Nov 29, 2003 - Director, Monash Centre for Research in International Education ... using expert state judgment to allocate resources and drive improvements ...
NZARE/AARE Joint Conference Auckland, New Zealand, 29 November to 3 December 2003
AARE Radford Lecture [revised]
Markets in higher education: National and global competition Simon Marginson Australian Professorial Fellow Director, Monash Centre for Research in International Education Faculty of Education, Monash University Delivered 29 November 2003 Revised 31 December 2003
Introduction Between 1960 and 1980 a world class mass university system was developed in Australia, guided by visionary policy and almost entirely dependant on public funding (Marginson 1997a, pp. 11-45), establishing favourable long-term conditions for basic research and doctoral training in all fields of study. In the mid 1980s higher education was free of tuition charges, 90 per cent Commonwealth funded, and also relatively isolated from the higher education systems of other nations, though British, and to a lesser extent American, exemplars loomed large in the minds of Australian academics and policy makers. Funding had been constrained for the previous half decade and there were few opportunities for young staff (Marginson 2000, pp. 22-27), but it was generally believed that academically, all Australian universities were world class, as good as any but a handful of institutions such as Oxford, Cambridge and Harvard. Given what came after, it is significant that high quality and greatly expanded capacity had been achieved without recourse to market mechanisms or other competitive methods of funding. For example, Commonwealth grants for innovations were distributed not on via competitive tendering, but on a per capita basis across the system. Apart from the small budget for research project grants, there was little officially structured competition. In the ideology of the times, there was nothing problematic about using expert state judgment to allocate resources and drive improvements in quality. Outside the framework of state policy, institutions competed against each other for community esteem, student demand, research credibility and academic respect, as normally universities do. But government did not see it necessary to exacerbate this existing element of competition, or use it as an instrument of distribution, or control.
2 However, all of this – dominant ideology, national policy, funding, system quality and its determinants – was soon to change. In 1984 and 1985 a new policy discussion emerged, inspired by the neo-liberal ‘revolution’ set in train by the Thatcher government in the UK and centred on deregulation and privatisation. In the coordinating departments of Treasury, Finance and Prime Minister and Cabinet a consensus emerged that Australia could no longer afford free education, and market competition (tuition fees, industry funding, international marketing, private universities) was the way forward. In 1986 a Higher Education Administration Charge (the HEAC) of $250 per full time student was pressed on an unwilling Tertiary Education Commission, well aware this was the thin edge of the wedge. In 1988 the Higher Education Contribution Scheme (HECS) was announced. The HECS was not a market fee, but it normalised user contributions, plural funding and the consumption paradigm, opening the way to a marketised system. The HEAC and the HECS were the first steps in a long series of policy changes that layered more and more aspects of market competition onto the public institutions, without diminishing Canberra’s capacity to steer the system. The official creation of inter-university competition (1987-1988), successive steps in the deregulation of international and postgraduate fees (1985-1995); competitive bidding for innovation funds and staff development (1988); national quality assurance (1993-1995, and again from 1999); the Hoare inquiry on governance (1995); the Vanstone cuts to funding, HECS increases and up-front undergraduate fees (1996); the West report (1997-1998); the leaked Kemp memo proposing a wholesale market deregulation and voucher funding (1999); the PELS loans to support the postgraduate market (2001); the Nelson inquiry (2002) and reforms (2003): almost every policy move since the mid 1980s, certainly after the departure of reforming Minister John Dawkins in 1993, was powered by faith in markets and the business model - faith that the three ‘C’s’ competition, corporatism and consumerism – would lift efficiency, performance and rates of innovation; strengthen accountability to government, students and business; and provide fiscal relief1. To compel institutions into market activity, the per student value of Commonwealth grants was whittled away to 40 per cent of the 1975 level in real terms (Marginson 2002, pp. 114-117). In 2001 Australia spent only 0.8 per cent of GDP on the public funding of higher education, half the level of 1975, though the rate of participation in higher education had doubled. Where the last generation of students paid nothing, the current generation of students carried one of the highest public tuition charges in the OECD, and was about to pay much more. At the same time, the globalisation of communications, knowledges and skilled labour transformed Australian higher education, as it transformed higher education throughout the world, propelling the local institutions irreversibly into the world-wide environment. There was a phenomenal expansion of international student numbers and offshore activity in Asia, and cross-country research and knowledge transfer. Because globalisation coincided with the hegemony of neo-liberal policy, it was inevitable that much of Australia’s new global educational engagement would take a market form.
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The only break in the pattern was the doubling of Commonwealth Australian Research Council (ARC) and National Health and Medical Research Council (NHMRC) grants in the national innovation statement of 2001 and; but even there, it seems, the intense competition for research funding protects the public interest.
3 Today, 18 years after the HEAC, the Australian system is very different. Remarkably, the policy discussion is not. Market reform is still the only policy game in town. At the national level, the government is again trying to impose on a reluctant public a high cost fee system that would turn the leading universities into elite independent private schools. At the global level, the only discussion of international relations in education is about trade liberalisation through the General Agreement on Trade in Services (WTO/GATS). In the economisation of education policy, the long fetish with markets and the primacy of fiscal savings over social and educational outcomes, we see the triumph of the Treasury line. In the Westminster systems the Treasury is largely beyond political control. It is at one at the same time expert witness, prosecutor and judge of the policy system - the guarantor of sound finance and sound government; the main shaper of financing mechanisms, policy options and structural reforms in education and other sectors. It imposes on the education system an arid neo-liberal imagination, in which society, culture and personality are mere outcomes of the economy, and global strategy is a trading game, in which the world is nothing more than opportunities for self-enrichment. Markets, government and identity In this neo-liberal imagination (Marginson 1997b), markets emerge spontaneously from natural human life, and are sustained separately from and if necessary against the state, which always threatens to undo them. It is therefore ironic that in the real world, education markets are closely regulated if not created by governments, and are a function of politics and policy. The forces of supply and demand, and market entry and exit, are affected by subsidised tuition, state-protected monopolies, state guarantees against bankruptcy, and so on. To the extent that we control democratic politics, we can choose the markets we want, and we can choose whether to have markets in education or not. As Geiger remarks in relation to American higher education: ‘Market systems are above all affected by the large role played by governments. Governments affect social coordination in three ways: they make significant purchases of goods and services; they penalize some activities through taxation; and they encourage behaviours they favour through subsidization. The result is not a free market, but an administered market system – one, moreover, in which the values of the polity play a large role in affecting approved and disapproved activities’ (Geiger 2003, p. 2). If markets in education are a function of politics, then the choice of whether to market education or not is a momentous one. This is because education markets tend to shape human behaviour. Our systems of human association, and social coordination, make us what we are. Markets are not the only force at work, but all else being equal, once market incentives are introduced, they tend to turn us into the kind of people that can survive and prosper in markets. Further, because education is one of the places in which human beings are formed, over the longer term, markets in education remake not just human behaviour but human nature. As Karl Marx put it: ‘Production not only creates an object for the subject, but also a subject for the object’ (Marx 1973, p. 92). Or as the guru of market reformers, F.A. Hayek, put it: ‘Competition is as much a method for breeding certain types of mind as anything else’ (Hayek 1979, pp. 75-76).
4 Therefore education markets tend to have a corrosive effect on professional practices in higher education, which embody a different kind of ‘mind’. For the professional academic working outside the imperatives of the market, the intrinsic aim is to maximise the quantity and quality of outputs. For the teacher, pastoral care has no boundaries except the rights of the student. For the scholar-researcher, the ultimate horizon is truth and innovation. But from the market viewpoint, the intrinsic aim is maximise revenues, and this is achieved by combining the minimum unit cost with maximum market size and share. This implies loyalty not to truth but to institution, not to innovation but to marketable product. It means reducing professional inputs in teaching, while devoting more resources to competitive marketing. It means the ‘feel good’ management of students, once apprentices and co-workers but now customers held at arm’s length. Markets do not directly reduce professional autonomy, in the manner that, say, aristocracy or dictatorship eliminates the possibility of professionalism. Rather, the problem is that in markets, educational professionalism is redundant. The more important are the goals of profitability, economic efficiency and market share, the less energy and time is left for professional objects as ends in themselves. Of course as Marx notes, it all depends on ‘the solidity and inner articulation’ of professional practices. ‘Trade always has, to a greater or lesser degree, a solvent effect on the preexisting organisations of production, which in all their various forms are principally oriented to use value. But how far it leads to the dissolution of the old mode of production depends first and foremost on the solidity and inner articulation of this mode of production itself’ (Marx 1981, p. 449). This paper The robust policy scepticism about free markets and private economic interest that characterised public culture in the mid twentieth century, and provided an important corrective to capitalist excess, has been thrown out in Australia as in many countries of the world. As Amartya Sen remarks in Development as Freedom (1999): ‘The virtues of the market mechanism are now standardly assumed to be so pervasive that qualifications seem unimportant. Any pointer to the defects of the market mechanism appears to be, in the present mood, strangely old fashioned and contrary to contemporary culture, like playing an old 78 rpm record…’ (Sen 1999, p. 111) If so, there is much wisdom to be gained in challenging ‘contemporary culture’. The premise of criticism serves us well. Large taken for granted ideas are usually simplistic, if not highly flawed, and normally reflect hegemonic rather than subaltern interests. In challenging them, we enable other perspectives and possibilities to emerge, and we can broaden our intellectual, moral and political capacities. Above all, we benefit by imagining education as if it is unaffected by market economic competition. Economic markets are essentially heterogeneous to individual and collective learning, and the professional processes of research and scholarship. When placing market economic competition in the foreground of our thinking – as governments, managers and our dayto-day circumstances often require us to do - it is easy to lose sight of the core tasks.
5 This paper reflects critically on national and global markets in higher education. It focuses initially on Australia, analysing the national-system market. Then it shifts its frame of reference to the world-wide education environment, noting the growing role of global market forces. The paper notes tensions at the global/ national interface; and the tension between global markets and global common good in education, and resituates Australian higher education in that global context. The paper closes with speculation about the future development of education markets and the potential for broadening the global policy discussion beyond the present narrowly framed GATS agenda. Although the subject matter of the paper is ‘markets’, this is not a paper in the economics of education, but in the political economy and sociology of education, with an eye also on cultural aspects. We can observe education markets as working subsystems, so that economics has something to tell the sociologist and the historian. But there is much else in education, apart from markets, or economy; and its endogenous economic dynamics can only be understood in the larger social and cultural context. It is the relationship, and the collision, between the economic, social and cultural elements in education that make the analysis interesting. It is an unfortunate peculiarity of mainstream economists that having seen an economy, they can see nothing else!
Market goods and common goods in education For the most part, orthodox economics limits its definition of education production to the individual earnings benefits. The larger collective contributions to wealth (’spillovers’) are little noted; and the effects on social relations, and cultural formation and knowledges, are completely missed. In fact there are many outcomes or ‘outputs’ of education, in the form of both individual and collective goods: the number of students educated and trained; the quantities and qualities of skills or knowledges learned; scholarship and artefacts of research; welfare, cultural and sporting activities; even the contribution of educational institutions to democracy, tolerance, social order, economic growth, regional development, cultural exchange, global understanding and ‘civilisation’. These are much too complex and heterogeneous to be summed up in a single economic metaphor, such as human capital2, let alone a single number for ‘the output’ of education. Arguably, a more useful metaphor is to imagine education as a common language of social communication and organisation consisting of an large element that is learned universally coupled with more specialised ‘dialects’ that only some of us acquire. This flexible education-language, always changing and growing, can be deployed for many purposes. It does not by itself lead to individual success, generate economic wealth and create social equality but it is part of an ensemble of practices which do this. 2
While the concept of human capital has limitations; for example it misses the networking effect, the flows of knowledge between individual human capitals; and it misses non-economic effects such as the formative effects of education on individual personality or collective values; it at least provides for the broad open-ended potential of education. In theory, human capital can be deployed in many ways. It is not limited to what we can immediately measure. Unfortunately efforts to measure the value of human capital have reduced the concept to already-existing utilities, such as graduate earnings (GCCA 2003). Arguably, individual earnings benefits are too narrow to stand for the whole of educational outcomes, and also run too deep in implying that education by itself determines earnings, without regard to such factors as labour market demand, the structuring of occupations, labour market segmentation, and work organization.
6 All efforts to summarise the social character of education are simplifications; and there is nothing ‘natural’ or fixed about it. Education is not the same in all places; nor does it remain constant. It is made and unmade by human actions. At this time it is useful to distinguish between two kinds of education outcome, common goods and market goods. Looking forward to the theme of the 2004 AARE conference, ‘Doing the public good’, these might have been called ‘public’ and ‘private’ goods, but it would take too much space here to untangle the terms ‘public’ and ‘private’ from their roots in liberal political philosophy and liberal economics (Marginson 1997b). ‘Public’ and ‘private’ have many non-economic connotations, but we can identify measurable commodity forms and market goods, and with less certainty, educational goods that are held in common. S
We derive education as common goods from the shared institutional infrastructure, provided below cost price, that produces general education at all levels, and basic university research. Common goods are not individualised commodities that confer benefits on some, while excluding others. Much of the consumption of common goods is joint – for example the contribution of education institutions to general literacy - and individual benefits of the common good kind are accessed freely without considerations of rivalry or excludability. When one class of children successfully completes primary education, everyone gains from this.
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Education as market goods refers to benefits of education that are settled on one individual to the exclusion of others. Such goods are readily bought and sold in markets; and made subject to competition. Market goods include programs of study in institutions subject to scarcity, such as independent secondary schools and certain universities; specialised tertiary training which confers status or earnings advantages on individuals; and commercialisable research.
These two different kinds of educational good are associated with two different modes of policy and practice. A policy focus on common goods emphasises problems of inclusion/ exclusion. It urges us to extend the boundaries of participation, to expand outputs and to serve ever more diverse clients and purposes. A focus on market goods leads to pricing in allocating resources and determining access; to the differentiation of educational outcomes, enabling a hierarchy of output values that can be linked to prices; and to the differentiation of producers via the ranking of institutions and courses. It also leads to management techniques that define outcomes, reduce costs, limit inputs, and facilitate consumption; such as marketing, the standardisation of services, and quality assurance. Common goods and market goods are in tension3. The same education cannot be both a common good and a market good at the same time. When education is produced as individualised commodities, it cannot be freely and democratically accessed as common 3
The principle of ‘equality of educational opportunity’ attempts to combine common goods with individual market goods, by promising universal and equal access to the competition for superior educational opportunities. Equality of opportunity is a transitional discourse, its appearance around the world was a key moment in the passage of modern education systems from privately managed elite participation at tertiary level to state-led mass tertiary participation. Yet the practice of ‘equality of opportunity’ is riven by tensions. The opportunities, promised to the social majority by the notion of equality of opportunity, are too readily secured by the social minority, with prior competitive advantages, that places itself at the head of every queue. But education is not bound to be always equally unequal. The more that strategies designed to secure a greater measure of educational equality are directed to education as common goods, the more that democratic access is secured. The more that equality strategies are focused on access to market goods, the less egalitarian is the result.
7 goods. Likewise, where education is produced and consumed on a common basis, fuller market relations cannot function. No one will pay the producer separately and directly for goods made freely available to all. Yet in real life education systems, we find common goods and market goods alongside each other. Often, common production and market production divide an education system between them: in most nations, the production of market goods takes its main role at tertiary stage. (Australia is unusual in the extent to which secondary education is market differentiated). Moreover, common goods and markets each provide conditions that assist production of the other. Basic research provides conditions for commercial research. Free primary education for all provides the grounding for individual investments in independent schooling later on. Likewise, as a market good education can give rise, separately and incidentally, to common goods: for example fee-paying international education fosters tolerance and cultural diversity.
Markets in Australian higher education Market goods are produced by market producers in markets. A market is an economic system of coordination on the basis of buyer-seller relations, as distinct from a system of bureaucratic planning and administration, or communities of scholars, or democratic communal forms of education (Marginson 1997b, pp. 27-50). Market goods have a dual social character, constituting at one and the same time use values for the consumer, and exchange values for the producer. It is helpful to distinguish between simple commodity production in education – where market are the means but not the end of production, and non-market objectives such as social access, or the formation of social leaders, or the reproduction of academic disciplines, may also come into play – and fully capitalist production, where the producer has no intrinsic interest in educational effects as such, or any loyalty to the product, only loyalty to the economic bottom line; and the expansion of production and accumulation of capital are ends in themselves. Markets incorporate five distinctive features: a defined field of production and consumption; competition between producers; identifiable products (‘commodities’); prices and monetary exchange between producers and consumers; and the human behaviours and values - entrepreneurship and minimisation in production, utilitymaximisation in consumption, contractual relations and so on - consistent with economic self-interest. Real life education systems normally incorporate some but not all of these features of markets in developed form. Higher education systems typically consist of a set of producer institutions (‘the market’) that together participate in several interlocking markets based on distinct products: undergraduate education, research degrees, research and consultancy, other services. We will now consider Australian higher education as a market system, noting the presence of the five features of markets Field of production and consumption When creating the Unified National System of higher education in 1988, which combined the university sector with the colleges of advanced education, Minister Dawkins announced that ‘institutions will be able to compete for teaching and research resources on the basis of institutional merit and capacity’ (Dawkins 1988, p. 28). In 2002, the publicly funded national system covered 896,621 students enrolled in 38 public universities, three private universities and three small private colleges: 98.2 per cent of
8 these students were enrolled in public institutions (DEST 2003). All universities were self-accrediting. At all these universities and colleges, academics were eligible to apply for government research funding. A 1999 survey identified a further 31,212 students enrolled in 79 accredited private institutions outside the national system (Watson 1999). Competition between producers In Australian higher education the competitive aspect of markets is well developed. As well as competing for social and academic prestige, institutions compete for economic revenues from public and private sectors. The principal economic competitions are first, for research funding, in the form of competitive academic schemes based on merit, and targeted research projects in the government and corporate sectors; and second, for tuition revenues from international and postgraduate students. Institutions also sell services in short courses, continuing professional education, and consultancy; and compete for philanthropic support. Universities also compete for the best quality research students; and institutions compete for the preferences of high scoring school leavers. As in the USA the minimum cut-off score for entry is a principal sign of prestige. Other signs of market prestige are research record, assets and revenues. The producer market is significantly differentiated and segmented (see more discussion below). Identifiable products Whether commercial or merely academic, the outcomes of research – project reports, publications, continuing grant applications, patents and copyrights – are readily understood in the product format. Teaching services are standardised on the basis of credentials. All programs of study offered by accredited tertiary institutions are lodged in the Australian Qualifications Framework, which structures levels. Program duration is defined by public funding, with some variation in full-fee markets. Students and their families can purchase published guides to the choice-based market, including data on university resources, graduate ratings of courses, and graduate starting salaries and employment rates. A 1999 study of the factors influencing the choices of prospective undergraduates found that ‘applicants focus on broadly conceived course and institutional reputations when making their selections’. Further, ‘course entry scores, and by implication “university scores”, serve as a proxy for quality in prospective students’ eyes’ (James et al. 1999). Applicants had low detailed knowledge of the teaching quality and lifelong earnings potential of particular courses. This kind of choice making is consistent with behaviour in a positional market (see below) not a human capital market. Monetary exchange In Australian higher education, the markets for international education and vocational postgraduate education are fully fledged capitalist markets. Universities set the prices they choose and can expand the number of students without limit. In international education, Australian universities are more market minded and entrepreneurially aggressive than American universities (Slaughter and Leslie 1997). International students provide 12 per cent of revenues. There is little subsidisation. While the USA provides scholarships to a quarter of international student (IIE 2003), in Australia in 2002, the ratio of full fee paying places to scholarship places was 61 to 1 (DEST 2003).
9 However, in undergraduate education, the Australian system is less market-like than American higher education, at least until the Nelson reforms for 2005 (see below). The USA provides student loans for tuition, enabling a high level of student mobility and creating a quasi-voucher national market4. In Australia there is choice-based interuniversity competition in each capital city but little national mobility. Less than 3 per cent of domestic undergraduate students (6537) paid fees in 2002, without support from government-backed loans. All other undergraduates were enrolled in HECS-based places with costs shared by student and government. HECS-based places are market goods, in the sense that all Australian university places create scarce positional value (individualised social status and income earning potential), so constituting commodities. But HECS places are not allocated on the basis of market prices in a buyer/seller relationship between students and higher education institutions. The number of HECS places is capped by government. The HECS is paid to government not institutions. Institutions are reimbursed for an amount equivalent to the HECS obligations of their students, as part of government funding. There are three standardised levels of HECS based on field of study, at AUD $3680-6136 per full-time student per annum in 2003. This is a substantial charge in world terms but the impact is modified by the income contingent character of the HECS. In 2003 repayments began when annual income reached $24,365 (Nelson 2003b). HECS debts are indexed to prices but there is no real interest rate. This contrasts with direct tuition fees and commercial loans in the USA. Market behaviours Australian universities exhibit entrepreneurial behaviour on a broad basis. The period since 1990 has been marked by a spirit of enterprise and expansion, led by executive leaders whose power within institutions has grown relative to traditional academic authority. In executive circles, the model of university as competitive business is influential. Universities have sharply increased fee-for-service teaching and consultancy; the hire of facilities; marketing and student recruitment, especially outside Australia; corporate structures to finance and market research, and manage commercial teaching; partnerships with other universities and corporations, fund-raising from many sources; financial planning and controls; asset management and investment. There are visible tensions between the business model of university organisation, and academic cultures. Among academics the incidence of entrepreneurial behaviours varies by field: it is strongest in the fields most successful in market terms, Business and ICT (Marginson and Considine 2000). However, there is little evidence that students behave like textbook consumers, and most student organisations reject that characterisation. Further marketisation from 2005: the Nelson reforms In December 2003 the national parliament adopted a package of further market reforms in higher education as negotiated by the Minister for Education, Science and Training, Brendan Nelson. The new system begins in 2005. There are three main changes. First, though the HECS remains a payment from students to government, covering a part only of the cost of the student place with the balance paid by government, it will move closer to the forms of a market fee. The level of HECS will be varied freely by the Universities, 4
Mobility is also facilitated by the high incidence of student residence among younger undergraduates, and student job-holding on campus.
10 at up to 25 per cent above current levels, becoming $0-7670 per annum in 2005. The prestigious universities are expected to opt for the maximum possible HECS. Second, public universities can charge direct tuition fees at whatever level they like for up to 35 per cent of the places in each course. Third, fee-paying students in both the public universities and accredited private institutions will be eligible for income-contingent loans under the government-backed FEE-HELP. Repayments under both HECS-HELP and FEE-HELP5 will be income contingent, with no real interest rate, though students taking loans under FEE-HELP will be subject to an additional annual surcharge of $2000. Under these new arrangements a differentiated price-based undergraduate market is created, based on a voucher-like system of subsidised loans. With the cost gap between full fee places and HECS places reduced, many students will opt for fee-paying places in prestigious universities and course rather than HECS places in less desired courses. The cost gap between HECS places in public universities and fee places in private institutions is also narrowed, making a large-scale private sector viable for the first time. For students overall, costs rise sharply. There are two compensatory policies: scholarships of up to $24,000 per course for a small number of students from low socioeconomic status or isolated backgrounds; and a higher income threshold for repayments under HECS and FEE-HELP, an indexed $35,000 per year (the higher repayment threshold also helps to make full fee places economically viable). Later, the government can create a unified undergraduate market, with variable levels of public subsidy per place, by lifting the cap on maximum HECS, extending HECS arrangements to the private sector, and abolishing the surcharge on FEE-HELP funded places. The HECS becomes reinterpreted, moving from the student contribution to the costs of a publicly funded place, to a public subsidy (‘scholarship’) covering part of the costs of fees. Annual full-time undergraduate tuition costs in the USA and Australia USA private universities (2002-03) USA public universities in-state (2002-03) Australian HECS (2003) Australian HECS + 25% variation (2005) Australian full-fees (2005)
21% of students pay over $36,000, 68% pay over $22,500 22% of students pay over $7500, 75% pay over $4500 varies by course between $3680-6136 varies by course between $4600-7670 [watch this space]
All data in Australian dollars with USD $1.00 = AUD $1.50; 2005 Australian charges expressed in 2003 prices Source for American data: Geiger 2003, p. 14
The Nelson reforms bring Australian cost levels and structures closer to those of the United States. One effect of increasing the domestic price of prestige Australian degrees will be to encourage investment in American university degrees. The Nelson reforms largely close the cost gap between an Australian HECS place and an American in-state public university place. In the longer term, full fee places supported by FEE-HELP will allow prestige Australian universities to charge fees approaching American private sector levels in sought after faculties such as Law, Medicine and Dentistry. A University of Sydney or Melbourne Law degree at $25,000 per year exceeds the production costs but students would pay the differential as it reflects the positional value of the degree. Most Law graduates from these universities enter high income earning careers. 5
The new fees/loans system from 2005 absorbs the PELS system of loans for fee-charging postgraduate courses introduced in 2002.
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Positional competition and market segmentation The main market goods produced in education are positional goods, scarce educational opportunities that are seen to confer on students potential or actual social advantages, such as places in elite schools and in universities. Positional goods confer advantages on some by denying them to others. As Fred Hirsch put it in his brilliant study of Social Limits to Growth (1976): ‘Positional competition … is a zero-sum game. What winners win, losers lose’ (Hirsch 1976, p. 52). Positional goods are produced in a hierarchy of value: some are more valuable than others. Positional goods do not require all the forms of an economic market, such as tuition fees, providing that they are scarce and confer social advantage, and they are produced and consumed competitively. Positional competition in higher education Within any one nation (though ‘within any one nation’ is a significant qualification, as is discussed below) there is an absolute limit on the number of positional goods at a given level of value. The number of such goods cannot be expanded without reducing unit value. When an exclusive education is more broadly available, it ceases to be exclusive. For example, when everyone can enrol in Medicine and become a doctor, Medicine ceases to be a high income earning high status profession. With an absolute limitation on the number of high value positional goods, there is also a limit on the number of high value producer institutions. Elite institutions do not expand production to meet the full demand, like capitalist businesses. For these institutions, the lodestone is not maximum market share or maximum revenue. It is consumer preferment and social status. The producer institutions compete for the custom of the most preferred customers, while consumers compete for entry to the most preferred institutions. Prestige sustains high student entry scores, and this very scarcity reproduces prestige. Wealth follows prestige: wealthy families invest in high value positions in education to maintain social leadership. Positional markets in higher education are a matching game in which the hierarchy of students/ families becomes synchronised with the hierarchy of universities, and student and family choices are over-determined by status. ‘Prestige ought to reflect quality, but far more is involved. As a function of consumer awareness, prestige is affected by the entire manner in which selective institutions market themselves and how they are treated in the media. Specifically, rankings advance their own definition of prestige, creating a ‘positional market’… The positional markers in this competition … are measures of selectivity, costs, or rank’ (Geiger 2003, p. 7). The production of positional goods necessarily combines competition with oligopoly and market closure. Whether high tuition is charged or not, this is never a freely competitive market. In elite institutions, the more intense is consumer competition for entry, the less the elite institutions are required to court the consumer in the conventional manner, by dropping prices or providing more and better services, providing that they sustain their prestige. And once a university obtains elite status, where it has a limited number of high value competitors, and its very status maintains student custom and research resources,
12 then to reproduce that status requires no more than ordinary prudence. Elite universities do not need to become fundamental innovators, though they need to look sharp6. One consequence is that at the top the positional hierarchy in education tends to be very stable over time. In Australia the leading institutions are all 45 years old or more7. At the bottom end of the market the positional competition operates differently. Institutions must compete hard to attract students to fill their places and secure revenues; and success is always provisional and contestable. But these institutions do not receive full recognition for the quality of good programs, because in a positional market their educational quality is over-determined by low social status. Intermediate institutions, combining some high value scarce places with low value access places, find it difficult to move up the ladder because of the limit to the number of high prestige producers. They cluster as ‘second choice’ producers, or specialists. Positional markets segment into different groupings, with the segments aligned in a vertical hierarchy and firm barriers limiting upward movement between segments. There are four distinct segments in the Australian system. Geiger (2003, p. 6) cites seven in the United States. Market segmentation in Australia The market segmentation of the Australian system has been shaped by history and funding. The elite institutions, the ‘sandstones’ or Group of 8 – Queensland, Sydney, NSW, Melbourne, Monash, Adelaide, WA and ANU - are the older foundations in the capital cities (excluding Hobart and Darwin)8. The elite segment is defined primarily by the pattern of school leaver preferment as measured by entry scores, and research prestige and performance as measured by the quantity of research grants, publications and research students9. The older universities, especially Sydney, Western Australia and Melbourne, also enjoy what are in Australian terms relatively high levels of income from donors and private investments, further insulating them from market forces.
6
Arguably, in terms of innovations in fields of knowledge, or educational method and organisation, Ivy League institutions are rarely significant path-breakers on a large scale. They are more likely to adopt a ‘wait and see’ approach, running with innovations that have become successful elsewhere. 7 In the United States the number and make-up of the leading ‘Ivy League’ universities has been largely constant since world war one; though it is interesting to note that within the Ivy League group, the position of public institutions has deteriorated relative to private institutions, following three decades of policy making in favour of the private sector (Pusser 2000). 8 The sandstone group here includes the Australian National University, Monash University and the university of New South Wales, although these are more recent post-second world war foundations for which (following the architectural metaphor) the title ‘Redbrick’ might seem more appropriate. Redbricks is the term used in Marginson and Considine 2000. However, in popular usage the term ‘sandstones’ has come to include these three, sharing as they do the prestige of the older foundations, and common membership of the elite segment in the ‘Group of 8’. 9 These same indicators of the elite segment – research performance, competitiveness as measured by student entry scores, and donations also come into play in the US News and World Report’s annual ranking of American institutions. The published US rankings also take into account faculty resources, student retention, graduation rates and subjective peer assessments of academic quality by university leaders. (Note that there is now only one American public university in the top 20).
13 The elite segment of higher education, in institutional order: USA and Australia United States (leading 30 institutions only) Princeton Harvard, Yale Caltech, Duke, Massachusetts IT, Stanford, Pennsylvania Dartmouth Columbia, Northwestern Chicago, Washington (St. Louis) Cornell Johns Hopkins, Rice Brown Emory, Notre Dame UC Berkeley Carnegie Mellon, Vanderbilt Virginia Georgetown UC Los Angeles, Michigan-Ann Arbor, Wake Forest Tufts, North Carolina-Chapel Hill William and Mary
Australia (‘Group of 8’) Australian National Melbourne Sydney Queensland Western Australia New South Wales Monash Adelaide
italics indicates public university. Sources: US News and World Report 2003, pp. 82-83; Australian rankings by the author.
Below the Sandstones, the further segments of the Australian market are S the ‘Gumtrees’, mostly the second or later universities established in each State, prior to the Dawkins reforms that began in 1987; S the ‘Unitechs’, large universities of technology in each state capital which had longstanding status as vocational institutions, and became universities after 1987; S the ‘New Universities’, other institutions that also achieved university status after 1987. Some are specialist regional and/or distance education providers10; S Private Universities. Bond has no HECS places and like Notre Dame is small and marginal to the national system (the Nelson reforms will change this: see below). The national government’s Institutional Grants Scheme (IGS) is allocated competitively on the basis of research performance11: this provides a useful indicator of segmentation (Nelson 2003b, pp. 103-104). In 2003 the Sandstones received between $24.8 million (Melbourne) and $15.3 million (Adelaide) in IGS grants: next were Flinders, Newcastle and Tasmania – Gumtrees with Medical Faculties - each with $7.0 million. The allocation of Australian Research Council Discovery grants follows a similar pattern. Research activity is open to merit-based contestation, but like school leaver status it is also open to prestige-generates-prestige effects, and it is sensitive to the funding base. Before 1987 the Gumtrees were funded by government to conduct common good basic research in all disciplines. They now find it difficult to sustain this function, given that public funding is down, revenues are more dependent on competitive position, and the Sandstones are better placed to attract competitive research funding and student fees12. 10
For detailed discussion of the segments in the Australian system see Marginson and Considine 2000, pp. 175-232. The IGS formula is income from research grants (60 per cent of the IGS), the number of higher degree research students (30 per cent) and publications over the previous two years (10 per cent) – see Nelson 2003b, pp. 103-104. 12 Twenty years ago then newer universities such as Murdoch, Griffith, La Trobe and Deakin were exciting research innovators in a number of fields, including education. But because of the decline of public funding per student since the mid 1980s, the non-sandstones are no longer able to accumulate levels of research infrastructure that would enable them to challenge the sandstones. 11
14 Segments of the positional market, Australian universities, 2001/ 2003 data Med
SANDSTONES U Melbourne U Queensland U Sydney U New South Wales Monash U Australian National U U Western Australia U Adelaide GUMTREES U Tasmania U of Wollongong La Trobe U Macquarie U Griffith U U of Newcastle James Cook U Flinders U Murdoch U U New England Deakin U UNITECHS Curtin U Technology Queensland UT U South Australia Royal Melbourne IT U Technol. Sydney NEW UNIVERSITIES U Western Sydney U Canberra Swinburne UT Victoria U Technol. Edith Cowan U Northern Territory U Southern Cross U Charles Sturt U Central Queensland Southern Queensland U Ballarat U Sunshine Coast PRIVATE UNIS Austral. Catholic U* U Notre Dame Aust. Bond U MINOR SITES [various] TOTAL
total students 2002
flexible delivery share 2002 %
total income 2002 $s mill
internat’l fee share income 2002 %
research students 2002 number share %
New ARC Discov 2003
NCG per EFT staff 2001
IGS funds 2003
$s
$s mill
Y Y Y Y Y Y Y Y
39,378 37,498 42,305 42,333 52,010 11,979 15,885 16,188
3.0 7.5 3.9 10.1 23.8 0 0 7.5
856.3 814.5 816.3 701.5 735.4 461.7 360.4 334.2
13.1 8.0 9.5 16.5 15.1 4.3 8.0 8.3
3908 3669 3473 2669 2935 1491 1830 1512
9.9 9.8 8.2 6.3 5.6 12.5 11.5 9.3
104 81 98 81 56 137 46 36
29,788 21,452 22,943 23,529 15,786 **-31,157 32,382
29.8 28.3 27.1 25.4 19.3 16.6 16.1 15.3
Y N N N Y Y Y Y N N N
13,750 18,764 24,930 27,239 30,969 23,502 13,189 13,644 12,734 18,202 33,033
10.9 1.1 0.7 17.5 7.5 7.5 17.0 10.9 24.1 81.9 54.7
199.7 210.1 314.0 295.9 350.7 256.9 173.5 177.2 156.0 148.3 325.8
7.1 20.5 8.1 18.9 11.6 10.9 6.2 7.8 10.4 3.9 8.5
1030 1024 1359 1031 1283 1236 679 905 761 820 899
7.5 5.5 5.5 3.8 4.1 5.3 5.1 6.6 6.0 4.5 2.7
22 14 24 23 22 22 6 10 7 9 11
20,499 14,931 10,332 12,409 7996 13,835 11,040 18,192 14,954 13,880 6624
7.0 7.0 6.3 6.2 6.1 5.4 4.9 4.5 4.3 3.8 2.9
N N N N N
33,240 39,192 30,627 38,280 29,290
11.5 15.1 22.0 3.7 0
360.9 365.2 286.1 478.2 287.7
23.3 15.6 15.8 21.5 17.1
1592 1105 1741 1831 918
4.8 2.8 5.7 4.8 3.1
11 13 13 15 13
6432 5121 5297 3346 6892
5.2 4.9 4.5 4.5 3.6
N N N N N N N N N N N N
35,361 10,419 14,404 19,475 23,829 5612 11,961 39,776 21,763 24,271 6615 3947
4.5 [0.04] [0.01] 1.9 24.4 26.3 52.9 83.4 40.9 81.0 0 11.3
296.7 105.8 233.2 277.8 202.9 91.6 89.7 187.4 210.6 118.6 106.9 32.5
12.9 11.5 14.6 10.5 12.1 2.8 7.6 5.4 37.7 13.3 4.9 12.0
942 265 537 654 824 213 449 434 316 326 187 62
2.7 2.5 3.7 3.4 3.5 3.8 3.8 1.1 1.5 1.3 2.8 1.6
4 2 10 1 3 2 1 5 0 3 3 0
5159 7332 6294 4372 3289 7885 5920 4132 2995 3832 3754 98
3.2 1.7 1.7 1.7 1.4 1.2 1.2 1.2 1.0 0.9 0.5 0.1
N N N
11,894 2832 n.a.
8.9 1.7 n.a.
104.4 20.2 n.a.
4.3 17.7 n.a.
338 27 51
2.8 1.0 n.a.
1 0 0
1496 0 n.a.
0.5 0.1 0.1
--
6250
--
69.4
--
896,621
19.2
11,614.1
-12.5
377
--
12
45,703
5.1
921
-15,165
0.4 277.6
* Private university funded as public universities. Med = Medicine Faculty (Y=Yes, N=No). All dollar amounts in current prices. Flexible delivery share = proportion of students who were external (distance) students and multi-modal students, distinct from internal (wholly campus-based) students. Research student share = number of research students as proportion of all students. IGS = Institutional Grants Scheme, awarded competitively on the basis of research performance (see note). NCR per EFT staff = National Competitive research Grants per effective full-time member of staff, teaching/ research staff research only. ** Not all ANU staff eligible as funded separately for research. New ARC Discov = new Australian Research Council Discovery Grants, awarded on academic merit across all fields except Medical sciences. For definition and discussion of segments see Marginson (1999); Marginson and Considine (2000, pp. 175-232). Sources: DEST 2003; Nelson 2003b; Australian Vice-Chancellors Committee; Australian Research Council.
15 Nevertheless, the Gumtrees mostly perform much better than the post-1987 universities in national competitive research grants per effective staff member. The Unitechs have focused on income generation via international education and postgraduate fees, and maintain small selected areas of research concentration rather than across-the-board research activity. The Sandstones can internationalise while sustaining general research intensivity. In the other segments, individual institutions exhibit obvious concentrations in specialist areas such as fee-based international education and distance education. Data on student entry scores are harder to obtain. In 1993 the Sandstones between them attracted more than 60 per cent of the top quintile of school leavers in each State/ Territory. The extreme case was Western Australia, with 86.2 per cent (DEST 1998)13. Thus the national market competition sustains sandstone hegemony at the expense of the resources and prestige of all other universities. ‘True quality’ in Australian higher education is centred on fewer institutions than at any time since the formation of the modern mass system in the 1960s. In such a market, where institutions draw on their competitive position to pay their own way, it is no longer possible for all universities to be world class universities, as once was the expectation in Australia. Under conditions of production for exchange values, there is ‘comparison in place of real commonality and generality’ (Marx 1973, p. 161). The producer hierarchy has become steeper than before, and the dominance of the elite institutions more difficult to contest. The next round of marketisation, in the Nelson reforms from 2005, will enhance these trends.
Limits of market reform In the 1990s the implementation of market reform was associated with downward pressures on the quantity of common goods, and on the quality of both market goods and common goods; manifest not just at the bottom of the market but across all segments. The rise in non-government revenues was accompanied by (and driven by) the reduction of per capita government funding, and the growth of university expenditures necessary to universities as corporate institutions involved in competitive markets: recruitment, off-shore sites, student servicing, financial planning, commercial developments, asset management, quality assurance, etc. Though total income per student did not decline, their new market functions added to the total work of universities and spread their resources more thinly. The outcome was a sharp reduction in the direct outlays on teaching and research that are integral to the production of common goods, and in the longer term underpin the quality of all goods. The proportion of university staff directly engaged in teaching and research activity fell to 37.5 per cent in 2001. The average student-teacher ratio rose from 14.2 in 1994 to 20.4 in 2002 (DEST 2003). Average students per academic staff member, Australian universities 1993–2002 1993 14.2
1994 14.2
1995 14.6
1996 15.6
1997 17.2
1998 17.9
1999 18.3
2000 18.5
2001 19.1
2002 20.4
Full-time equivalents. Source: DEST 2003
13
The next strongest university in WA was Murdoch with 12.1 per cent of the top quintile (DEST 1998).
16 As the material floor of the system slid downwards, the pressures on quality were exacerbated by policies in particular sub-sectors. When the government deregulated fee-based coursework Masters programs, institutions competed with each other for market share by shortening the length of programs. In this ‘race to the bottom’ via the iterative process of cross-institutional imitation, the normal length fell from two full-time years to fifteen months or one year. Institutions competed on the grounds that they could provide a Masters degree more quickly and cheaply than their rivals: in other words, they offered not more or better education, but less education. In research policy, the research system was modelled as a competitive economy based on measured outputs. The government allocated performance-based funding on the basis of universities’ record of grant income, research student numbers and publications. The outcome was that the quantity of publications outputs expanded but unit quality deteriorated. According to Butler (2003), between 1988 and 1998 Australia’s share of publications in the Science Citation Index increased by 25 per cent, but its share of citations declined from a position of 6th in a ranking of 11 OECD countries in 1988, to 10th place by 1993, and there was a widening gap with 9th place. ‘Australia’s increase in output appears to be at the expense of impact’. One reason was that Australian articles were published in lower impact journals: lower status journals achieved the same levels of government funding as high status journals, and were easier to access. These downward pressures on quality arose naturally from the operations of the new government-implemented markets. Nevertheless, these outcomes were conjunctural. Without dispensing with market reform per se, a different mix of funding and regulation could have avoided them. However, in other respects, the limits of positional markets are fundamental and incapable of correction by policy, rendering reform ineffective. When positional goods are produced in economic markets, and elite universities charge high tuition fees, this increases the value and scarcity of elite positional goods and strengthens the market dominance of elite producers and elite consumers. But the peculiar character of positional competition means that in some respects market reform is self-defeating even for elite consumers. When competition is intensified, and/or more of production takes the form of positional goods (as in the Nelson reforms), all else being equal this strengthens the status and resources of the top tier institutions. They raise prices above cost levels, and centre resources not on better services but on the augmentation of prestige. Students and their families have to invest more to achieve the same social outcomes. When everyone stands on tiptoe, no one gains a superior vantage. Meanwhile, the ‘race to the bottom’ in the lower segments forces quality down. The result is a perverse combination of individual frustration and dead-weight social costs. ‘The connection between individual and aggregate advance is broken’ (Hirsch 1976, pp. 7-8). Adam Smith’s invisible hand does not apply. Positional competition reduces the general welfare. Perhaps the extreme case of this individual frustration and deadweight social costs is the ultra competitive Korean education system. Parents’ spending on private tutoring, designed to secure their children’s entry to the most prestigious schools and universities, is at 3.2 per cent of GDP (OECD 2000)! For the most part these investments, entirely devoted to private benefits, fail to achieve their objectives. They cancel out. If the same resources were applied directly to institutions for
17 teaching and research, Korea’s position as a knowledge economy would be stronger14. This suggests that the way to collective advance is not through intensified competition, but investment in common goods, joint education infrastructure designed to benefit all: ‘When social interaction of this [positional] kind is present, individual action is no longer a sure means of fulfilling individual choice; the preferred outcome may be obtainable only through collective action’ (Hirsch 1976, p. 5). Effects of the Nelson reforms In Australia after 2005, the number of fee-based places underpinned by FEE-HELP will increase rapidly (Chapman 2003). This will expand the public subsidisation of positional investments by individuals - mostly from socially advantaged groups - through unpaid loans and administrative costs15, and further reduce funding for the direct grants to institutions vital to the common research and teaching infrastructure. Much of the fee revenue will be squandered on the costs of competition, such as marketing. At the same time, fees and variable HECS will widen the resource gap between the sandstones and other universities, as the sandstones are best placed to charge high prices. Drawing new private investments from families used to investing in secondary education, the top five or six universities, at least, will strengthen their resource base. Part of this will be ploughed into research capacity, including remuneration for high performers, because research is the global source of prestige and competitiveness, again widening their advantage over other universities. At the lower levels of the hierarchy, there will be a ‘race to the bottom’ as institutions struggle to fill their places. Both of their strategic options – varying HECS charges downwards, and investing resources in marketing – will reduce the resources for teaching and learning, and thin out their research capacity. In terms of system structure, the overall effect of the Nelson reforms will be to stretch the vertical hierarchy and widen the gaps between the segments. Price variation will enable a more differentiated set of economic choices, but these will be matched by steep variations in educational quality. Because high value course choices in the researchintensive universities will command higher prices, and research intensive provision itself – once government dependent, but now increasingly market-dependant - will be firmly restricted, it will become more difficult than before to access world class education. The protection and extension of market relations in education helps those with prior economic, social and cultural advantages to consolidate their position. The driving force of the Nelson reforms is the economisation of social privilege in education. First the sandstones are restructured as a high cost segment dependant on private investment. 14
Another case in point is Malaysia, where 0.6 per cent of GDP – much less than the investment in private tutoring in Korea, but still considerable given that the whole Australian public expenditure on tertiary education is 0.8 per cent of GDP - is allocated in government scholarships, grants and loans to students and families with bumiputra ethnic identity to secure for them a disproportionate control over tertiary places and professional jobs (OECD 2003). As with the private investment in tutoring in Korea, much of this Malaysian public investment in social position ends up in someone’s pocket and fails to find its way into common educational facilities – institution-based resources that are broadly available and can be drawn on for the production of a variety of common and market goods. To the extent that the monies are fed back to institutions in the form of subsidised tuition fees, the targeted character of the funding ensures that the benefits are confined to some at the expense of others. 15 In the first full year of operation of the Commonwealth government’s Postgraduate Education Loan Scheme (PELS) in 2002, 11,387 students, constituting 33 per cent of all fee paying domestic postgraduates, took out a PELS loan at an average liability per full-time equivalent student of $10,076 for one year (Nelson 2003b, p. 68).
18 Second, the price mechanism is installed to mediate access. Competition is universal, quality becomes differential. The social pyramid is matched to the educational pyramid. It is a neater, tighter (and fiscally cheaper) positional market: one that is more closed, with less threat of competition from below. Previously in undergraduate education the HECS modified the social impact of market forces; though after the HECS increases in 1997, in the most expensive Band 3 courses, there was a fall in the participation of men from low socio-economic backgrounds (Aungles et al 2002). The Nelson reforms will generate sharper inequities. The purpose that has guided the HECS, user charges without deterrent effects, has been abandoned. At the bottom of the market costs will be low, as well as quality, so that total participation may not fall. The more important effect is the stratification of participation. The rising cost of HECS, fees and income contingent loans will stream low income families away from the high cost high value places. By strengthening the competitive position of the Sandstones, and comforting them with an extra resource cushion, the reforms will reduce pressures for efficiency and customer responsiveness at the top end. The Sandstones will probably engage in the tuition inflation16 and unproductive ‘feather-bedding’ of high status units typical of the US. They will not need to innovate to maintain a domestic edge: the extent to which they are under pressure to innovate will depend on their openness to global competition. Closer market relations with leading Anglo-Australian families, and less reliance on international fee revenues, could encourage insularity. But unlike the USA Australia is not an imperial power. In the longer term its university quality will be globally referenced.
Opening the global dimension So far the analysis has focused on national markets. However, institutions, and national higher education systems, are also globally connected. Universities are simultaneously implicated in local, national and global activities (Marginson and Rhoades 2002; Marginson and Sawir 2003). Cross-border relations are partly structured by universities themselves, partly in bi-lateral and multi-lateral dealings between national governments. Here the term ‘global’ does not mean ‘universal’, the world and everything in it. Rather ‘global’ refers to systems, networks and relationships flowing across and between nations and institutions. ‘Globalisation’ is the process of widening, deepening and speeding up of this worldwide interconnectedness (Held et al. 1999). In higher education the global dimension includes cross-border communications, cross-border flows of people (staff and students, which as noted includes fee-paying international students); cross-border flows of research and knowledge, cross-border flows of money in international educational trade; and inter-country and inter-institutional collaborations, negotiation and recognition protocols in many areas. The term ‘global market’ refers to an economic competition located in this global dimension constituted by cross-border relationships; for example the education of international students.
16
In the United States between 1978 and 1996, tuition costs almost doubled, but process and disposable income rose by just over 50 per cent. The private institutions are clearly ‘over-priced’ (Geiger 2003, pp. 8 & 15).
19 Global common goods and global market goods As well as producing national common goods and national market goods, higher education institutions produce global common goods and global market goods. Global common goods – or ‘global public goods’ (Kaul et al 1999; Kaul et al 2003) – are collective goods common to many countries. Examples are international security, ecological sustainability and the benefits of stable networks in transport, communication, financial and knowledge. Higher education depends on global common goods such as communications, and is itself an important producer of global common goods, including research and knowledge transfer; and the movement of skilled professionals across borders, contributing to the global circulation of skills, and the hybridisation of cultural practices. Higher education contributes to global business integration, tolerance and international understanding. Global market goods in higher education include fee-paying education, commercial and other competitive research, and doctoral training. Global common goods and global market goods produced in higher education Global common goods freely exchanged knowledge and research communications and information networking cross-border people mobility (student & academic) international cultural exchange, tolerance, hybridity
Global market goods research and intellectual property software and commercialisable ICT systems cross-border foreign education (positional goods) postgraduate research training (positional goods)
Universities are the most important nodes in global research and scientific networks. In many disciplines, the number of cross-country research projects has grown17. Global research relationships embody both markets goods and common goods. The market goods include both fully capitalist goods and simple commodity production. Some subsectors of research such as biotechnology are shaped by economic markets, with the objective of saleable intellectual property; while other sub-sectors such as research in education are powered by traditional academic exchange, driven by the benefits of sharing and the competition between individuals for collegial prestige and grant revenues. At the same time, the provision and circulation of knowledge is perhaps the main role played by higher education in producing global common goods. Knowledge is as close to a ‘natural’ common good as it is possible to get. Once knowledge is created, in the long run it is impossible to exclude anyone from its benefits. Once it enters the public domain its use by one person does not harm another (Stiglitz 1999). Like research, global student movement embodies both common goods and a mix of market goods. There is the commercial provision of fee-based programs for international students, subsidised markets in some countries, and student exchange embodying the common good benefits of cross-border learning and mutual understanding. Arguably, in global student movement, the market element is more important than it is in research. International education is dominated by a global positional market, linked to migration.
17
For example at the Australian National University (Marginson and Sawir 2003).
20 Global markets and world markets There are two kinds of global system in higher education. First, activities that are an outgrowth of national education systems and based in the traffic between them, such as the international education of undergraduates. This kind of global market does not subsume or subordinate national markets to it. It is analogous to international law, which functions at the borders of national legal systems without dominating them. Other global educational activities are constituted in singular worldwide systems that suborn local and national activities. In research the worldwide system of codification, publication and knowledge exchange, conducted in English, has become dominant. There are still research networks circulating knowledge within single nations and single institutions, but such research networks play a minor role. This global activity is analogous to, say, the worldwide market in currencies, a singular worldwide market operating on a planetary scale. When it take a competitive form, this kind of global system will be referred to as a world market to distinguish it from global markets as defined above. Closely associated with research, doctoral activity is a world market in formation, funded by governments and American philanthropy. ‘Doctoral education, particularly in the sciences, is perhaps the most perfectly competitive market in higher education’ (Geiger 2003, pp. 3-4), with a classic dual positional competition: departments compete for the highest scoring students; students seek places in the most preferred departments18. Doctoral universities in the United States, and the leading UK universities, are emerging as a world graduate school, especially in relation to developing countries. Australia sustains a viable national system of research training, but bright students can gain a positional advantage by enrolling in the USA or Oxford and Cambridge. American universities compete for the best students from everywhere. More than half their doctoral graduates in Engineering, and over 30 per cent in natural sciences, are foreign.
‘International education’: the global positional market The global market in international education is a global market in positional goods. This global market has a complex relationship with national positional markets (see below). In most countries, national positional competition still predominates. At the same time the global market in positional goods is growing rapidly. The global market plays a more important role in some countries than others. While 2 per cent of students in OECD nations access foreign education each year, in some countries global activity constitutes a much higher proportion. In Australia in 2001, incoming students constituted 13.9 per cent of students in the domestic tertiary system. In Malaysia in 2001, outgoing tertiary students were 6.0 per cent of the domestic student population (OECD 2003).
18
Note that the ‘production’ and ‘consumption’ of research training also exhibits non-commercial behaviours, tending as much to output maximisation as to cost efficiency. Graduate students are more readily understood as co-producers than as consumers.
21 Student flows in the worldwide environment of higher education
EUROPE
ASIAPACIFIC
UNITED STATES
(China, India, Korea, Japan, Taiwan, HK, Singapore, Malaysia, Indonesia, etc.)
(and UK)
AUSTRALIA CANADA, NZ
The economic character of this global market varies by nation. International education is fully commercial in the UK, Australia and New Zealand; while it is heavily subsidised in Germany, Japan and the USA. Nevertheless, it is meaningful to refer to a global market. There is a defined field of production (higher education) with identifiable products (degrees and diplomas), converging worldwide around a Bachelor/Masters/ Doctoral model along American lines. In most nations, international students pay fees. Nations and institutions compete for the status and/or revenues brought by foreign students, though some compete more vigorously than others. Students make choices between competing offerings, in which they seek to maximise individual positional outcomes. Worldwide student flows Looking at the global positional market overall, it is structured by student flows that are uneven and asymmetrical. Individual institutions, and nations, are variously placed. Some nations are primarily exporters, others are primarily importers. A third group, including Japan and parts of Europe, exhibit a pattern of more balanced two-way exchange. The diagram simplifies the picture by leaving out Latin America, Africa and central Asia, concentrating on the dynamic parts of the global market. It demonstrates: S S
S
the magnetic attraction of American higher education, associated superior positional opportunities. US universities charge fees, but also offers scholarships; the UK, Australia, Canada and New Zealand sitting in the American slipstream, operating on a more entrepreneurial basis than American institutions. They gain a referred power as lesser English-language educational providers and sites for migration, often as a transitional stage in passage to the USA; the massive demand for foreign education in Asia-Pacific, with its inadequate domestic capacity, and desires for foreign education as a positional good;
22 Principal exporters and importers of tertiary education, 2001 OECD exporter nations
International students number
USA UK Germany France Australia Japan Canada Spain Belgium Austria
475,169 225,722 199,132 147,402 110,789 63,637 40,667 39,944 38,150 31,682
Nations importing from OECD
proportion of all students
3.5% 10.9% 9.6% 7.3% 13.9% 1.6% 4.6% 2.2% 10.6% 12.0%
International students number
China Korea India Greece Japan Germany France Turkey Morocco Italy
124,000 70,523 61,179 55,074 55,041 54,489 47,587 44,204 43,063 41,485
proportion of all students
n.a. 2.3% n.a. 11.4% 1.4% 2.6% 2.0% 2.6% n.a. 2.3%
Source: OECD 2003
S
the extensive student flows within Europe, largely of a non-commercial nature. European universities also educate many students from the developing world.
The demand for global positional mobility Between 1995 and 2001, the number of foreign students in the OECD countries rose from 1.306 million to 1.581 million, out of a world total of 1.645 million (OECD 2001). The growth of the global market in positional goods is both cause and effect of the larger trends to globalisation. On the supply side this growth is partly driven by entrepreneurial nations such as the UK and Australia. On the demand side, it is driven by two factors. First, an inadequate number of tertiary places in many countries, especially in China and Southeast Asia. Second, perceptions of students and families that a global education, particularly an English-speaking one, offers opportunities for upward positional mobility. While all English-speaking education systems are targeted, research on student preferences suggests there is particularly strong demand for an American education (for example Mazzarol et al 2001). The global positional market is especially important in nations where opportunities for upward mobility are constrained at home, but even where the number of tertiary places of good quality is adequate to meet domestic demand, as in Korea and Japan, there is strong positional demand for an Englishlanguage foreign education. This is unlikely to diminish19. Foreign education confers positional opportunities in three spheres, albeit varying by field of study. First, in the home nation, a foreign education offers both skills and prestige. Second, there may be prospects of working in and migrating to the nation where the foreign education is acquired. American immigration policies encourage high skilled graduates to stay, for example in ICTs and research. Third, there are a growing number of mobile positional opportunities within the global flows themselves, in fields such as Business, ICTs, Engineering and technologies, and scientific research (OECD 2002). 19
Like participation in higher education itself, once the acquisition of foreign education becomes a normal practice of middle class families, it becomes not so much a method of gaining a special advantage, as a ‘defensive necessity’ (Hirsch 1976) for maintaining social position and retaining the effectiveness of the family business.
23 Principal sources of international students, USA and Australia (2002) USA 2002-2003 India China Korea Japan Taiwan Canada Mexico Turkey Indonesia Thailand
74,603 64,757 51,519 45,960 28,107 26,513 12,801 11,601 10,432 9982
Australia 2002 Singapore Hong Kong China Malaysia China mainland Indonesia India USA UK Thailand Taiwan
29,956 26,956 23,725 19,596 11,981 8390 8325 5752 5202 3977
Sources: IIE 2003; DEST 2003
Despite the frequent movement between contiguent European countries, four of the five largest importing nations are in the Asia-Pacific: China, Korea, India and Japan. Malaysia, Indonesia, Hong Kong and Singapore are top 20 importing nations (OECD 2003). According to the Institute of International Education, which is a different data collection to that of the OECD, American higher education institutions educated 586,323 international students in 2002-2003 (IIE 2003): American universities recruit students from all over the world but the largest group is from the Asia-Pacific. The overwhelming majority of Australia’s foreign students, 85 per cent, are from Asia-Pacific. In the AsiaPacific region there is immense potential for the further growth of demand for education as a global positional good. The Asia-Pacific nations constitute well over half of the world’s population, including three of the four largest nations: China, India and Indonesia. Ten of the world’s 16 cities with over ten million people are in Asia-Pacific, representing immense concentrations of present and future demand for education. In much of the Asia-Pacific the habit of private investment is entrenched. In Korea 70 per cent of domestic expenditure on tertiary institutions is private spending, in Japan 56 per cent, in Indonesia 56 per cent, in China 43 per cent (OECD 2003)20. In China there have been two decades of high economic growth and the nation could produce one fifth of world GDP by 2050. Expenditure on tertiary education is relatively low and in 2000, only 8 per cent of the school leaver age group entered degree level course in China, a third of the level in Australia. Unmet demand in China will increase steeply because though China will expand and upgrade domestic provision, the growth of middle class demand for tertiary education will outstrip the roll-out of new institutions and places. The IDP projects that total demand for tertiary education in China will rise from 8 million students in 2000 to 45 million in 2015 (Bohm et al 2002). Chinese demand for foreign education will dwarf the capacity of exporter countries, even the USA. Thailand and Indonesia are other countries where unmet demand will be high even without the extra incentive constituted by the positional value of foreign education.
20
Even in Malaysia, Thailand and India, where the rate of household investment in the national system is much lower, many middle class families have become accustomed to investing in international education.
24 Mega-cities, world and Asia-Pacific region, 2000 and 2015 cities projected to have more than 10 million people in 2015 Asia-Pacific countries:
India Bangladesh Pakistan China Japan Indonesia Philippines
Mumbai Calcutta Delhi Dhaka Karachi Shanghai Beijing Tianjin Tokyo Osaka Jakarta Metro Manila
other countries:
United States Brazil Mexico Argentina Nigeria Egypt Turkey
New York Los Angeles Sao Paulo Rio de Janiero Mexico City Buenos Aires Lagos Cairo Istanbul
population in: 2000 2015 millions
millions
16.1 13.1 12.4 12.5 10.0 12.9 10.8 9.2 26.4 11.0 11.0 9.9
22.6 16.7 20.9 22.8 16.2 13.6 11.7 10.3 27.2 11.0 17.3 12.6
millions
millions
16.7 13.2 18.0 10.7 18.1 12.0 8.7 9.4 9.0
17.9 14.5 21.2 11.5 20.4 13.2 16.0 11.5 11.4
Source: ADB 2003
When domestic systems in East and Southeast Asia develop in terms of size, resources, academic standards and prestige, as Singapore and Hong Kong are already developing, this will reduce both unmet demand, and the positional status of foreign education. Nevertheless, the continued global hegemony and superior wealth of the United States will sustain global mobility. In the English language countries as a group, the limitations on the number of international students will be not demand, but supply capacity, and visa and immigration policies. The future distribution of Asia-Pacific demand for an English-speaking education, between the USA, UK, Australia and other countries, is less certain, being partly determined by relative prices, prestige and entrepreneurship.
Structures of the global market Like national markets in higher education, the global market in higher education is hierarchical. Export nations are in the developed world: 93.5 per cent of all international students are enrolled in the OECD nations. Led by the USA, the English-speaking nations lead the global hierarchy. Australia is the fifth largest provider of global tertiary education, but the third largest provider of degree level courses in universities after the USA and the UK. With much of the movement of students within the OECD group consisting of student exchange within Western Europe, the main purchasers of fee-
25 based international higher education are nations in the developing world. It is in the developing world that unmet demand is largest and there are the greatest positional advantages to be gained from acquiring an international education. Within the developed world, there is significant movement from other OECD countries to fee-paying courses the USA, reflecting its role as the global positional apex. In other words, global education is produced and consumed in terms of a worldwide economic and cultural hierarchy. Global inequality, particularly between developed and developing world, is necessary to the commercial market in international education (though global inequality is not necessary to other forms of educational exchange, as the heavy traffic of student exchange within Western Europe demonstrates). For the most part it is global hierarchy that creates global positional goods. It is global hierarchy and unevenness that makes export services profitable. As Marx notes: ‘Capital invested in foreign trade can yield a higher rate of profit … because it competes with commodities produced by other countries with less well developed production facilities, so that the more advanced country sells its goods above their value…’ (Marx 1981, pp. 344-345). As noted, the advantage of countries such as Australia will diminish to the extent that importing nations develop better and more extensive education systems of their own. The global educational market also tends to reproduce these inequalities of power. It sustains hierarchies between the developed and the developing nations. It maintains the unequal value of education in the developing world compared to the developed world, and creates an asymmetry in student flows and cultural engagement. Students from developed nations rarely enrol in developing countries. By spreading English language and Americanised practises, global education markets colonise national cultures and identities. Economically, the flow of direct revenues is largely from the developing countries to the export nations. Education aid dollars rarely compensate. Global higher education, like global business activity, also fosters globally-connected local elites in every country, widening the gap between haves and have nots. Global positional mobility in education, and the growing salience of foreign (particularly American) universities as reference points, tend to relativise national universities and national positional hierarchies, overshadowing the authority of the leading national universities. Nevertheless, the reproduction of global inequalities is not all that happens; and some flows are two-way. The question of who benefits from the global flows, and how much, is an active policy issue in many countries (OECD 2002). International education disperses knowledge and skills which feed into emerging university systems. Where educational capacity is inadequate to meet national needs, international education partly financed by the students themselves, is often seen as a useful adjunct to national capacity. Given also that global positional investment by individuals and their families is inevitable, the question for governments in many developing countries is not how to stop that investment, but how to maximise the flow-back of people, ideas and capital. The structure of the hierarchical, asymmetrical global education market will now be analysed in three ways: (1) the global network of individual universities; (2) the global map of educational languages, and (3) the hierarchy between nations.
26 Institutions as global players Direct university-to-university dealings are becoming more extensive and intensive. Information and communication technologies (ICTs) enable them to network worldwide in real time. Even where Internet penetration is poor universities are among the first sectors to secure global communications linkages. Direct dealings are also facilitated by the worldwide trend to corporate autonomy in higher education. The most globalised sub-sector is the major research universities. They collaborate actively on a world scale; and tend to have the most autonomy vis a vis governments; though this varies by nation. American universities dominate institution-to-institution networks. While universities in the different regions (Europe, central Asia, Asia-Pacific, Australia/New Zealand, Africa, Latin America, North America) tend to have partial linkages with other regions, they are nearly always linked to universities in the United States, reflecting the role of the USA as the global communications and business hub (Castells 2001). American universities also enjoy the primary status as individual institutions, particularly leading private universities such as Harvard and Stanford. They are followed by British and Western European universities, universities in other English-speaking countries; and in Asia-Pacific universities from Japan, Singapore, China and Hong Kong (Marginson and Sawir 2003). American doctoral universities provide a universal model of practice, setting off chains of imitation, a process exacerbated by web-based communications. Yet the conditions enabling the success of American universities are not reproducible. World hegemonic power is not readily imitated, nor is the wealth of American universities: only Oxford, Cambridge and the leading Japanese universities are in the same league. Recently the Shanghai Jiao Tong University Institute of Higher Education compiled a ranking of world universities based on research and academic performance. The criteria were the number of Nobel laureates associated with the university, the number of highly cited researchers (1981-1999), articles in Nature and Science (2000-2002), articles in cited in the science index and the social science index, and academic performance per academic staff member using the above indicators. This ranking system contrasts with that of the influential US News and World Report, which includes in its ordering of American higher education, not just research performance but subjective rankings by peers, academic resources, student selectivity and graduation rates. The US News and World Report rankings are a more comprehensive measure of market power. Nevertheless, exchange value is not the same as use value. Reputation and price do not necessarily correlate with quality of the product. The Shanghai measure, based on research and publication record alone, provides the better surrogate for academic quality (no measures of teaching quality are included in either set of rankings)21. 21
The ordering of American universities as listed here differ significantly from the top 30 listed by the US News and World Report in the earlier table. When we move from the wholistic market rankings used by the US News and World Report, to the purely academic measure used by the Shanghai Jiao Tong University, the ordering of the American institutions changes. Several American private universities fall sharply - for example Princeton drops from first th American university to sixth American university, Duke University from equal fifth to 25 , Dartmouth College from rd th rd th th th ninth to equal 63 , Rice University from equal 16 to 43 , Brown from 17 to equal 49 , Emory from equal 18 to st th 61 , Notre Dame from equal 18 to outside the American top 100. Meanwhile the University of California public system moves from two universities in the top 30 American universities, to six universities in the top 30, and UC th Berkeley moves from 20 position in the USA to fourth in the USA and in the world. With a few exceptions such as the rd th University of Virginia, that slips from 23 to 45 , the American public universities tend to do much better when the measures are confined to the research and publication record alone, as in the Shanghai rankings.
27 World’s top 101 universities ranked on research and publications, according to the Shanghai Jiao Tong University Institute of Higher Education, 2003 institution 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 32 34 35 36 37 38 39 40 40 40 43 44 45 45 47 48 49 49
Harvard Stanford California IT California - Berkeley Cambridge Massachusetts IT Princeton Yale Oxford Columbia Chicago Cornell California – San Francisco California- San Diego California- Los Angeles Washington, Seattle Imperial College Pennsylvania Tokyo University College London Michigan–Ann Arbor Washington, St. Louis Toronto Johns Hopkins Swiss Fed IT Zurich California – Santa Barbara Wisconsin Madison Rockefeller Northwestern Kyoto Colorado - Boulder Vanderbilt Duke Texas – SW Med Centre British Columbia California - Davis Minnesota – Twin Cities Rutgers – New Brunswick Karolinska I - Stockholm Pennsylvania S – U Park Utrecht Southern California Edinburgh California - Irvine Illinois – Urbana Champ. Zurich Texas - Austin Munich Brown Australian National
Source: SJTUIHE 2003
nation USA USA USA USA UK USA USA USA UK USA USA USA USA USA USA USA UK USA Japan UK USA USA Canada USA Switzerland USA USA USA USA Japan USA USA USA USA Canada USA USA USA Sweden USA Netherlands USA UK USA USA Switzerland USA Germany USA Australia
institution 51 52 53 53 55 55 55 58 59 60 61 61 63 64 65 65 67 68 68 70 70 72 72 74 75 75 75 78 79 80 81 81 83 84 84 86 87 88 89 90 91 92 93 94 95 96 96 98 99 99 99
Case Western Reserve North Carolina – Chapel Hill Osaka Pittsburgh Arizona Bristol New York Heidelberg Uppsala Technical U Munich Rice Carnegie Mellon Oslo Tohoku Paris 06 Copenhagen Virginia Nagoya Sheffield Roma – La Sapienza Texas A & M Uni College Station Rochester Paris 11 Helsinki Maryland – College Park Florida King’s College London Leiden McGill Purdue – West Lafayette Ohio State – Columbia Utah Tufts Vienna Groningen McMaster Michigan State California –Riverside Manchester Iowa Gottingen Melbourne Lund Hebrew U Jerusalem Free U Berlin Basel Illinois - Chicago Boston North Carolina State - Raleigh Ghent Emory
nation USA USA Japan USA USA UK USA Germany Sweden Germany USA USA Norway Japan France Denmark USA Japan UK Italy USA USA France Finland USA USA UK Netherlands Canada USA USA USA USA Austria Netherlands Canada USA USA UK USA Germany Australia Sweden Israel Germany Switzerland USA USA USA Belgium USA
28 Regardless, the Shanghai Jiao Tong University Institute rankings underline the global academic domination exercised by American and to a lesser extent British universities: S of the top 20 universities, 15 were from the USA and four from the UK. There was only one other nation in the top 20, Japan via the University of Tokyo; S of the top 50 universities, 35 - more than two thirds - were from the USA; S of the top 101 universities, 58 were from the USA and a further nine from the UK (altogether two thirds of the top 101 universities were from these two countries); S A total of 73 out of the top 101 universities were from the English-speaking countries, including Canada and Australia. Most other universities in the top 101 (19 out of 28) were from central and northern Europe - Germany, Austria, Switzerland, the low countries and Scandinavia – which form a related cultural zone. In total the world’s top 101 universities included five German universities, five from Japan, four from Canada and three from each of Switzerland, Sweden and the Netherlands. Australia had two universities in the top 101, the Australian National University at equal 49 and the University of Melbourne at 92. The Shanghai Jiao Tong University Institute did not give precise rankings after 101, but bracketed the universities in groups of 50. It included a total of 12 Australian universities in the top 500, including Sydney and Queensland (between 102 and 151), Monash, NSW and Western Australia (152-200), Adelaide (201-250), Macquarie (301-350), Newcastle and Tasmania (351-400) and La Trobe (401-450). There were 160 American doctoral universities in the top 500. A striking feature of the Shanghai Institute table is the absence from the top 200 of many long established leading national universities from around the world. Once relativised in the global setting, these traditional positional leaders emerge as weaker in competitive terms, than they look in the national setting. American institutions exercise worldwide dominance not just because they are strong institutions but because they are American. Despite the growing role of direct universityto-university dealings these institutions are what they are because of their national context, and the relationship between their nation and the rest of the world. It would be a mistake to imagine the worldwide environment simply as a network of institutions that increasingly bypasses nation-states. As noted, cross-border relationships are partly structured by universities themselves, partly in bi-lateral and multi-lateral dealings between national governments. Education is still regulated nationally. And universities are capacity-determined: while they have plural sources of finance, universities in most countries continue to be resource dependent on governments. In every country, national identity is a component of university identity, especially in a university’s global dealings. Global linguistic hierarchy and asymmetry A key element of the global hegemony and hierarchy exercised in and through education is language, particularly English. English is both objective and medium of the high demand component of cross-border education. Worldwide in 2001, 55.1 per cent of cross-border international students were studying in the Anglophone countries: USA, UK, Australia, Canada, New Zealand and Ireland. The English-speaking countries enrolled 71.6 per cent of all international students from Asia (OECD 2001). Studies of student choice find that the acquisition of linguistic and cultural skills in English is one of the primary motivations for positional investment by international students.
29 Role of Anglophone countries in education export, 2001 Nation
United States United Kingdom Australia Canada New Zealand Ireland Total Anglophone
Number of international students
475,169 225,722 110,789 40,667 11,069 8207 871,623
Proportion of all of the international students educated in OECD countries
% 30.1 14.3 7.0 2.6 0.7 0.5 55.1
Number of international students from Asia*
294,230 74,400 77,849 14,630 7971 1399 470,479
Proportion of all of the Asian students educated in OECD countries
% 44.8 11.3 11.9 2.2 1.2 0.2 71.6
* includes Middle East and Central Asia.
Language is closely implicated in economic and cultural life. The extension of the role of a particular language usually has implications for relations of power. English plays a key role as the medium of Anglo-American economic and cultural globalisation: ‘It is English that stands at the very centre of the global language system. It has become the lingua franca par excellence and continues to entrench this dominance in a self-reinforcing process. It has become the central language of communication in business, politics, administration, science and academia as well as being the dominant language of globalised advertising and popular culture. The main language of computing is English – providing the written language for Windows and Internet protocols. Estimates suggest that 80 per cent of all the electronically coded information stored in the world in the world is in English. English is also the language used for international safety procedures such as air traffic control… In a sense this dominance is hardly surprising. As the fortunes of other languages show, language use is closely connected to the rhythms of power. English has become the native language of the two modern hegemonic powers, Britain and the USA. Moreover that power has been exercised in all domains of human life – the economic, political and military of course – but in the cultural domain as well’ (*Held et al. 1999, p. 346). As a global language English ought to be seen as a common global property; but despite efforts to foreground variations within English (‘Englishes’), the cultural contents of English is standardised from the UK and the USA. No doubt by extending the status and usage of English throughout the developing world, the global market reinforces the patterns of linguistic hierarchy and hegemony. In some nations the growing educational role of English tends to weaken or displace the role of national languages. David Crystal (2003, p. 111) tells of a story of the Prime Minister of Sri Lanka who was concerned that the national language policy in schools was too successful. Farmers could no longer read the instructions in English on their bags of fertiliser. She resolved to return to an English as a Second Language policy. Rather than require foreign manufacturers to increase their costs of production by producing bi-cultural labels, it was ‘easier’ to overturn the educational-cultural norms of a whole developing nation.
30 Major languages used in the Asia-Pacific countries, 1999-2000 language
main countries of use
English Putonghua (‘Mandarin’) Hindi and Urdu Bengali (aka Bangla) Bahasa (Malay/ Indonesian) Nihongo (Japanese) Punjabi Wu Jawa Marathi Hankukmal (Korean) Viet (Vietnamese) Telugu Yue (Cantonese) Tamil
Australia, New Zealand and widespread China, Taiwan and migration India, Pakistan, Nepal and migration Bangladesh, India regional and migration Indonesia, Malaysia, Singapore Japan and migration Pakistan and India regional, migration China regional Indonesia regional (Java) India regional Korea and migration Vietnam and migration India regional, Malaysia China regional incl. Hong Kong, migration India and Sri Lanka regional, migration
number of speakers world-wide million 1000 1000 900 250 160 130 85 85 80 80 75 75 70 70 65
Language groups refer to a primary language plus alternate languages close enough to it to enable a relatively high level of communication: for more details see source. aka = also known as Source: Linguasphere Observatory 2003 http://www.linguasphere.org/
The half a million Asian students who enter the English-speaking education systems each year come from a very diverse range of national and linguistic backgrounds. Some of their national and regional languages are spoken on a very large scale. Apart from English, in the Asia-Pacific 14 languages are spoken by 65 million people or more (see Table). Other national languages include Filipino/ Tagalog in the Philippines (45m), Thai in Thailand (45m), Burmese (33m) and Lao and Isan in Laos, which are also spoken in Thailand (30m), and Nepalese (17m) and Sri Lankan (14m). There are more large subnational regional languages: Bhojpuri and Maithili (60m), Gujurati (45m), Kannadu (45m), Malayalam (35m) and Oriya (30m) in India; Min-nan (55m), Xiang (48m) and Hakku (35m) in China and Taiwan; and Sunda in Java in Indonesia (30m). By no means all of these languages are doomed to disappear, either from general usage or education. Manadarin, Hindi and Urdu, Begali, Bahasa Indonesia/ Malay will be major languages for the foreseeable future. Some may become alternative global languages to English. In the English-speaking nations, international education is often described as a process of ‘cultural exchange’, but if so the exchange is blatantly asymmetrical. In the higher education systems of the English speaking countries, these languages, as well as the languages of many smaller national and regional populations, are largely ignored. On the immense cultural diversity of the Asia-Pacific, English-speaking universities impose a cultural vacuum (or is it a vacuum cleaner?!). Along with global hegemony comes global insularity, a blindness to other languages and the cultures embedded in them, regardless of the immense richness these entail. Apart from Canada, no Englishlanguage countries are formally embrace multi-lingualism in government and education despite the cross-cultural element in their populations. In higher education this is paralleled by the unwillingness of Australian – though not New Zealand – students to go
31 overseas for part of their studies. In Australia the ratio of incoming foreign students to outgoing local students was 19.74 in 2000, much the highest level in the OECD and twice the level of the next nation, the insular USA. The ratio in New Zealand was 1.37 (OECD 2003). When Australian and New Zealand students do go overseas, they prefer to travel to the UK and USA, rather than to Asia. The bedrock assumption here is that for English speakers there is nothing to learn in other languages and other cultures. Thought the government website providing information about international education in Australia markets the national product in 11 different Asian languages, the actual programs of study are provided only in English, apart from a few bilingual programs in China. The cultural diversity of students is respected up to and including the point at which they hand over their money. After that they have to take what they are given22. This strange confrontation between global cultural diversity and global market uniformity raises questions about global education as both a market good and a common good. Whether international students want to learn in English or not, many would benefit from programs which assisted their acquisition of the foreign language, and the course contents of the academic disciplines, by providing a bi-lingual pedagogical framework. Further, programs which actually embodied respect for Asian cultures and teaching and learning traditions could generate much broader educational potentials, and might start to pluralise the cultural hegemony itself. Is the global positional market necessarily confined to the provision of upward mobility into English-language environments, or positional advance in the country of origin through possession of global English-based skills; or is there potential for exporters from Australia and elsewhere to supplement educational provision in local languages? Or is it too costly, or otherwise impossible, for Anglophone education exporters to do what students and education systems from the importer nations already do as a routine matter; that is, adjust and adapt to foreign cultures? If this is impossible, this suggests it is necessary to treat linguistic diversity as a global public good, and sustain it by means other than markets. The hierarchy of nations As noted, the global market position of individual institutions of higher education is in part determined autonomously, by their own history, capacity/ resources and strategies; and in part is over-determined by the geo-strategic location of their nation within the global order (for more discussion see Marginson and Sawir 2003). To the extent that global institutional reputation is nationally determined, the factors that determine the global reputations of universities in the global market are the capacity and perceived quality of their domestic higher education systems, plus the power and identity of that nation within the world. However, the capacity of a particular institution to operate globally is determined by more than just domestically generated resources and reputation: it is affected also by the extent and effectiveness of its global engagement.
22
In October 2003 the Australian Government’s Australian Education International (AEI) website reported with pride that the website would seen be available in Arabic, joining English Chinese, Indonesian, Japanese, Korean, Portuguese, Spanish, Thai and Vietnamese versions. Russian will be next. http://aei.detya.gov.au/general/stats/SIA2003/SIAOctober2003/htm
32 Differential positions of nations in the global education market Description
Examples of such nations
national system national capacity
national system global reputation
national system global engagement
balance of export/ import
Hegemonic exporter nation and dominant model of educational practice Lesser exporter nations with general market position (UK), or more specialised positions Nations with full domestic capacity that both import and export (often non commercial) Nations with full domestic capacity that import but play little role in export Nations with part domestic capacity that both import and export (e.g. regional markets) Patchy domestic systems, net import, potential determined by future national trajectory Weak domestic systems, significant net education import, brain drain problems
United States
very strong
very strong
net export, import is weak
UK, Australia, NZ, France, Germany Western Europe, Japan Korea, Taiwan
strong
good to adequate, varies good to adequate, varies adequate, varies
Singapore, Hong Kong Chile Malaysia, South Africa Mexico Weaker developing nations
partly inadequate, varies inadequate, some strengths relatively weak
Strong inward flows but locally insular extensive, Anglophone are insular in Europe extensive, Japan less engagement as importers, limited extensive in both directions engagement as importers, limited usually limited or absent
strong strong
good to adequate, varies varies, little profile poor, little profile
net export, import varies roughly equal flows net import, little export net import, some export net import, export potential net import little or no export
All else being equal, individual universities - and nations - are best placed in the global educational environment when they practise strong inward and strong outward flows of people, money and ideas, enabling them to exercise a broad range of strategic options in the combination game of origination and imitation that constitutes global activity. Despite their inadequate domestic educational capacities, Singapore and Hong Kong have established themselves as global knowledge economies via such two-way flows. As noted, the United States, Australia and to a lesser extent the other English-speaking countries are one-way in their educational relationships, which reduces their strategic options. American educational institutions are so strong relative to other countries that they can dictate the terms of their global relationships, so this limitation does not constitute a weakness. In the case of Australia it is a more serious handicap. Nations in the first four categories of the table all have adequate domestic capacity for national needs, that could be expanded to meet global demand, though the fourth group have a negligible role as exporters. The domestic systems of nations in the first five categories are perceived as relatively strong in quality terms, though there are quality hierarchies and product differentials within and between these groups, with varying strengths by field of study, and specialisations by geographic region. For example Germany is perceived as strong in Engineering and technologies, the UK and France in the humanities, the United States in Business Studies, etc. Australia draws the great bulk of its international students from Asia-Pacific, France draws many from Francophone Africa and relatively few from Europe, Germany draws students from Turkey and from other parts of Europe. Only the United States is an unambiguous leader on all measures, though like the USA, British higher education draws on all parts of the world and is relatively strong in global terms in all fields of study.
33 Nations in the sixth and seventh categories, the developing world, are characterised by capacity inadequate for national needs, domestic systems perceived as inferior in quality to the exporters, and the preponderance of imports. The developing world comprises by far the largest number of nations and is internally differentiated, from countries in group six such as South Africa, India and Malaysia with areas of domestic strength, some exports and the potential to move into a higher category; to nations such as Myanmar or Bangladesh where higher education infrastructure is poor or non-existent. In all nations in the developing world, bright students seek higher education from nations in the first three categories. The stronger the domestic economy and polity, the more likely it is that graduates will return temporarily or permanently, or contribute capital and know-how. Given the hierarchy of nations, particularly the existence of one very powerful nation, there can be only a limited number of global positional goods at the first level of value. Perhaps there is space for new global producers to emerge at the next level of the market, that of Australia or Western Europe, but there is no contestable space at the top of the global market. Any ordinary American doctoral university enjoys a crucial advantage over leading university from all other nations except perhaps Oxford and Cambridge. Universities in the developing world have no prospect of becoming significant exporters until their nations leverage themselves into a higher global economic status. In the absolute scarcity of high value positional goods, and the fundamental conservatism of the positional hierarchy, the global positional market functions as similar to the national positional market - except that in the global positional market, positional segmentation is framed by national rather than institutional identity. International education in the USA Desires for migration to the United States via education are common to the developed world as well as the developing countries. A study by the OECD notes that of American doctoral students 60 per cent or more of those from India, China, the UK, Peru, Iran, Greece, Argentina and Germany had ‘firm plans’ to stay in the US after finishing their studies (Tremblay 2002, p. 44). Yet while international students experience American education as a positional market, Americans tend to see international education as a form of foreign aid and cultural exchange, rather than as a revenue raising market. There is an intense domestic competition between the American universities for top students, for leading academic staff and for research resources and reputations. But American universities do not approach global market competition with the same vigour. American global educational hegemony is exercised without entrepreneurial global marketing. It is sustained by American economic, technological, cultural and military power; by the extraordinary resources US universities command, and by their academic prestige. Universities do not have to adjust their programs or cultural ambiance to attract international support. American higher education does not sell an internationalised curriculum, it freely offers its own national self as the global standard. American universities do not reach out to engage, they simply make themselves available. They offer places, many supported by scholarships, and foreign students flock to them, like the crowds of foreign tourists streaming into Disneyland. Globalisation - in education as in other sectors - is what America does to the world, not what the world does to America.
34 Ten largest university providers of international education, USA (2002-2003) and Australia (2002) USA (2002-2003) Southern California New York Columbia Purdue (main campus) Texas Austin Michigan Ann-Arbor Illinois Urbana-Champaign Boston Wisconsin-Madison Ohio State (main campus)
6270 5454 5148 5105 4926 4601 4555 4518 4396 4334
Australia (2002) Monash RMIT Curtin New South Wales Central Queensland South Australia Charles Sturt Melbourne Western Sydney Sydney
14,499 13,371 11,313 10,330 9187 8881 8333 7850 7645 7378
Sources: IIE 2003; DEST 2003
International education is marginal to the American domestic system, compared to Australia. International students were 4.6 per cent of American higher education enrolments in 2002-03 (IIE 2003) compared to 13.9 per cent in Australia in 2001 and almost 20 per cent of all Australian students when offshore twinning, foreign campuses and distance education are fully included (DEST 2003; AEI 2003; IDP 2003). In the largest American exporter, the University of Southern California, there were 6270 international students, 20.4 per cent of all students. In Australia the largest exporter in 2002 was Monash with 14,499, representing 27.9 per cent of students. At Central Queensland University the 9187 international students in seven campuses, including Fiji, represented 42.2 per cent of enrolled students (DEST 2002). In 2002, 13 Australian higher education institutions – one third of the national system – enrolled more international students than did the University of Southern California.
International education in Australia In the hierarchy of demand, the USA and the UK lead other English-speaking nations. In the hierarchy of costs the table is inverted. The American dollar and sterling appreciated in the 1990s, pricing those nations out of reach of some positional investors. IDP (2001) estimates that the average total cost of fees and living expenses in the American public universities was $19,427. It was $19,159 in the UK, where living costs are relatively high. In Australia it was $12,482, and in New Zealand $11,712. Australia’s costs were less than two thirds of those in the UK and the American public universities. This cost structure has underpinned rapid growth. According to the DEST data, between 1995 and 2002 the number of international students in Australian higher education rose from 46,187 to 185,058. Of these 50,412 (27 per cent) were enrolled off-shore (DEST 2003) in distance education programs and in branch campuses in East and Southeast Asia. Likewise in New Zealand, between 1995 and 2001 the number of international students jumped from 5883 to 11,069 (OECD 2003). In 2001 in Australia there were also 39,845 international students in vocational education, 15,112 in schools and 49,380 in intensive English courses (AEI 2003). The Australian ELICOS sector was similar in size to that of the USA, where there were 51,179 IEP students in 2002 (IIE 2003).
35 Comparative cost of foreign study in the English language countries, Master of Business, 2001 country
visa charge
USA (private unis) USA (public unis) United Kingdom Canada Australia New Zealand
$US 45 45 48 81 156 45
annual tuition fees (median)
annual living costs (average)
$US 24,810 10,898 10,376 5944 7055 6209
$US 8529 8529 8783 6906 5427 5503
total annual costs (median)
Total annual costs exclude visa charge. Exchange rates as at 1 June 2001 used for conversion to USD.23 Source: IDP 2001
$US 33,339 19,427 19,159 12,850 12,482 11,712
International education is now Australia’s third largest services export, and in higher education funding it provides significant fiscal relief. In 2002, universities earned $1.45 billion in student fees, 13 per cent of revenues (DEST 2003). They earned more in fees per international student ($7334) than in HECS and government grants per domestic student ($7010). In 2001 Australia earned $4.3 billion from international student spending on fees, food, transport, accommodation, living costs and entertainment, here and offshore. This total is expected to reach $5 billion in 2002 (Nelson 2003b, p. 35). Revenues from international marketing, Australia 2002 category of students international
number of students 185,058
domestic
711,463
principal revenues $1.45 billion in full-cost student fees $3.15 billion Commonwealth grant for teaching $1.83 billion HECS obligation payments
revenue per student $7334 $7010
Source: DEST 2003
Because it has been market driven, the growth of international education has been uneven by field of study: some degrees offer more positional benefits than others. In both higher education and VET more than two thirds of enrolments are concentrated in Business Studies and ICTs. In credentials, the main growth has been in Bachelors degrees and coursework Masters. In the 1990s, international student load in coursework Masters programs rose by 251.8 per cent. At the same time, research degree load rose by only 14.5 per cent. Compared to most export nations, Australian universities have a weak role in research degrees. An exception is the Australian National University, where there were 357 international research students in 2001, 17.7 per cent of all international students, and 3.0 per cent of all students were research degree international students24.
23
Australian dollar = 0.54c, New Zealand dollar = 0.43c, Canadian dollar = 0.66c, Pound Sterling = $1.46. This is exceptional in the Australian context and reflects the ANU’s specific mission as a national university since its foundation, as both research-focused and internationally-focused. The ANU has a relatively small number of undergraduate students in conjunction with highly developed research schools, and in international education it is less focused on revenue rising than is the case at other Australian universities (Marginson and Sawir 2003). 24
36 Proportion of international students enrolled in research degree programs, selected OECD nations, 2001 Exporter nation Finland Switzerland Spain United States Sweden United Kingdom Austria Norway Australia New Zealand OECD country average
% 19.6 18.1 17.1 16.6 15.1 11.6 11.2 7.9 5.4 2.7 10.2
Data for Germany, France, Canada not available Source: OECD 2003.
Most of the public universities enrol large numbers of international students. In 2002, international students were more than 20 per cent of enrolments at Monash, NSW, Macquarie, Wollongong, RMIT, Curtin, South Australia, Central Queensland, Southern Queensland, Charles Sturt, Western Sydney, Victoria, Swinburne and Ballarat (DEST 2003). Because of their reputational strength, the Sandstones are in the best position to attract international custom: the University of NSW (10,330) and Monash (14,499) were among the leading providers of international education, and Melbourne and Sydney also had large enrolments. However, along with Monash it is the Unitechs at RMIT (13,371), Curtin (11,371) and South Australia; the New University Central Queensland (9187), and the Gumtree Wollongong (where the international student enrolment is more than a third of all enrolments) that have been particularly entrepreneurial in their approach to the market, taking every opportunity to recruit students in all modes. Among the universities active off-shore, Monash operates its own campuses in Malaysia and South Africa, RMIT is building a campus in Vietnam and Curtin has an established one in Sarawak, Malaysia. Many Australian universities provide branch campuses in Singapore, Malaysia, Hong Kong, and mainland China through local partners, as do UK universities. Universities with the largest off-shore enrolment in 2002 were South Australia (6587, 21.5 per cent of enrolled students), RMIT, Charles Sturt, Curtin and Western Sydney, followed further back by Wollongong and Monash. Monash (2030, 3.9 per cent of students) was the only Sandstone with more than 700 offshore international students. International marketing is crucial to the revenues of most universities. In 2002 the University of NSW earned $115.9 million in fee income, 16.5 per cent of total revenues: three other institutions topped $100 million. Nevertheless, despite the economic importance of the global market it has had little effect on the structure of positional competition within Australia. It has strengthened some institutions within their segments, for example NSW, Curtin and Central Queensland. Others might have lost competitive position by specialising too heavily in international education and neglecting capacity in other areas. However the rise of international marketing has left membership of the elite segment unchanged, regardless of each institution’s level of engagement. The principal drivers of the Australian positional market continue to be national, rather than global.
37 Fee-paying international education, Australian universities, 2002 Institution
all international students share of all students number %
offshore international students share of all students number %
international research students share of all students number %
revenue from international fees proportion of all revenues $s mill. %
SANDSTONES
Monash U U New South Wales U Melbourne U Sydney U Queensland U Western Australia U Adelaide Australian National U
14,499 10,330 7850 7378 5586 2543 2472 2017
27.9 24.4 19.9 17.4 14.9 16.0 15.3 16.8
2030 565 0 635 35 684 436 274
3.9 1.3 0 1.5 0.1 4.3 2.7 2.3
358 499 523 374 549 287 203 357
2.5 4.8 1.3 5.1 9.8 11.3 8.2 17.7
111.1 115.9 112.1 77.9 65.4 28.8 27.6 19.6
15.1 16.5 13.1 9.5 8.0 8.0 8.3 4.3
6598 6563 5370 4274 3319 3015 2210 1655 1389 1252 1221
24.2 35.0 17.3 12.9 13.3 12.8 17.4 12.1 10.5 9.1 6.7
1191 2109 335 1102 1135 1011 678 451 26 242 724
4.4 11.2 1.1 3.3 4.6 4.3 5.3 3.3 0.2 1.8 4.0
180 207 107 51 150 154 73 109 109 92 88
2.7 3.2 2.0 1.2 4.5 5.1 3.3 6.6 7.8 7.3 7.2
55.9 43.1 40.6 27.7 25.5 28.1 16.3 13.9 10.7 15.4 5.9
18.9 20.5 11.6 8.5 8.1 10.9 10.4 7.8 6.2 7.1 3.9
13,371 11,313 8881 5242 5042
34.9 34.0 29.0 17.9 12.9
6257 5510 6587 1014 168
16.3 16.6 21.5 3.5 0.4
220 413 980 105 110
1.6 3.7 11.0 2.0 2.2
102.7 84.1 45.1 49.3 57.0
21.5 23.9 15.8 17.1 15.6
9187 8333 7645 6406 4574 3818 3193 2107 1845 1686 413 345
42.2 20.9 21.6 26.4 23.5 16.0 22.2 31.9 17.7 14.1 10.5 6.1
1913 5980 4180 0 64 1647 0 1164 663 1404 0 68
8.8 15.0 11.8 0 0.3 6.9 0 17.6 6.4 11.7 0 1.2
63 102 82 107 140 413 53 14 44 112 15 16
0.7 1.2 1.1 1.7 3.1 10.8 1.7 0.7 2.4 6.6 3.6 4.6
79.5 10.1 38.2 15.8 29.2 25.0 34.1 5.2 12.1 6.8 3.9 2.6
37.7 5.4 12.9 13.3 10.5 12.1 14.6 4.9 11.5 7.6 12.0 2.8
961 530 24
8.1 18.7 n.a.
103 0 0
0.9 0 0
13 4 n.a.
1.4 0.8 n.a.
4.5 0.9 n.a.
4.3 17.7 n.a.
GUMTREES
Macquarie U U of Wollongong Griffith U Deakin U La Trobe U U of Newcastle Murdoch U Flinders U James Cook U U Tasmania U New England UNITECHS
Royal Melbourne IT Curtin U Technology U South Australia U Technol. Sydney Queensland UT NEW UNIVERSITIES
Central Queensland Charles Sturt U U Western Sydney Southern Queensland Victoria U Technol. Edith Cowan U Swinburne UT U Ballarat U Canberra Southern Cross U U Sunshine Coast Northern Territory U PRIVATE UNIS
Austral. Catholic U* U Notre Dame Aust. Bond U MINOR SITES
[various] TOTAL
601
9.6
27
0.4
54
9.0
1.3
185,058
20.6
50,412
5.6
7274
3.9
1449.8
* Private university funded in the same manner as public universities Source: DEST 2003
-12.5
38 Why has Australia been successful? Despite the narrowness of the achievement, why has Australia been so successful in marketing international education - to the extent that university or governmentsponsored inquiries in Germany, the Netherlands, Japan and Canada are currently examining Australian international marketing and asking ‘should we do the same thing?’ Australia benefited from a productive coincidence of supply factors under its control, and demand factors outside its control. Australia had 30 year’s experience in educating AsiaPacific students, initially through the Colombo Plan, prior to the legislation that created international marketing in 1985. In the early stage many Australian universities moved quickly and effectively. In the late 1980s, the government coordinated marketing in the Southeast Asian capitals via Education Centres located in Australian Embassies .This provided the appearance of government-guaranteed quality, while reducing mutually destructive marketing. The government also ran a generous visa policy, though this did not last. Later (1999) the government established national quality assurance, including audits of offshore activities, to shore up the global reputation of Australian universities. However, the most important factors on the supply side were the favourable cost settings relative to the USA and UK (see above); and the financial incentive. In 1985 government grants per student began to trend down (Marginson 2002); and it was apparent that international marketing constituted the main potential source of discretionary revenues. International marketing was perhaps the chief factor shaping the new entrepreneurialism that took hold in the universities after the Dawkins reforms, so that every university set out to expand international enrolments. ‘The development of trade and commercial capital always gives production a growing orientation towards exchange value, expands its scope, diversifies it and renders it cosmopolitan, turning money into world money’ (Marx 1981, p. 449). In 1995 indexation of government grants was abolished by the ALP, and in 1996 the new Coalition government announced forward funding cuts. These factors together reduced university incomes by 12-15 per cent over three years. Between 1995 and 2000 the number of international students doubled, and revenues rose from $441.2 million in 1995 to $947.2 million in 2000 (current prices, DEST 2003). On the demand side, the emergence of Australia as commercial providers coincided with the growth of globally mobile work; the growing attractions in Asia of English language education; and growing capacity to pay. As well as the cost advantage Australia benefited form being closer to Asia than the USA and the UK, and with a reputation for greater security and stability, a more tolerant atmosphere and a more attractive climate. As this analysis suggests, the spectacular growth of higher education in Australia was not grounded in superior quality, but in burgeoning demand, business acumen, an English-language product, adequate quality, good location and cheaper price. Australia could sustain high volume standard cost standard quality degrees in Business and IT, but its universities were not good enough to attract many bright international research students. They preferred to advance their academic development and their life chances in the USA and the UK, where in any case there was better scholarship support.
39 Australia could and should have achieved a better-balanced student mix through scholarships. However, Australian policy makers were determined to shift the ethos of international education ‘from aid to ‘trade’. The casualty was scholarship funding. The outcome was that in the global matching process that constitutes the global positional market, whereby the hierarchy of student demand becomes matched with the hierarchy of national suppliers, and exporter countries find their specialisation and the appropriate segmented level, Australia has become positioned as the global polytechnic. Outcomes of international marketing In addition to revenues, international education is associated with other effects. Within universities, the balance of resources has shifted towards disciplines generating higher than average revenues, Business Studies and ICT; and away from those with below average revenues, including the fundamental sciences, social sciences and humanities. Only some fee revenues return to the disciplines that generated them: between 30 and 70 per cent depending on university. Business and ICT faculties have seen student-staff ratios rise, as elsewhere (DEST 2003). However, Business and ICT workloads have increased more slowly; there has been more time and infrastructure support for research; and higher expenditures on support staff, and buildings and equipment. More generally, international education is associated with rising expenditure on nonacademic functions associated with revenue generation and corporate activity; and given the reductions in public funding and growing dependence on market revenues, the resources outlaid directly on teaching and research functions have been reduced, creating downward pressures on quality (see above). This has reduced the capacity of universities to generate a broad range of public goods. Nevertheless, this was not an inevitable outcome of the international market. It arose under the particular conditions driving development of that market, viz the scarcity of public funds, which forced, institutions to substitute market goods production for common goods production. Public funding was the balancing item, essential to sustaining the overall capacity for market and common goods. If public funds per student had been held constant or increasing relative to costs, then international education could have expanded market goods without necessarily undermining the infrastructure that enables common goods. In international education itself, its high commercial nature has inhibited common goods. The sole goal has been revenues. Australia provides little funding to assist the movement of students into overseas countries on a scale enabling more reciprocal educational and cultural relations in the Asia-Pacific. The global polytechnic orientation and the weak international research scholarship program, compared to the USA, make Australia a third choice destination whose chief attractions are price and proximity. An opportunity to augment the national research effort is missed; and universities attract less of the future social, business and academic leaders, from the countries of Australia’s region, than they might. This reduces the long-term potential of cross-border relationships, cutting into future capacity for both common goods and trading goods. For Asia-Pacific countries themselves, Australia’s success in the market offers little more than an adjunct to local participation rates, and market goods for those who can afford to pay for them. Arguably, fee-for-service international education, accessed on the basis of private wealth rather than academic merit, fosters inequalities and divisions in importing
40 societies. Australia could have sustained a more generous program of education support to poor countries, enabling a more equitable social distribution of the benefits in those countries, and a better balance between developed and developing world, but the ‘trade not aid’ dichotomy put paid to that. It should have been both. A strong quantitative presence in the global education market does not necessarily translate into a flourishing university system, national sovereignty and self-definition, the optimum global outcome, or even a deeper engagement by Australia with other cultures and economies. A major common good is that universities are better networked in the Asia-Pacific,25 with incalculable long-term possibilities for universities and nation. A nagging doubt remains, that universities, government and business have yet to take full advantage of this. One brake is the uncertain sense of self. Research on international student choice-making suggests that Australia does not project a strong cultural and educational identity of its own. Australia’s essential strategy in international education is to provide Anglo-American business education more cheaply than London or Chicago. Arguably, a broader set of academic disciplines would be a better medium for engaging with the region. A less homogenous multiculturalism in Australia, and a more nuanced approach to Asian language and culture in the universities might also help to unlock the capacity that the export of higher education has enabled, but is yet to create.
The global positional market and national positional markets Within the national dimension, the number of high value positional goods is subject to absolute limitations. This constrains the potential for high fee high value places, and sets limits on the number of elite producers. In the global dimension no such limits apply. Unmet demand in high growth countries such as China, and the continued attractions of private positional investment in hegemonic USA, means the demand for global positional goods will continue to exceed supply. As long as educational border-crossing creates positional goods – as long as a foreign education leverages upward social mobility within and between nations – there is no foreseeable limit to the growth of the global positional market. The maturation of domestic systems in East and Southeast Asia will reduce unmet demand for domestic education, and may diminish the attractions of some forms of foreign education, but will not take away the lure of the USA. This changes the national positional market in the exporter nations in two ways. Because the export market can expand freely without devaluing the unit value of global positional goods, this market can operate on a fully capitalist basis, as it does in the UK and Australia. Second, universities locked out of the elite segment of their national systems can position themselves as providers of high value positional goods for students from elsewhere. A middle-tier education maintains most of the global value, so that it is easier to raise full fees from foreign students than from domestic students. But the global market in positional goods also has another and profound implication for higher education, in all nations outside the United States, especially for the leading institutions. For all middle class families a foreign education has come onto the agenda 25
This was a founding objective of international education in the late 1980s though it is probably of lesser concern to Canberra today.
41 for the first time. By bringing a new and superior layer of high value positional opportunities within view (if not necessarily within reach), this relativises the local Ivy League. The global market disturbs the traditional conservatism of national positional markets. Suddenly, venerable and unchallengeable universities become less attractive and more vulnerable. They are undermined by the gravitational pull of the global markets; the global character of research and judgments about the value of knowledge; and the in-your-face visibility of American institutions in a networked era. This affects both leading universities in nations such as Australia - which at least can become global players in their own right – and in developing countries, where institutions lack the resource capacity and the national geo-strategic power to make the transition, and on the whole face less options and more constraints (Marginson and Sawir 2003). While undermining the established leaders, the global market offers all institutions, elite or not, a wider set of strategic options, identities and development paths. They can specialise in international partnerships, ICT-based linkages, international marketing or a more cosmopolitan curriculum. Suddenly institutions find themselves operating in more than one sphere at the same time, using the outcomes of strategies in one sphere (resources, networks, reputation) as inputs in the other. By the same token, they face new tensions between domestic investment paths and global investment paths. For national governments, there are novel questions about the mix of common and market goods produced. The global sphere is primarily a market sphere: regulators have less of a hold, and there is no international forum which might agree on a carve up of common goods, protecting the strong and the developing world alike. It is every nation for itself, and for policy makers the question becomes how best to draw national common goods from the global operations of each university without inhibiting its freedom of action. Nevertheless, the ‘wash-back’ effects of global positional competition on national competition and national policy are no more equal or uniform than is the global market that generates them. Some local traditions are more robust than others, some nations and some institutions are more open to global influences than are others; and the capacity to pursue a proactive global strategy is unevenly distributed. Some national governments will underpin the forward strategies of their leading institutions in the global setting (the wisest policy), some will offer domestic protection from those same global market forces26, and some leave it to the market to sort them out. The principal potential losers are the leading universities in the developing world, long placed at the pivot of their national system but marginalised within the new global higher education networks, and lacking the national funds for modernisation. The potential winners are a handful of the second level universities in the developed world. The global sphere offers potential for many new common goods and market goods. By expanding their global activity and revenues these institutions can augment local strength and reputation. This has the potential to improve their position, both globally, and also within the domestic hierarchy. 26
In many countries, protecting the strength of leading institutions is a key objective of policy. Those institutions can be shored up by intensifying their national positional value via competitive entry, or strong government investment in the science-based disciplines: both of these factors apply in the national universities in Japan. In Malaysia, despite the high reliance on foreign tertiary education, at undergraduate level the nationally dominant bumiputra are channelled into the leading public universities. This maintains the prestige of those institutions. The Chinese and Indian families make heavier use of undergraduate foreign education. The bumiputra benefit from government-funded scholarships for foreign education at postgraduate stage, offered to university academics and public servants marked out as future leaders.
42 At best they can use local destabilisation and global strategy to lever themselves up, decisively breaking through the constraints of national segmentation. Not many will do so. Most revenues continue to be sourced not globally, but nationally and locally, from government grants for research and teaching, and from student fees. Even in export-oriented Australia, only 12 per cent of revenues derive from international students; and institutions spend more on globally-linked research activity than they generate from it in revenues. Universities that have placed especially high emphasis on the global dimension, such as RMIT and Central Queensland in Australia, are unstable in resource terms. In most nations (except those with the weakest higher education systems, where a wholesale reinvention is possible, fragile plants in scorched earth) the national positional competition will still be the main game in town. Leading institutions will still hold more card than the others; and they might be able to shore themselves up using strategies of national re-investment, and/or or global partnerships and presence. The difference is that they no longer set the whole horizon of possibility. The ultimate constraints are now set by global segmentation, where the pecking order of nations is decisive. Until global economic and cultural power shifts - for example through the growth of East and Southeast Asian nations, especially China - the dominance of the American universities is unchallengeable, except perhaps from the peak of the UK.
On-line distance education: the new world market? On-line education is very efficient in purely economic terms. This is not because ICTs readily allow labour to be displaced from the teaching process, in the manner that course developers are displaced by software designers, as some early policy advocates hoped. Research finds that whatever the mode of delivery, students place a high value on interaction with their teachers and with each other. When on-line education is provided on the basis of reduced staff intensity, the cost saving is cancelled out by reduction in the quality of the product. The study by Bates (2001) for UNESCO suggests that on-line distance education of adequate quality is no cheaper to provide than is faceto-face education in on-site institutions, and it is more expensive than traditional distance education based on mail and broadcast modes27. Rather, ICTs are economically efficient - even when provided on the resource-intensive basis that adequate pedagogy and cutting edge technology demand - because of the nature of ICT networks. In a networked environment, the velocity of the turnover of capital is no longer inversely related to the size of the market or the geographical dispersion of sites of production and consumption (Marx 1973, p. 644; Marx 1978, pp. 163-164). The number of nodes in the network can be expanded ad infinitum at a small fraction of the original unit cost, creating an ever multiplying number of connections (Castells 2000a, p. 71). This economic base of on-line education suggests that in principle it should be possible to provide a common curriculum to an expanding number of sites located in every country in the world, with the rate of expansion determined by the growth of the Internet and the competition between producers. On-line education would become the first 27
Bates argues that the main virtue of on-line education is that it broadens the quality of the educational experience, making use of internet-based sources and new interactive modes of teaching and assessment.
43 genuinely world market in higher education credentials, distinct from the place-bound market national markets in face-to-face delivery. It is this vision that has animated both the established universities and commercial producers, often in partnership with each other, as they have struggled for first mover advantage in the e-revenue bonanza to come. Hopes have been focused on Asia, particularly China, given the size of unmet demand and the willingness to invest in foreign education. On-line education promises to deliver reputable American or British or Australian degree to the door, without the costs of going abroad or the disruption to families and careers that follows. But the bonanza has not arrived. One reason is the relatively poor level of Internet penetration in most Asia-Pacific countries. In 2001, China had 26 Internet users per 1000 people. There were 57 Internet users per 1000 persons in Thailand, 26 in the Philippines, 21 in Indonesia, 13 In Vietnam, seven in India and only two in Bangladesh with a population of 132 million people. This compares with 289 in New Zealand and 551 in Singapore The only Internet-strong nations in Asia-Pacific are Korea, with a very high incidence of Internet penetration, web-page production and page views (Castells 2001, pp. 207-246), Japan, Taiwan, Singapore, Hong Kong and Malaysia (ADB 2003). A more fundamental problem is that universities that have tried to mount on-line programs have blurred the distinction between the on-line and face-to-face products. In hoping to transfer their recognised positional value across to the on-line product, they claim that the two modes are equivalent, using quality assurance to ‘guarantee’ this. But student are not fooled. The evidence shows that they are aware of the difference between the two modes, and on the whole they prefer the face-to-face product (though on-line education offers a special flexibility and convenience for working students). The commercial on-line sector might have been better placed to celebrate the distinctive qualities of the on-line mode; creating a world market that supplements rather than displaces traditional universities, but non-traditional providers are still marginal. Even if these problems are overcome, it is unlikely that excess Asia-Pacific demand can be predominantly satisfied by on-line foreign higher education. First, students want faceto-face education; second, on-line foreign education accessed at home does not offer the same benefits as foreign education accessed abroad, or even in branch campuses located in the Asian country. On one hand, it offers neither the potential for migration that comes with crossing borders to study, nor cultural immersion in the Englishspeaking environment, nor the prospect of moving abroad via the branch campus, nor the English-speaking classroom. These elements are central to global positional demand. On the other hand, despite the fact they are directed at students living day-today in mostly Asian language environments, on-line programs are nearly all offered only in English. While reliance on English makes some (not very respectful) sense in nations with an historic association with Britain through imperialist rule, such as Singapore, Malaysia, Hong Kong and South Asia; the on-line education industry is almost entirely dependent on English-language materials even for the delivery into China, Thailand and Indonesia. In other words, on-line programs offer the downside of the monocultural global market, the difficulty of communicating and succeeding in English, but without the opportunities provided by English-language culture, networks and citizenship. This suggests that unless on-line materials are developed on a large scale in national languages such as Mandarin, Hindi/Urdu and Bahasa Indonesia/ Malaya, then it is
44 unlikely that the potential market demand will be fully tested28. If American and British providers are unable to do this, it might provide a market opening for providers from Internet-strong nations other than the English-speaking ones, such as Korea and Japan, prepared to invest in on-line curriculum in languages other than their own. (Alternatively, Asia-Pacific governments might invest seriously in the development of on-line curricula as a common good, working cooperatively through the World Bank or other agencies). This would dispense with the compelling vision of a singular world e-market in Internet degrees, operating from one cultural centre with the ultimate economies of scale. But the fact needs to be faced that such a vision cannot be realized. English might be the sole global language, but it is not a universal tertiary educational language that has subsumed all national languages to it. International education remains predominantly a global market in transfer of people, knowledge and credentials between nations - rather than a world market that subsumes every nation to itself. Teaching and learning are locally grounded, and national language and context still matter. Only in the specialised area of research and doctoral education is an English-language world market viable.
Global common goods As noted global education relationships has the potential to generate not just market goods (national and global) and national common goods, but global common goods. Global common goods in education are benefits that cross national borders29. The operations of global education markets produce certain global common goods as ‘spillovers’. They are not part of the contract, but they matter. First, international education enables an extensive pattern of networking and collaboration across borders; also creating long-term conditions for further mobility and international collaboration in many areas. For exmaple, formal agreements between Australian and international universities have increased rapidly, from 340 in 1990 to 3894 in 2001. Of the latter, 2631 of the agreements were for academic collaboration, including research (AVCC 2002). Though markets have a relational downside – they are premised on the goal of unequal exchange - human communication, collaboration and useful mutual borrowing are good in themselves (Sen 1999, p. 112). Second, cross-border and cross-cultural relationships, via the global education market enable encounters with difference: this leads to greater individual sensitivity to and knowledge of foreign cultures, strategic and diplomatic benefits for nations, and more cosmopolitan and more globally competent universities. Third, more specifically to higher education, global markets encourage institutions and governments to consider more streamlined recognition protocols and other measures to enhance collaboration and mobility. Fourth, by creating a range of cross-border partnerships, based on arrangements for fee-based programs, global marketing has 28
Arguably the English-language domination of web pages and Internet software in education and other fields has not only retarded potential demand for international on-line education, but has slowed the roll-out of Internet capacity itself (bandwidth, telecommunications, satellite, cable) in many Asia-Pacific countries. 29 Global common goods are not the aggregate of all the various national common goods in each country. Quite the contrary, many national common goods benefit only those national citizens that receive them directly, and some national common goods are received at the expense of people in other nations. For example subsidised petrol one nation can generate ‘common bads’ in other nations via the effect of augmented fuel consumption on global warming. As the term is used here, ‘global common goods’ relate to benefits that are common to the citizens of many countries. See Kaul et al. (1999) for more discussion.
45 opened more opportunities for cross-border research collaboration and so catalysed knowledge transfer. Where international education is about doctoral students, there is a more fertile potential for this spill-over into the global research domain. Because these benefits are incidental to individual market transactions, and policy makers leave them to the ‘invisible hand’, they are rarely identified and measured. On the whole, the production of global common goods in education could be more explicitly and effectively addressed by forms of internationalisation other than market exchange, such as education aid programs, non-commercial student exchange, and direct international cooperation in funded research projects. In particular, whereas equity goals are heterogeneous to the operation of markets, an aid approach allows these goals to be directly addressed. Socially, education can go either way: it can exacerbate inequalities or compensate for them. Because access to high quality education has become increasingly stratified, in the market era, higher education exacerbates existing inequalities both within and between nations (Castells 2000b, p. 135). The global education market tends to favour the strong over the weak. It reinforces hierarchies and hegemonies. It favours wealthy people, it favours exporting nations over importing nations, it strengthens the educational and cultural dominance exercised by Englishspeaking countries. It is often associated with brain drain rather than national capacity. Through aid and exchange programs, the counter-tendencies can be set in train. Social equity is a national common good, and contributes to global common goods. The provision of an equitable framework of social and economic opportunity is a national common good in all nations. For example, where export nations provide scholarshipbased places to students in the developing world, rather than full fee places, it becomes possible to provide assistance for a more balanced socio-economic mix of students. Instead of international education operating as a monopoly of the local elite in the developing country – as it does when individual positional investment is uppermost - it can be opened up more widely, via academic merit. And the presence of this framework of social equity in all nations contributes to a more stable and productive global order. In other words a better balanced, more equitable educational relationship between developed and developing countries is a global common good in itself. It also provides favourable conditions for the production of other common goods, national and global.
GATS and the problem of global regulation National governments are responsible for securing an appropriate balance between common goods and market goods in education. In principle, these decisions are open to negotiation and democratic politics. In most nations education is closely regulated and there is much attention to the question of national common goods, even in a market era. In the global dimension the picture is very different. There is no agency responsible for balancing market goods and common goods on the global plane. The only framework for multi-lateral negotiations, that of the World Trade Organisation (WTO) via the General Agreement on Trade in Services (GATS), conceives education as a market good, and global regulation as a problem of trade liberalisation.
46 When public universities in Australia or American state universities in the United States operate within the nation, they are public institutions obliged to produce a range of public and market goods. But according to WTO/GATS, when they operate across borders whether selling full-fee education or not - they are private and commercial institutions with responsibilities only to themselves, identical to profit-making firms. In this framework there is no starting place for questions of educational equity within nations, or questions of equitable educational relations between the developed and developing world. To the extent that they might interfere with free trade, national public goods are frowned on. Global goods are not considered, except those that facilitate market transactions. In the WTO/GATS process the ultimate objective is to create an environment in which foreign providers would be able to freely sell educational services to national citizens on the same basis as local providers. Most nations do not agree. Exporters such as the USA and Australia want free access to the national higher education systems of other nations, but have imposed barriers to equal treatment on their own terrain. For example, Australia states that is not obliged to private subsidies to foreign providers, so that domestic providers retain an economic advantage. It appears that more extensive trade liberalisation will be agreed only in relation to cross-border on-line education. Nevertheless, the WTO/GATS negotiations pose dangers for weak developing countries, where domestic educational capacity is poor, foreign commercial providers offer to substitute for expensive local development, and national and state identity are weak, enabling those foreign commercial providers to prevail. Perversely, the nations most in need of protection in the global market have the least prospect of receiving it. The more general problem posed by the GATS negotiations, is that as a global framework for regulating higher education, they are seriously incomplete. GATS provides for educational trade, but not other forms of communication and exchange. For example, research is regulated at the global level in terms of the regulation of patents and copyright, not mutual obligations in relation to the codification and sharing of knowledge. GATS is unable to address substantial issues that have arisen as a result of global communications and the growth of the global market; including the development of a global system of protocols for recognising institutions and qualifications. It cannot tackle the global rationalisation of degree structures and the creation of mutual recognition in relations between national quality assurance systems. In moving beyond the limitations of the current global framework, a first step is for nations involved in bi-lateral negotiations to more explicitly and extensively provide for cross-border common goods in education. A second step is to involve international agencies in measuring, monitoring and ultimately regulating the production of common goods in education, in cooperation with nation-states. Unless common goods become as important in the global education environment as market goods, the fuller potential of international education will not be realized, especially in the developing world.
Conclusion There has been a policy-engineered shift to the use of market forms in Australian higher education, as in many other nations. This is not a pure economic market, but there is intense competition between institutions for revenues and prestige, and the role of
47 prices is expanding. At the same time there has been a major expansion of the global market in international education, facilitated by deregulation at the national level. Australian higher education has become a profitable commodity. Nevertheless, there is little evidence that market reform has achieved the stated objectives of improved allocative efficiency, faster rates of innovation, higher quality and greater customer responsiveness. In Australia, cost efficiency and entrepreneurship have been enhanced, and the quantity of research outputs has increased, but these trends can be explained by the growing scarcity of public funds; and beg the question of whether the unit quality of teaching and research has been maintained. For example, markets are associated with more stratified outcomes, a ‘bargain basement’ segment marked by ‘race to the bottom’ cost cutting, and siphoning off part of the funding of education and research infrastructure for competitive functions such as marketing and quality assurance, Marketisation interacts with the particular character of positional markets (Hirsch 1976), leading to perverse effects. By strengthening the competitive position of universities in the elite segment, market reform actually reduces pressures for efficiency and responsiveness; and tends to be associated with improvements in research quantity rather than teaching quality. Marketisation is also associated with declining policy support for public goods, including social equity. Globally, commercial relations offer more to export nations than to importers in the developing world. Market goods benefit selected individual investors in position but their contribution to national education infrastructure in the developing world is patchy at best. The global market in position reproduces English-language (and particularly American) domination and singularity, undermining plural approaches and diverse national identities. The focus on trade objectives has been associated with the weakening of educational aid programs in countries such as Australia, and a downgrading of global public goods. The market fetish in education policy will pass, nothing is permanent, but what kind of education system it will leave behind is unresolved. In part this depends on the ‘solidity and inner articulation’ of professional practices; in part on the vitality of market forces and their support in government; and on whether the market-generated inequalities, national and global, create pressures for corrective policies. There is more to education than individual positional investment. But only a broader approach to national policy, and an enabling global regulatory framework, which places national and global common goods on centre stage, will enable that larger educational capacity to emerge into view.
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