If higher education were an industry, it would be one of the world’s biggest and most dynamic. Take these numbers for the UK, for instance. The total revenue earned by universities there amounted to £23.4 billion (US$43 billion) in 2007/08, according to a report by Universities UK. This was comparable in gross output terms to the printing and publishing industry, and considerably larger than the pharmaceuticals industry.
Or take Australia, where education is one of the country’s largest exports. Some estimates have put the value as high as Aus$17.2 billion in 2008-09, or about 1.4% of GDP, with growth of over 20% from the previous financial year. The global leader is of course the US, where higher education is estimated to employ 3.4 million people, or some 3% of the entire US service sector. Education is ultimately about students, and the number of students enrolled in higher education has grown steadily and strongly over the past 50 years. In fact, data from OECD’s Education at a Glance shows that 30% of adults in OECD countries now have a tertiary qualification. International student numbers in the OECD have trebled in the past 20 years to more than 3.7 million, and that number can be expected to continue to grow rapidly.
The reasons for this growth are obvious: graduates earn more, have more satisfying jobs and live longer than those who don’t graduate from higher education. This is as true for women, who now comprise the majority of tertiary students in OECD countries, as for men.
Developed economies rely on skilled labour to drive productivity and economic growth, as well as create a more confident and more affluent middle class. And the economic benefits of higher education flow not only to individuals, but also to society (see “Higher education’s crisis dividend” in OECD Observer No. 287).
As higher education has grown and expanded, it has also become more international. OECD data show that the number of students attending institutions outside their country of origin tripled between 1985 and 2008, and it is expected that this trend will continue. It is, however, a very asymmetrical market, dominated by some strong providers, mostly in Englishspeaking countries. The United States hosts the largest number of international tertiary students, while the proportion of such students is highest in Australia. It is a volatile market, as well, where public perceptions can be quickly swayed by relatively minor incidents. For example, the US market share has been declining since 2000, while the Russian Federation has doubled its market share during the same period, and many Asia-Pacific countries are now entering the field, as well.
Just as university education has become more global, so it has become more competitive. Yet, are educational establishments–those whose role it is to “produce” or supply education–able to compete and do their job? Look at it another way. Suppose you are running a business and are fortunate enough to have good brand recognition and tens of thousands of customers trying to buy your product. You might choose to remain exclusive and raise the price of your product, or you might want to increase production to meet demand. But if your business is running a university, you might well find that your government won’t allow you to do either of these things. Indeed, it might not even allow you to charge for your product at all–even while some of your competitors in other countries benefit from public subsidies, may charge fees and receive strong support for their efforts to “export” their product. In addition, government policy on immigration or institutional funding can influence your appeal to new students.
The challenges to those who are responsible for strategic planning in universities and other higher education institutions are clearly considerable. The OECD’s Programme on Institutional Management in Higher Education (IMHE), will present some pointers and ideas, based on focus groups it is now running, at the OECD’s higher education conference in Paris, September 2012.
But if those who are responsible for the “supply side” of higher education are struggling to keep up with developments, spare a thought for the students and prospective students who make up the “demand side”. Many countries offer various scholarships and other kinds of financial assistance, while others let students fend for themselves financially. In addition, the quality and relevance of higher education programmes and institutions are far from obvious for prospecting students, even when hunting for courses within their own country. At the international level, students can fall prey to misleading–and sometimes fraudulent–advertising; often, their only guides are institutional rankings, which are largely based on research outcomes (see “League tables that rank” in OECD Observer No. 287). As a result, these students might not have all the information they need to make a well-informed choice about something that will have a significant impact on the rest of their lives.
Some efforts to help them are at hand. The OECD and UNESCO, for instance, have worked together to develop guidelines on quality in cross-border higher education. First published in 2005, the non-binding guidelines invite governments to establish comprehensive systems of quality assurance and accreditation for cross-border higher education. They also call on institutions and providers of higher education to ensure that the programmes that they deliver, across borders and in their home country, are of comparable quality, and suggest that students become active partners at international, national and institutional levels in developing, monitoring and maintaining the quality of higher education. Do we even know what this demand side is demanding? Surveys, such as the Australian Survey of Student Engagement or the National Survey of Student Engagement in the United States, have collected information about how students learn and what they expect from higher education. They provide institutions with detailed reports on how students spend their time and what they gain from attending college and university.
But not all students are 18 years old, and universities also have to be able to provide a service to lifelong learners and older students seeking to refresh, upgrade or complement their knowledge and skills. This is becoming increasingly important as the global economy retrenches and labourmarket demands shift. At the moment, while policy makers are struggling to decide whether to treat higher education as a business or as a public service, some of our traditional models are evolving fast. Fees are being introduced in many countries, while the focus on quality and transparency that has been gathering pace over the past two decades will only become more intense.
And there will be a new drive for efficiency and productivity in higher education as public and private resources shrink and competition becomes more fierce. Students are becoming customers, seeing good higher education as something to pay for as a way to a better career. The notion of “free” tertiary education is becoming harder for governments to defend, either in theory or in practice. The governance and regulatory arrangements that apply to higher education will continue to come under ever closer scrutiny.
Kelly, U., D. McLellan and I. McNicoll (2009), The impact of universities on the UK economy, Universities UK, 2009.
Weisbrod, B., J. Ballou and E. Asch (2008), Mission and Money: Understanding the University, Cambridge University Press, Cambridge.
OECD (2011), Education at a Glance 2011: OECD Indicators, OECD Publishing.
“Higher education’s crisis dividend” and “League tables that rank” in OECD Observer No. 287
©OECD Observer No 287 Q4 2011