HESA

Higher Education Strategy Associates

Category Archives: international

August 03

A tipping point for internationalization?

Over the last few years, my position about internationalization has been pretty consistent: the international student market is going to grow and grow.  Talk about a China bubble – one of the education press’s favourite “what-if?” doom and gloom scenarios – is almost invariably overstated.  Yes, political instability in a place might China might occur, but Chinese parents think of having students overseas as an insurance policy, a way to get out if need be – so frankly if anything political instability there is likely to increase study abroad, not decrease it.  Fears about an economic contraction affecting internationalization?  We just had a Great Recession and international student numbers climbed right around the world.

The only thing that I think really stands in the way of continued growth in international student numbers is a major disruption in the international economic/political order, something on the scale of a major war, say.  And until now I’ve been pretty confident that this isn’t in the offing.  But after the summer of 2016, I’m not so sure anymore: turns out there are ways to effectively poison the prevailing economic/political order short of war.

To me, there are six big things going on right now which individually might not matter much but taken together signal real change: Brexit, the Syrian refugee crisis, the Turkish coup, Trumpism, the French election and the creeping cult of Xi Jinping.  None of these phenomenon do much to change outbound student-mobility at a global level in the short term.  Brexit might reduce foreign demand for UK education, but those people have options elsewhere; the Turkish coup, if anything, gives a boost to internationalization because there are going to be a *lot* of secular-minded students looking for an exit.  But in the medium term, it’s possible these changes herald a very different kind of world than the one we have grown used to.

Internationalization in higher education depends in large part on the notion that mobility – and not just study mobility but life mobility – is desirable.  If you’re a kid from an aspiring middle-class family in Buenos Aires or Beirut or Beijing, you want the foreign degree partly because the institution you might attend is better/more prestigious than the education might get at home, and partly because you think your degree will make you more valuable to a wider set of employers.  But if laws emerge which constrain businesses from hiring across national borders, that poses a serious challenge to the logic behind internationalization.

Trumpism and Brexit are both expressions of ugly nativism and herald exactly such a challenge.  Though they may not play out completely (Brexit may not happen, Trump likely won’t win the general election) they certainly suggest that the twin anglo-saxon motors of globalization are much less keen on immigration than they were.  The French election, which Marine LePen is now given a reasonable chance of winning, could see this momentum carried through to another major G-7 country.  The Schengen agreement is still wobbly thanks to the refugee crisis and Europe’s mostly short-sighted reaction to it and mobility within Europe may will be curtailed at some point.  In the developed world, where we used to see immigration in terms of doors and bridges between nations, increasingly we see only walls.  This is not good.

And that’s just what’s going on in developed countries.  The aftermath of the Turkish coup attempt has freed President Erdogan’s most authoritarian tendencies, resulting in a wholesale attack on universities and academics.  In China, universities are being purged of “western influences.”  In themselves, neither of these are going to reduce student flows; but in both cases you see major countries adopting more nationalist positions, and being more restrictive of press freedoms and freedoms of speech.  These spaces are becoming less open to the world, not more.  These are not conditions in which it seems likely that employers  will enthusiastically welcome students who have gone abroad for their education.

Put all that together, we could be going back to a pre-1989 world where the nation-state is much more powerful and paternalist and where individual mobility – at least, beyond simple tourism – is much more restricted than it is today.  Some people, I am sure, would welcome such a world.  Personally, I think it would be a disaster and a huge step backwards for progress and freedom.  Where universities are concerned it would be a disaster because it would erode the foundations of internationalization and student mobility.

I’m not saying this will all happen; a slow-down in the move towards globalization still seems more likely than an out-right reversal of it.  But this summer’s events make me much less confident about this than I have been at any time in the last thirty years.  Institutions with major stakes in internationalization would be wise to do some contingency planning.

July 14

Brexit

Morning, all.

Everyone’s writing a Brexit thinkpiece these days.  Literally, everyone.  I’m feeling left out.  So here’s mine.

1) Brexit isn’t a foregone conclusion.  Yes, Leave won 52% of a non-binding referendum based on a pack of lies about the results of future negotiations that would make the PQ blush.  But the UK government has yet to invoke Article 50, the clause in the EU constitution that signals a 2-year countdown to departure, and will certainly not do so until a new PM is chosen.They may not do so until after the French and German elections next year, and as the realities of negotiating a divorce sink in they may never do so (and – irony of ironies, there are not enough trade lawyers in the UK to negotiate such deals, so they are having to import them ) .  Even if they do start negotiations, the final settlement may be so far from the Leave fairytale that there would almost certainly be a huge demand for a second referendum before ratification.  So all this handwringing may be for naught.

2) Even if Brexit doesn’t happen, this episode can cause a lot of damage.  The UK hasn’t been booted out of the Erasmus student mobility program yet, but with racist incidents up 500% since the vote, you can bet there will fewer European students thinking London is a place they’ll feel secure.  The UK hasn’t been booted out of the Horizon 2020 European research scheme yet, but multi-national scientific teams have been pulling UK researchers’ names from their proposals in anticipation of Brexit.  And the idea that the UK will make up for the drop in funding?  Good luck with that.  Paradoxically, the longer the uncertainty about Brexit, the less likely the UK will actually pull the trigger; but conversely, the longer they wait, the greater the damage will be.

3) What will happen to International student flows?  Now this is where it gets tricky.  A lot of the focus right now is on EU students, and the fear that they won’t come to the UK because they will have to pay international student fees instead of domestic ones.  But domestic fees are already pretty high (and in humanities and social sciences are set well above the cost of delivery). If universities want to keep those students they could always grant concessionary fees to EU students and keep them paying exactly what they’re paying right now.  No, I think the real issue with EU students has to do with whether students still think the UK is a place they want to spend a part of their lives.  Lots of them now go assuming they can stay and work there: no more.  But it’s not clear that countries like Canada or Australia would be able to pick up on this loss.  If the point of going to London was because it was a “destination” rather than simply a chance to learn English, it’s not obvious that Melbourne or Toronto would be a satisfactory second choice.

It’s the same with non-EU students: you might think that there would be a lot of non-EU students who might be dissuaded from going either because of increasing incidence of racism or because London was no longer a way into the EU.  Since the Tories took power it’s been increasingly difficult for graduating students to immigrate anyway, so it’s unlikely to be the latter: Teresa May’s immigration saw that lot off years ago.  But the racism/intolerance thing?  That’s a vulnerability.

4) Can Canadian universities and colleges cash in on this?  Yes. Advertise a lot in Asian markets where UK currently does well.  Emphasize security and multiculturalism.  Talk about possibilities for immigration.  And do it fast, because odds are the Aussies are already there doing it.

Hope you’re all having a good summer.

May 18

Canadian B-Schools and Economic Growth

If there is one thing university Presidents desire, it is to be useful to society – and preferably to the government of the day, too.  After all, post-Humboldt, universities exist to strengthen the state.  The better a university does that, the more it will be appreciated and, hopefully, the better funded it will be.  So it has always struck me as a bit odd how little universities (an business schools in particular) have really done in order to help work on the causes of Canada’s perennially sluggish economy.

Canada’s fundamental economic problem is that outside the resource sector, companies struggle to reach scale.  Outside the oligopolistic telecoms and banking sectors, we are a nation of small and medium businesses.  Judging by the party manifestos in last year’s elections, many people like things that way.  Small businesses are good and deserving of lower tax rates, big businesses are bad and deserve to be taxed more heavily. 

The problem with this little story is that it is simply wrong.  Big businesses are crucial to innovation and hence to economic growth.  Big businesses are the ones that have the money to invest in R & D.  They are the ones that can make long-terms commitments to training employees (if you don’t think firm size plays a role in Germany’s ability to sustain its apprenticeship system, you aren’t paying attention). People may be rightly cautious about the power of capital and its influence on the political process; but that doesn’t mean we shouldn’t encourage the formation of large companies in the first place.  Ask the Swedes: their social democracy would never have existed without very large companies like Volvo, Saab and Ikea.

And so the key question is: why don’t we have bigger domestic companies in Canada?  Oh sure, we have the occasional behemoth (i.e., Nortel, RIM) but we don’t seem to do it in a non-ephemeral way, or do it across the board.  And when our companies do start getting big, they often sell out to foreign companies.

We can point fingers in a whole bunch of directions – one favorite is a lack of appropriate venture capital.  But to a considerable degree, it’s a question of management.  Universities like to talk about how they are teaching entrepreneurship but getting people to start businesses and getting those businesses to grow are two very different propositions.  We seem not to have a lot of managers who can take companies from their first million in sales to their first ten million in sales, or to take our businesses out of the Canadian context and into a global one (if you haven’t yet read Andrea Mandel-Campbell’s Why Mexicans Don’t Drink Molson, on this subject, do – it’s revealing).   And for that matter, how is it that our venture capital industry still seems more comfortable with mining projects than life science or biotech?

Can it be – say it softly – a question of education?

We pretend that success in innovation is a function of prowess in tech.  But to a large degree, it’s a function of management prowess: how can staff be better motivated, how can processes be changed to add value, how well can business or investment opportunities be spotted.  Might it be that the education of our business elite doesn’t include the right training to do these things? 

To be clear here, I don’t really have any evidence about this one way or the other.  No one does.  But if I were a university president, or a business dean, it’s a question I’d be asking myself.  Because if there’s an economic conundrum that needs solving its this one, and if there’s any way in which universities can contribute, they should.

April 07

Innovation to Watch at the University of Sydney

Australian universities seem to do “Big Change” a lot better than universities elsewhere.  A few years ago, the University of Melbourne radically overhauled its entire curriculum in the space of about two years partly to create a more North American-like distinction between undergraduate and professional degrees and partly to reduce degree clutter by winnowing the number of different degrees from over a hundred to just six.  (For a refresher, I wrote about this back here).

If you read press reports about the University of Sydney’s new strategic plan (read the full document here,  it’s completely worth it) you might think Sydney is just aping Melbourne: it’s culling of degrees from 120 to 20, mostly by wiping out five-year “double degrees”, and also reducing the number of faculties from 16 to 6.

But the reduction in the number of degrees is actually a much less interesting story than what Sydney plans to do in terms of its curriculum.  From 2018, every program is to have two courses in third-year: one to integrate and apply disciplinary skills and another to apply disciplinary knowledge and skills in context.  Every degree will culminate in a final-year project or practicum.  Every program will have cultural competency embedded within it, and support for international studies will rise so that (hopefully) the proportion of students with an international experience will rise from 19% to 50%.  A strong framework to support career transitions will also be set up. Involving both curricular and co-curricular efforts

Here’s the most interesting bit: And an entirely new “open learning environment” will be created within the university, which will provide short, on-demand courses in areas such as entrepreneurship, ethics, project management, leadership (you know, all the employability-related skills universities usually claim students pick up by osmosis).  Some of these courses will be online, while some will be blended online/workshop; some will be non-credit and some will be small-credit. 

Did I mention they are going to develop a university-wide approach to measuring how desired graduate qualities such as disciplinary depth, interdisciplinary effectiveness, communication ability and cultural competence have been attained?  Yes, really.

What makes this kind of change deeply impressive – and potentially highly significant – is that it is not coming from a second-tier, ambitious institution trying to catch attention by doing something new.  This is the country’s oldest university.  This is a big, old prestigious institution taking big serious steps to actually change the undergraduate degree structure in order to provide students with better skills without sacrificing academic rigour.  It’s a research university that cares enough about undergraduate learning outcomes that it will measure them in some way beyond graduation rates and immediate employment rates. 

This is cutting edge stuff.  It may even be a world first.  We should all hope it is not the last; this kind of approach needs to spread quickly.

March 11

How Much is a Brand Worth? Evidence from Doha

The Washington Post had an absolutely fascinating article earlier this week regarding the sums that the Government of Qatar is paying various American universities to be part of its set up at Education City.

For those who are unfamiliar with Education City, a slight diversion.  About 15 years ago the Qatari royal family got frustrated with the state of local education and hit on the idea of creating a world-class educational facility by inviting top US universities to come in and each run one faculty.  So Virginia Commonwealth was invited to set up a visual arts school, Georgetown came in to run the school for the foreign service, Weill Cornell did the medical school, etc.  (Northwestern, Carnegie Mellon, and Texas A&M also have campuses there).

Now this wasn’t your typical branch campus arrangement.  These institutions were not over there to make money by offering degrees for high prices.  Rather, the Qatari Royal Family was paying them big dollars to educate their students in situ (there’s a similar arrangement in place for the NYU and Sorbonne campuses in Abu Dhabi).  The universities themselves had nothing at risk: each one received its own gorgeous building fully paid for by the Qataris.

But nobody knew exactly how much they were getting until the WaPo article this week.  Using tax records, Department of Education data and freedom of information requests, the paper managed to lift the veil on the financial arrangements.  As it turns out, the Qataris are paying them, collectively, just under $405 million per year to operate their Doha campuses.  Weill Cornell rakes in the most (hey it’s a medical school) at $121.7 million, and Virginia Commonwealth the least at $41.8 million.

On their own, these are eye-watering figures.  But to truly get a sense of how insane this is, you have to look at what this translates to in per-student terms.  These are actually pretty small operations – according to the data I was able to piece together the six campuses collectively only educate about 2000 students.  So the actual expenditure per student is actually just over $205,000. 

Qatari Government Expenditure per Student, Education City Campuses

ottsyd 20160310 Doha Brand

In other words, these schools are making out like absolute bandits.  Free buildings, six figure per student incomes – this is heaven.  But the question really is what on earth possessed the Qataris to pay this kind of price?

It’s instructive here to look at what the Qataris are paying the College of the North Atlantic to run their community college a few kilometers away from Education City.  It’s the same deal – Qataris built the campus and pay an annual fee to CONA to run the place.  Details on the post-2013 CONA contract are scarce, but the first ten-year contract was worth $500 million so let’s just say it’s worth $50 million/year (the CONA Annual report gives figures in the $10-11M range, but I’m fairly sure that’s profit not operating).  But CONA educates more students than all the Education City campuses combined: with roughly 3000 in total – I make that out to be $16,500 or so per year – or about an eighth of what the cheapest institute at Education City is getting.

Now obviously, that’s not a bad deal for CONA (In comparison, the college receives about $84 mil in provincial grant in aid and tuition to educate its 8888 students in regular programming back in Newfoundland, which comes to about $9400/student), and obviously there are some differences in delivery costs for college and university programs, but they aren’t that big.  Georgetown’s campus is a pure social sciences operation, and at Canadian universities those rarely cost more than $15,000/student.  So where’s that extra money going?

Well, to student amenities, partly.  These places are like little educational wonderlands(check out Georgetown’s student life page).    But mostly, this is pure rent.  Unlike CONA, these American institutions have global prestige.  And that in a nutshell is what the Qataris are paying hundreds of millions a year for – the right to be associated with these institutions’ prestige.

That’s what brand is all about.  And apparently, it’s worth up to a couple of hundred thousand dollars per student.  Nice work if you can get it.

March 09

Better Know a Higher Education System: Jordan

I’ve had occasion recently to take a deeper look at higher education in a couple of Arab states, and one system I’ve found to be especially fascinating is that of the Hashemite Kingdom of Jordan.

Jordan is a middle-income country (gdp/capita = $12,000 or so), but one with a lot of problems on its hands.  Not only is it dealing with a multi-million refugee flow from neighbouring Syria, it has also lost a huge amount of remittance income as low oil prices have hit the Gulf.  So there isn’t a lot of money for higher education: in fact, public expenditure on higher education is only about 0.3% of GDP, which makes it one of the lowest-spending governments in the world as far as higher education is concerned (the Gulf States are lower but they are spending off a much lower base and of course are only concerned with educating a small fraction of their population).

So you’d kind of expect higher education there to be a shambles.  Except it’s not.  It has participation rates that are right about average for a country at that level of development.  Compared to most OECD countries, it is heavy on science and technology programs – its distribution of students by field of study looks more like Korea or Germany than it does like Canada or France.  Among Arab countries it has a relatively high research profile and almost alone among countries with GDP/capita under $15,000, it places two universities in the Times Higher Education top 800 rankings.

How does it manage all this?  Simple: tuition fees.

All Jordanian student pay tuition.  Under the restrictive way students enter university, the students who do best on their high school exams get their pick of programs at the more prestigious public universities at below-cost rates (about US $1650).  Poorer performing students simply get assigned to wherever there is space.  If they don’t like it and want to study something else, they have to pay a higher price (often  around US $4000) at public universities, or they head to one of the private universities (between $4000 and $5000).  Add all this together and what you get is a country which devotes a little over 2% of GDP to higher education in the form of tuition fees.  That puts Jordan in some pretty rarified territory since only Chile and South Korea have ever hit this level (both are slightly lower than that today).  And in total it means that the tertiary ed sector in Jordan receives about as much in GDP terms as Canada’s does.

Total (Public & Private) Spending on Tertiary Institutions, as a Percentage of GDP, selected countries, 2011 or latest

JordanSpending

Now, what’s a little odd about the Jordanian system is that it has achieved this while keeping the higher education system mostly in the hands of public universities.  There are private universities but they only educate about a quarter of all students – in both Chile and South Korea, private institutions educate about 80% of tertiary students.  So Jordan is somewhat sui generis as a developing country where public universities are essentially privately funded.

It’s also sui generis in that it has no functioning system of student aid beyond a few scattered scholarships.  All these costs are being borne directly by families, without the help of any student loan program or system of fee waivers for poorer Jordanians.  Although there are no studies on how this situation is affecting access to Jordanian universities, it’s reasonable to assume that the barrier is a pretty severe one and that the system as a whole would be much better off with a decent system of loans and grants.

But of course that would mean making new government investments in an area which allows the cost burden to be shifted but doesn’t directly help universities.  And universities keep clamouring for more money (as they usually do).  That may seem a bit ungrateful in a country which is among the world leaders in university income, but of course since they operate in an international environment, they are paying world prices for scientific equipment and libraries, and above-the-odds in local term for academics as well.  Simply put, 2.4% of GDP doesn’t go as far in Jordan as it does here.  And so they clamor for more.

Jordan’s going through a rough period right now and the likelihood of a lot more public money showing up anytime soon is pretty remote.  So development, if it occurs, is going to have to happen through judicious management of what effectively is a system entirely dependent on fee-paying students, just like South Africa and Chile did. 

It’s an experiment that bears watching.  And it’s another reminder that in some contexts at least, tuition fees are what create educational opportunities, not deter them.

March 04

A New Logo for Canadian Higher Education

Last week, the government of Canada announced to great fanfare (Hip Hip Hooray! Caloo Callay!) that Canada has a new international education brand.  They actually meant “logo” not “brand”, but whatever – long past due because the old logo was terrible.  To wit:

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Ridiculous, right?  “Education in/au Canada”?  Most students who want to come study in Canada do so in order to improve their English, and Ottawa comes up with a logo that requires you to already be bilingual in order to understand it.  Mercy.

Now, here’s our new logo:

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Um… OK.  That’s a little bit better, I guess.  But who in their right mind thinks the Canada word mark and the CMEC logo belong on this thing?  Are they worried that prospective students in Izmir, Lagos, or Dnepropetrovsk would think less of us as a study destination if those logos weren’t there?  That some eager would-be student from Togo would begin to get heart palpitations about the potential quality of higher education in Canada if the word mark wasn’t there?  That a potential Colombian graduate student would interpret the lack of a CMEC logo as evidence of a scam?

But if you really want to shake your head in despair, take a look at the Study in Canada website, which is probably even dumber than the old logo was – note that despite the big announcement, no one seems to have found the time to actually update the logo on the website.  Anyways, the website is a monstrosity.  Fifty per cent of it is blank space, and its overall web sensibility would have been considered primitive even back in the MySpace era.  Literally, the only thing you can say about it is that it meets official federal government web guidelines.

And this, in a very real sense, is the entire problem.  The logo, the website – pretty much everything about our  international education effort – is centred around what makes sense for governments and their bureaucracies.  It is not centred around students.  Go ahead, take a look at the Study in UK website, the Study in New Zealand website, the Study in Australia website, or even the German DAAD website.  Do you see a lot of white space?  In the case of DAAD – an organization partially funded by the Germans states (provinces), do you see any CMEC-equivalent logos cluttering up the visuals?

No?  Me neither.  Apparently, the awfulness of Canada’s efforts in this area are unique.  But as all those other efforts show, it doesn’t have to be this way.  We can do better.  It starts simply by asking: “are we doing this because it will make sense to students?  Or to governments?”

February 19

The Dollar Quandary

If you haven’t been hiding under a rock these last few months, you may have noticed that the US dollar is on a roll.  And it’s not just on a roll in Canada, where the price of oil has reduced the value of our own currency; since mid-2014, the US dollar is up over 20% against a trade-weighted basket of currencies. This creates some interesting conundrums and strategy options for pricing international education.

The change in the dollar’s status means that everyone’s price has been reduced vis-à-vis those at American universities. If you’re a university in, say, Sweden, it doesn’t matter much because practically all of your competitors are European. Basically: if your price isn’t changing relative to that of your main competitors, then the fall of the dollar is fairly meaningless.

However, if the fall in the value of your currency is greater than that of your competitors, then this does actually create some room to maneuver. I was in Russia last week, where the fall in the value of the rouble (76:1 USD, down from 37:1 USD at the end of 2014) means that their product is now much cheaper, relatively speaking, than that of their competitors, and that makes them a more attractive destination.  As a result, the Russians are now marketing themselves as a “bargain” product because, let’s face it, Russian universities have a brand image problem after the disasters of the 1990s. Their strategy is to go low price, high volume, and admit as many Asian and Latin American students as possible.

That’s one strategy. But there are others. If you are an Australian or a British university with a reasonable reputation, you might ask why you should keep your prices constant in local currency. If you think your main competitors for international students are American schools, you might also think it makes sense to take advantage of your lower currency, and increase prices a bit. It won’t necessarily hurt you with recruitment, and you can make a little bit of extra money in local currency terms. Basically, in these situations, universities have a choice between marketing themselves as a “bargain” institution (take advantage of low price to increase volume) or as a luxury institution (risk volume to increase price).

Now in Canada we have a somewhat different set of issues at play, for two reasons. First, we actually have a lot of American students, institutional pricing strategies need to take account of that market. Second of all, unlike European universities, Canadian schools can be very sure that US institutions are a major source of competition, and hence we have more scope to re-price based on currency changes. So here’s the question: should institutions take the “bargain” route and keep prices steady in local terms, or a “luxury” strategy that sees us raise prices, or perhaps even start charging in US dollars?

Essentially, this is the choice every institution needs to make over the next couple of months. I think there’s a pretty clear case for Toronto, UBC, and McGill to move to USD pricing, and keep last year’s fees constant in USD terms (that is, raise them by about 20% in $CDN terms). Will they lose some applicants? Probably. But they have the brand power to deal with that, and the students for which they are really competing are going to be paying more anyways to go to an American university. And the prize is a big whack of extra cash.

For everybody else, it’s a trickier proposition. Some institutions – particularly if they are experiencing recruitment shortfalls (say Trent, or any one of a dozen Atlantic universities) – will probably see more benefit in going the “bargain” route, and aggressively going after students looking for a “cheap” North American experience. Others – Windsor, perhaps – might decide to take that pitch directly to American students. The institutions with the trickiest task are the other U-15 universities. They might be tempted by the USD route, but may be unsure if they had the brand power to make it work. Expect a period of experimentation, not all of it successful.

In any case, for those interested in looking at price elasticity as a function of institutional prestige, the next couple of years promise to be quite interesting.

January 22

Higher Education in Developing Countries is Getting Harder

Here’s the thing about universities in developing countries: they were designed for a past age.  In Latin America, the dominant model was that of Napoleon’s Universite de France – a single university for an entire country, which was all the rage among progressives for the first half of the nineteenth century.  In Africa (and parts of Asia), it was a colonial model – whatever the University of London was doing in the late 1950s, that’s basically what universities (the bigger ones, anyway) in Anglophone Africa are set up to do now.  We think of universities as being about teaching and research; by and large, in the global south, universities were about training future governing elite and transmitting ideology.

Of course, for a long time now, governments and foreign donors have been trying to nudge institutions in the direction of modernization.  By and large, the preference seems to be something like a 1990s Anglo/American model: market-focused for undergraduate studies, more of an emphasis of knowledge creation, etc.   This has been a tough shift, and not just because of the usual academic foot-dragging.

The problems are manifold.  If you want research, you need PhDs.  In much of Africa and Latin America, less than half of full-time academics have them.  And because only PhDs can give PhDs that’s a pretty serious bottleneck.  A few years ago, South Africa announced that it wanted to triple the number of PhDs in the country.  Great, said the universities.  Who’s going to train them?

And of course you need money, but that’s in exceedingly short supply.  Money for equipment, for instance (quick, how many electron microscopes are there in sub-Saharan African universities?  Take out South Africa, and I’m pretty sure the answer is zero).  But also money for materials, dissemination, conferences, etc.  In some African flagship universities, close to 80% of money for research comes from foreign donors.  That money is welcome, of course, but it means your research programs are totally at the whim of changing fads in international aid programs.

As for being market-focused: how does that work in countries where 80% of the formal economy is dominated by government and parastatals?  What’s even the point of building up a good reputation for graduating employable students when public sector HR managers aren’t allowed to discriminate between universities when hiring?

Now, making things worse are some fairly worrying macro-economic trends.  Not the commodities collapse, thought that doesn’t help.  No, it’s the secular change in the way development is actually happening; specifically, that countries are starting to de-industrialize at ever lower levels of manufacturing intensity (a phenomenon that economist Dani Rodrik explains very well here).  To put it bluntly, countries are no longer going to be able to get rich through export-driven manufacturing.  There aren’t going to be any more Taiwans or Koreas.  In future, if countries are going to get rich, it’s going to be through some kind of services and knowledge-intensive products.

This, to put it mildly, places enormous pressure on countries to have institutions that are knowledge-intensive and market-oriented.  When human capital trained for services industries become the only route for development, universities become vital to national success in a way they simply are not in a society that already has a major manufacturing base.  Simply put, no good universities, no development.  And that’s a world first because the developed world – including China – got rich before it got good universities.  It’s simply an unprecedented position for higher education anywhere.

But it’s a job for which these universities are simply not ready.  In Africa at least, even when the nature of the challenge is fully understood, universities are neither funded nor staffed adequately for the task; not only are their own internal cultures insufficiently entrepreneurial, but also they simply lack entrepreneurial partners with whom to work on knowledge and commercialization projects.

Getting a whole new set of challenges when you’ve barely got to grips with the old ones is a tall order. It’s a structural issue that international development and co-operation agencies need to think about, and invest in more than they currently do.

January 15

Political/Economic Risk and International Student Recruitment

A couple of big events occurred internationally over the last few weeks, which will matter to folks in the international recruitment field.  Briefly, they are:

1) The Saudis are pulling back.  Things are moderately bad in the kingdom right now.  Their gambit of driving down the price of oil in order to run the American fracking industry out of business is not working as quickly as they hoped, and may have re-established an era of cheap, $50 (or sub-$50) oil for the foreseeable future. (And yet Jeff Rubin still gets paid to dispense expertise.  Life is not fair.)  Plus they’ve gotten themselves stuck in a costly war in Yemen.  Result: Government deficits running at 12% of GDP.

Now, this isn’t the end of the world because their sovereign wealth funds are sitting on roughly a gazillion dollars in assets, and they can draw those down for awhile.  But still, economies have to be made, and that’s a tricky business in a country where the social contract is that the al-Sauds pay for everything in return for everyone agreeing to let slide the fact that the al-Sauds own everything.  Put it this way: foreign scholarships aren’t top of the list for cutbacks, but they’re not at the bottom, either.

It seems the way this is going to play out is with typical Saudi opacity.  Very quietly, schools are being told they are no longer eligible to be in the program.  It seems to have little to do with quality of individual schools or programs – the entire Atlantic region suddenly got cut off last month.  How many schools will this eventually affect?  Too soon to tell.  But even top schools need to be looking towards 2020 (the program’s current end-date) and wondering what comes next.

2) Brazil is suddenly hostile to overseas education.  Go back a couple of years and everybody loved Brazil.  They were spending money like nobody’s business on foreign scholarships through their Science Without Borders Program.  But things have been going sideways for Brazil lately for reasons eloquently described in last week’s Economistand the repercussions are severe.

Back in September, the government imposed a 40% cut to the program, which basically meant they could not accept any new students.  Now, a new draft law has been put forward, which places a tax of between 5 and 33% on any tuition fees paid outside the country (and yes, that does sound difficult to police – I think it’s only going to apply to fees paid through an agency, but it’s hard to tell from the article).

Of course, stories like this always bring up the dreaded question: what if the China market tanks?  Regular readers will know I am skeptical about talk of any China “bubble” in higher education, let alone a pop: in my view, political risk will likely increase the short-term flow of students rather than decrease it.  So there’s no need to get too panicky.  But these events should remind people that a sustainable recruitment policy requires some geographic diversification.

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