Opportunities, risks in exporting education

Opportunities, risks in exporting education

Thu, 12/10/2017 - 13:19
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ECU students

There are clear economic and social benefits from attracting international students.

Since the end of the mining boom, much attention has focused on Australia’s services sector to take up the slack in the economy.

One of the obvious service exports the country has relied on is international education.

The relationship with our Asian neighbours in terms of education export is currently very healthy. The latest 2016 export data indicate international education has performed tremendously well, with current figures being the highest since 2010.

The latest data from the Department of Foreign Affairs and Trade show the value of Australia’s trade in services in 2016 was $146.8 billion, an increase of 3.3 per cent from that in 2015.

This accounts for 21.8 per cent of Australia’s total trade in goods and services, an increase of 0.5 per cent from 2015.

Obviously, exports are crucial for our overall economic performance, and education is one of the most important.

Australia’s 2016 exports of services rose 9.2 per cent to $71.2 billion, with an increase of 17 per cent in education exports to $22.5 billion, of which education-related travel services (including international student expenditure on tuition fees and living expenses) was the largest component, valued at $22 billion.

China was the largest source of education-related travel services income, contributing $6.1 billion, followed by India ($2.6 billion) and Vietnam ($1.1 billion).

The largest contributing sector was higher education valued at $15.1 billion, followed by vocational education and training ($3.7 billion) and English language intensive courses ($1.1 billion).

In 2016, the $22 billion of education-related travel services was the third largest goods and services exported from Australia, accounting for 6.6 per cent of the total $330 billion (behind iron ore and concentrates (the highest at $53.8 billion), and coal (second highest at $42.3 billion).

It is obvious Australia’s education export sector, and its relationship with Asia, is a large and vital part of the economy.

With regards to the actual numbers of international students in Australia, the July 2017 data from the Department of Education and Training show a total of 564,869 international students in the country, an increase of 15 per cent from July 2016.

More than half of these came from China (29 per cent), India (11 per cent), Nepal (4 per cent), Malaysia (4 per cent), and Vietnam (4 per cent).

Since students can study more than one course in a calendar year, the report shows 685,499 enrolments in July 2017, 49 per cent of which were in the higher education sector.

There are a number of factors that may contribute to the good number and proportion of international students from Asia. These are Australia’s proximity to Asia, a growing Australian reputation for high-quality education, and most likely a lower Australian dollar.

A recent international student and alumni satisfaction survey, conducted by the International Alumni Job Network and Nielsen, also indicates Asian students who studied at Australian universities are largely happy with their experience.

Ensuring these factors remain in place could be helpful in supporting the sector in years to come.

Consistent with the strong education export story, other service industries such as tourism are becoming increasingly integrated with Asian markets.

The good news is that tourism exports (international tourism consumption in Australia) increased by 11.1 per cent to $34.2 billion in 2016, with short-term visitor arrivals of 8.3 million visitors in 2016, an increase of 11 per cent compared with that in 2015. China was the second largest source of international visitors, with 1.2 million movements, behind New Zealand, with 1.35 million movements.

It is worthwhile noting that international education can also contribute to other sectors of the Australian economy, including tourism.

For example, it is not difficult to understand that the increase of education exports leads to an increase in tourism and investment expenditures from visiting friends and relatives, who come to Australia to visit an international student.

There are also potential economic and social benefits from knowledge exchange and collaboration, trade and investment links, improved cultural literacy and capital.

As Asia’s middle class grows, it is likely the demand for Australian services will continue to expand.

Australia, however, cannot be slack in its efforts to capitalise on this opportunity, which will likely not be available forever. China, India, Korea and some of the South-East Asian nations have continued to invest heavily in building their own world-class universities.

China, for example, has clearly had continuous plans to achieve this goal over the past few decades. These include Project 211 and Project 985, which aimed to strengthen their universities and to establish world-class universities in the 21st century.

Just recently, they have started the “double-first class” initiative, which aims to eventually build a number of world-class universities and disciplines by the end of 2050. The rise of these universities raises the prospect that Australian universities may have much more competition in the region in decades to come.

Consequently, while a strong opportunity for education export still exists right now, all stakeholders, including the government, the universities, and the industries, should keep focusing on improving Australia’s high-quality education, ensuring a first-rate travel experience and enhancing student experience by providing more extensive workplace-based internships and programs.

For Australian universities themselves, as much as this current growth in international education is financially good, there is a financial risk if the intake of international students falls – since a significant portion of university revenue comes from international student fees.

In the longer-term, a collaborative strategic and balanced approach in managing international education is thus needed.

• Associate Professor Hadrian G. Djajadikerta

Associate Dean Research

School of Business and Law

Edith Cowan University