A RT I C L E
JRIE
International education
A tertiary-level industry update
VIKASH NAIDOO
University of Auckland, New Zealand
Recent developments in the international
education industry are notable in three
respects. First, international student
mobility has more than doubled in the last
two decades or so. Second, programme
mobility encompassing distance education
has also led to new forms of cross-border
education. Third, institution mobility
through such commercial deals as
franchises and twinning arrangements are
becoming an increasingly important
feature of cross-border education, although
on a limited scale. Such developments are
leading to the emergence of a new market
place for the international education
industry. This article documents and
analyses trends in painting a picture of
these contemporary developments in cross-
border education.
K E Y WO R D S educational services, educational
trade, GATS, international education
Introduction
Higher education is fast becoming a global business following the trend of
other industries. While once traditionally thought of as a matter of national
interest, the influence of ‘globalization’ and ‘internationalization’ is increas-
ingly becoming widespread in the so-called global education industry
JOURNAL OF RESEARCH IN
I N T E R N AT I O N A L E D U C AT I O N
& 2 0 0 6 I N T E R N AT I O N A L
B A C C A L A U R E AT E O R G A N I Z A T I O N
(www.ibo.org)
and S A G E P U B L I C AT I O N S
( w w w.s ag ep u bl ic a ti o n s. co m )
VOL 5(3) 323–345 ISSN 1475-2409
DOI: 10.1177/1475240906069455
Il est possible de distinguer des évolutions récentes dans le domaine
de l’éducation internationale et ce, à trois niveaux. Tout d’abord,
la mobilité des étudiants internationaux a plus que doublé au cours
des vingt dernières années. Deuxièmement, la mobilité des
programmes englobant l’enseignement à distance a également
engendré de nouvelles formes d’éducation internationale. En dernier
lieu, la souplesse des institutions à travers des relations commerciales
telles que les franchises et les accords de jumelage deviennent des
caractéristiques d’éducation internationale de plus en plus
importantes bien qu’elles n’existent que sur une échelle limitée. De
telles évolutions donnent naissance à un nouveau marché consacré au
domaine de l’éducation internationale. Cet article illustre et analyse
les tendances de ces évolutions contemporaines dans l’éducation
internationale.
Los últimos desarrollos en el ámbito de la industria de la educatión
internacional se pueden apreciar desde tres ángulos principales.
En primer lugar, la movilidad de estudiantes internacionales se ha
más que duplicado en las dos últimas décadas. En segundo lugar,
la movilidad curricular generada por la modalidad de educación
transfronteriza. En tercer lugar, las franquicias, los programas
académicos interinstitucionales y otras formas de acuerdos han
generado una movilidad institucional que se está convirtiendo en una
caracteristica importante de la educación transfronteriza, si bien en
escala aún reducida. A consecuencia de estos desarrollos ha surgido
un nuevo mercado para la industria de la educación internacional.
Este trabajo documenta y analiza las tendencias que intentan
describir estos desarrollos actuales en la educación transfronteriza.
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Journal of Research in International Education 5(3)

(Enders, 2004). From the paragraphs of the General Agreement on Trade in

Services (GATS) on cross-border trade in educational services to the World
Trade Organization’s (WTO) proposals for further deregulation of educa-
tional markets, these two phenomena have clearly become key themes in
education (van der Wende, 2001). Unfortunately, the more widespread
they become in the literature, the more they seem to be used as a catch-
all phrase highlighting the international aspects of education (Enders,
2004). Yet, there are some important differences between these two
terms that one cannot afford to overlook. Indeed, while globalization of
education alludes to the external macro-socio-economic process that influ-
ences the way educational institutions operate on the one hand, inter-
nationalization of education, on the other, represents the policy-based
responses that educational institutions adopt as a result of the impact of
globalization (Scott, 1998). Hence, rather than being viewed as distinct
from each other, globalization and internationalization of education
should be seen as dynamically linked concepts. As stated by Knight (1999:
14), ‘globalisation can be thought of as the catalyst while internationaliza-
tion is the response, albeit a response in a proactive way’.
Adding to this complexity of the international/global dimension of
education, a whole new vocabulary including the likes of transnational
education, global education, world education, international education
and multicultural education among others seems to be surfacing in the
literature (Knight, 1999). Such a differentiated vocabulary stems from the
wide approaches to internationalization that educational institutions have
adopted to date, ranging from a simple internationalization of the curricu-
lum to the more complex activity of establishing offshore campuses. Table 1
provides a typology of such approaches to internationalization. It is impor-
tant to point out at this stage that these four different approaches are not
necessarily exclusive of each other (Knight, 1999).
It is, however, on the activity approach, particularly cross-border educa-
tion, that this article narrowly focuses. Indeed, while the ‘activity’ approach
to internationalization also includes ‘internationalization at home’
(Nilsson, 1998), which refers to the international and intercultural dimen-
sion of curricula and a host of other activities to help students develop their
global awareness (Clarke, 2004) without ever leaving the campus, cross-
border education refers to educational activities which cross national
boundaries (that is, internationalization abroad).
Cross-border education can take three different forms (Knight 2003):
(1) student/academic mobility where the students/academics go abroad
for educational purposes (that is, study or teach); (2) programme mobility
where academic programmes are delivered abroad without students/

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Table 1 Approaches to internationalization

Approach Description

Activity Categories or types of activities used to describe internationalization such

as curriculum, student–faculty exchanges, technical assistance and
international students.
Competency Development of new skills, knowledge, attitudes and values in students,
faculty and staff. As the emphasis on outcomes of education grows there
is increasing interest in identifying and defining global/international
competencies.
Ethos Emphasis is on creating a culture of climate on campus which promotes
and supports international/intercultural initiatives.
Process Integration or infusion of an international or intercultural dimension into
teaching, research and service through a combination of a wide range of
activities, policies and procedures.

Source: Knight (1999).

academics having to leave their home country; and (3) institution mobility
where an offshore campus is set up via some forms of foreign direct invest-
ment. Table 2 provides a more detailed breakdown of these approaches.
While these different approaches can operate individually of each other,
contemporary cross-border education often incorporates more than one
approach. For example, when an offshore campus is set up (institution
mobility), students studying at that campus can opt to exchange with
the main campus (student mobility), academics from the main campus
are encouraged to teach at the offshore campus (academic mobility) and
courses can be delivered online to encourage the interaction of students
between the main and offshore campuses (programme mobility). Such
developments have changed the international education industry that has
traditionally relied primarily upon student mobility. The next sections
overview the trends of each of these different forms of cross-border educa-
tion before painting a picture of how these contemporary developments
might influence the future of the international education industry.

International student mobility

Internationalization through student mobility across national boundaries is
not a recent phenomenon. Dating back to the fourth century BC, educa-
tional migration has long had a history in the traditions of many societies

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Journal of Research in International Education 5(3)

Table 2 Types of cross-border education activities

Type Examples Size

Student . Full study abroad for a foreign Largest share of cross-border

mobility degree/qualification education.
. Students on exchange programmes

Academic . For professional development An old tradition in the education

mobility . As part of an academic partnership
. Employment in a foreign university
. To teach in a branch campus abroad
Programme . E-learning programmes
mobility . Joint course or programme with
foreign institution
. Selling/franchising a course to a
foreign institution
Institution . Opening of an off-shore campus
mobility . Buying (part of ) a foreign
educational institution
sector, which should grow given
the emphasis on mobility of
professionals and
internationalization of education
in general.
Academic partnerships represent
the largest share of these
activities.
E-learning and franchising are
small but rapidly growing
activities.
A trend increasing very quickly
from a modest starting point.

Source: adapted from Vincent-Lancrin (2004).

(Cardinale, 2000). At different times in history, different places, from

Athens to Timbuktu, have acted as centres of learning whose role has
traditionally been that of an intellectual forum, international in character,
where scholars travel in search of a quest for knowledge and wisdom
(Williams, 1981).
Today, a movement of a rather different kind is emerging. While in
former times the scholar would likely travel overseas to study under the
auspices of a renowned master, the contemporary student is more likely
to be in search of qualifications rather than knowledge and wisdom
(Williams, 1981). This ‘Diploma Disease’, as Dore (1976) called it, has
led to educational migration taking a whole new dimension with the
sheer magnitude of students travelling abroad in the pursuit of certificates
and their respective market value. At the same time, institutions of higher
learning, faced with reduced state financial support in many countries,
have had to operate under an increasingly market-oriented approach
(Kwiek, 2001). Such a shifting emphasis within the higher education

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 Naidoo: Tertiary-level international education

sector led to the recruitment of overseas students as a source of revenue.

Over the years, as the commercialization of higher education proliferated,
the number of students studying overseas rose accordingly. At the national
level, many countries added to this growth in overseas study by shifting
their overseas student policy from an ‘aid’ approach to a ‘trade’ rationale
(Smart and Ang, 1993). Doing so meant that overseas study was no
longer limited to those earning scholarships and fellowships. Rather, all
those who could afford it now had a chance for a cross-border education.
Ultimately, this led to overseas study shifting from an elitist experience to
one involving mass movements. Recent estimates by the Organisation for
Economic Cooperation and Development (OECD) suggest that nearly
1.9 million students were abroad in 2002 (OECD, 2004) compared to a
mere 149,590 overseas students in 19551 (UNESCO Statistical Yearbook).
In fact, between 1998 and 2001, the number of foreign students rose faster
than the number of domestic tertiary-level students in OECD countries
(16 per cent for the former compared to 12 per cent for the latter)
(Vincent-Lancrin, 2004) (Figure 1).
Although some commentators argue that the international student flow
has been slowing down in recent years, student mobility still accounts for a
significant source of international exchange throughout the world. Besides,
these figures represent foreign students undertaking tertiary education only
(Williams, 1981; Knight, 2002a). There are probably thousands more
foreign students involved in lower level education, language training and
the like (Williams, 1981), but at the time of writing, no comprehensive

2000
Number of overseas students (000s)

1800
1600
1400
1200
1000
800
600
400
200
0
1955 1968 1971 1975 1978 1981 1984 1987 1990 1993 1998 2002
Year

Figure 1 International student numbers at the tertiary level from 1955–2002

Source: UNESCO Statistical Yearbook (various years); OECD (2002).

327
Journal of Research in International Education 5(3)

statistics are yet available on international students enrolled in non-tertiary-

level institutions (Knight, 2002a).
Of those international students involved in higher education, 95 per cent
were studying in only 50 countries in 2002 (OECD, 2004). Almost 70 per
cent were enrolled in just 5 countries, namely the USA, the UK, Germany,
Australia and France (OECD, 2004). To the extent that approximately
another 20 per cent were studying in 10 more countries, namely Russia,
Japan, Canada, New Zealand, Spain, Belgium, Italy, Sweden, Switzerland
and Austria (OECD, 2004), the process of concentration is highlighted
even more: approximately 90 per cent of the world’s foreign students
were enrolled in just 15 countries in 2002. Figure 2 shows a selection of
these leading host2 countries’ enrolment of international students from
1980–2002.
Clearly, the USA has by far been the most preferred destination for inter-
national students during this time period. Australia also stands out where
the number of international students has increased more than 13-fold
since 1980 and by 2002, Australia was the fourth largest host country of
international students. Among these leading host countries, the case of
the English-speaking host countries is also of particular interest. Indeed,
with the emergence of English as an increasingly dominant world lan-
guage, a growing number of foreign students are opting for English-speak-
ing countries as their study destination in order to improve on their

700
USA
Number of overseas students (000s)

600

500

400

300
UK
Germany
200
Australia
France
100
Russia
Canada
0
New Zealand
1980 1985 1990 1995 2000 2002
Year

Figure 2 Number of tertiary-level overseas students in a selection of host countries

between 1980–2002
Source: UNESCO Statistical Yearbook (various years); OECD Education Database.
Note: Before 1991, statistics for Russia relate to the former Soviet Union.

328
 Naidoo: Tertiary-level international education

350

300
Relative growth index

250 1980

200 2002

150

100

50

0
Australia UK NZ Germany Austria Japan OECD USA Canada France

Figure 3 Increase of tertiary foreign students in a selection of OECD countries, 1980–

2002 (1990 ¼ 100)
Source: OECD (2002); OECD Education Database; UNESCO Statiscal Yearbook (various years).

linguistic abilities and consequently increase their ‘job-market’ value

(Hirsch, 2002). Based on a growth index computed from the number of
foreign students as a proportion of the total tertiary student population,
Figure 3 shows that on average, the five leading English-speaking host
countries, namely the USA, the UK, Canada, Australia and New Zealand
have shown a growth rate in their international student enrolment
higher than the average OECD country. In fact, estimates by the OECD
reveal that in 2002, these five English-speaking countries accounted for
over 50 per cent of the total foreign student enrolment (OECD, 2004).
On the demand side, Asia has consistently been the leading source
region of international students since the 1960s (see Figure 4). In 2002,
for instance, Asia accounted for 46.4 per cent of the total number of inter-
national students worldwide. Although one might argue that this large pro-
portion of Asian international students is to be expected since Asia accounts
for 60 per cent of the world population (United Nations Population Divi-
sion, 2002), there are a number of reasons why student mobility from Asia
can be argued to be of particular interest. First, the new global economic
structure that evolved in Southeast Asia in the 1980s made it possible for
more individuals from that area to study abroad. Similarly, particular
national circumstances such as the low domestic student intake in Chinese
higher education institutions3 all combined to increase the flow of students
from Asia.
Europe has also consistently been ranked as the second highest source
region of international students. As a proportion of the total number of

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Journal of Research in International Education 5(3)

Oceania
Number of overseas students (000s) 1800
South America
1600 Africa
1400 North America
1200 Europe
Asia
1000
800
600
400
200
0
1965 1970 1973 1980 1990 1997 2002
Year

Figure 4 Tertiary-level overseas students by region of origin: 1965–2002

Source: UNESCO (1971, 1976); UNESCO Statistical Yearbook (various years); OECD Education
Database.

foreign students, Europeans studying abroad have increased from 22 per

cent in 1965 to 31 per cent in 2002. This growth in the 1990s can be
attributed to the introduction of student mobility programmes such as
ERASMUS launched by the European Union in the late 1980s (Reichert
and Wächter, 2000). The popularity of such programmes, however, has
led European student mobility to be predominantly to other European
host countries such as the UK, France and Germany. In fact, statistics
show that approximately 74 per cent of all outgoing European students
in 2002 studied in Europe (OECD, 2004).
Mobility from Asia, conversely, has been more geographically diversi-
fied. In 2002, for example, 42.5 per cent of Asian international students
studied in the USA, 14 per cent in Australia, 9.4 per cent in the UK,
8.8 per cent in Germany, 8 per cent in Japan and 4 per cent in Russia. To
a lesser extent, New Zealand and Canada (roughly about 1.5 per cent
each) have also successfully tapped into the Asia market for international
students (OECD, 2004). Cross-border education is so popular in Asia
that the top 10 Asian source countries alone accounted for over 30 per
cent of international student mobility worldwide in 2002 (OECD, 2004).
The trends in student mobility from these 10 countries are depicted in
Figure 5.
China is by far the leading Asian sender of international students’
accounting for 10 per cent of the total number of international students
worldwide in 2002 (OECD, 2004). Since 1985, this represented a growth

330
 Naidoo: Tertiary-level international education
200
China
180
Number of students abroad (000s)

160

140

120

100 India
Korea
80

60 Japan
Malaysia
40 Indonesia
Hong Kong
20 Singapore
Thailand
Pakistan
0
85
86

87
88
89

90
91
92

93
94
95
96

98
99
00

01
02
19
19

19
19
19

19
19
19

19
19
19
19

19
19
20

20
20
Year

Figure 5 Top 10 source countries of tertiary-level overseas students from the Asian
region between 1985–2002
Source: UNESCO Statistical Yearbook (various years); OECD Education Database.

Note: Missing data for 1997.

rate of 328 per cent for China, peaking at approximately 182,000 students
in 2002. A decline in Chinese student numbers was, however, registered in
1998 when student mobility dropped by 26 per cent between 1996 and
1998. Given the fact that overseas study is a phenomenon which is sensitive
to changes in the world economy (Chen and Barnett, 2000), this fall could
possibly be attributed to the period of economic uncertainty caused by the
Asian financial crisis which started in mid-1997. Although China was
largely not affected by the crisis because of the non-convertibility of the
renminbi, it can nevertheless be assumed that the economic situation in
the region would have had some kind of ‘spill-over’ effect on the willing-
ness of Chinese students to study overseas. However, student mobility
rebounded quite well in China after 1998, increasing by nearly 110 per
cent from 1998 to 2002. India also stands out as a source country of inter-
national students, with an increase of 394 per cent in international student
mobility since 1985. By 2002, India accounted for 5 per cent of the total
number of international students worldwide (OECD, 2004) and all trends
point to India being the next growth market for international student
mobility.

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Journal of Research in International Education 5(3)

Programme and institution mobility

From a very modest starting point, programme mobility has a great poten-
tial for the provision of cross-border education. Already private for-profit
institutions such as the University of Phoenix are increasingly offering
courses and degrees taught online (Vincent-Lancrin, 2004). Cunningham
et al. (2000), for instance, suggest that while cross-border distance educa-
tion and training were somewhat unheard of as recently as 40 years ago,
today it is subject to a growing demand. Indeed, with the promise of new
satellite and Internet-based technologies, distance learning systems are
becoming increasingly popular, making programme mobility the second
most common form of cross-border education. In Australia, for example,
distance education accounted for 9 per cent of all international student
enrolment in higher education in 2000 (Vincent-Lancrin, 2004). In addi-
tion, the current geo-political dynamics suggest that distance education
will become more and more important as international students wanting
to study in countries such as the USA are encountering increased difficulties
in obtaining student visas due to increased security measures fuelled by
fears of terrorism. Indeed, many US-based institutions such as the Penn-
sylvania State University and the University of Maryland University College
have already recognized such challenges and have expanded their distance-
education programmes to attract international students post-9/11
(Carnevale, 2005). ‘Twinning’ arrangements whereby foreign education
providers deliver their courses by partnering with local education institu-
tions have also become a popular option to acquire foreign, internationally
recognized qualifications (Bennell and Pearce, 2003). The Observatory of
Borderless Higher Education (OBHE) (see http://www.obhe.ac.uk), for
example, reports that in 2000, there were 657 so called ‘twinning’
arrangements in China and 144 of them in India which, to date, represent
the two biggest markets for cross-border education (OBHE, 2002).
Institution-mobility on the other hand, although still limited in scale, is
also becoming an increasingly important development in cross-border
education with a number of universities increasing their commercial pre-
sence abroad through the establishment of offshore campuses (Symonds,
2004). Mazzarol et al. (2003), for instance, discuss how the number of
branch campuses of international universities has increased in the Asia-
Pacific region, particularly in Malaysia and Singapore. Indeed, in 2001,
three international universities had opened branch campuses in Malaysia
and a further four universities were in the process of doing so. Similarly,
there were three such campuses in Singapore with up to six in planning
(Mazzarol et al., 2003). To date, the main providers of offshore educational

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On campus Distance learning Offshore campus

100
90
80
Enrolment (%)

70
60
50
40
30
20
10
0
1996 1997 1998 1999 2000 2001
Year

Figure 6 Distribution of international students in Australian universities by mode of

study, 1996–2001
Source: Larsen and Vincent-Lancrin (2002a).

services have been British and Australian institutions (Larsen and Vincent-
Lancrin, 2002a). The University of Nottingham for instance was the first
foreign university to establish a stand-alone campus in China. In Australia,
foreign student recruitment based on offshore campuses doubled between
1996 and 2001 to account for 29 per cent of all international student enrol-
ment in the Australian tertiary education system (see Figure 6). However,
while British and Australian institutions currently dominate the offshore
campus market, institutions from other countries such as Canada, South
Africa and the United States are also expanding their market access
(McBurnie and Ziguras, 2001).
Such growth in student, programme and institution mobility has largely
been driven by four main rationales: (1) the mutual understanding
approaches which view student mobility as a means to enhance political,
cultural and economic ties (for example, the ERASMUS programme); (2)
the skilled migration approaches where highly skilled international
students are encouraged to stay in the host country after their studies (for
example, Germany); (3) the capacity building approaches where emerging
countries encourage cross-border education to improve their capacity in
higher education (for example, Singapore and Malaysia); and (4) last but
not least, the revenue-generating approaches where international students
are viewed as a potential source of revenue (for example, Australia and New
Zealand). The latter rationale in particular has been prominent in recent
years. Countries that have adopted this rationale to the internationalization

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of higher education have to date recorded the highest growth in inter-

national student enrolments (Vincent-Lancrin, 2004). Indeed, the substan-
tial income derived from international students has strongly induced
institutions in these countries to actively market themselves on the inter-
national scene. At the same time, coupled with increasing worldwide
demand for cross-border education, the revenue-generation approach to
international education has evolved into a major business. The next section
provides an overview of the growth of international education as an export
revenue earner.

Exporting international education: from an ‘aid’ to a

‘trade’ rationale
As the Second World War came to an end in 1945, it was increasingly
recognized that this great tragedy of the 20th century was largely a conse-
quence of misunderstanding of human issues and the conditions that con-
trolled relationships between them (Mungazi, 2001). Since in those times,
educational opportunity was the privilege of a few, the recognition of this
reality led to the conclusion that if nations were to avoid future conflicts, a
new collective effort had to be made to alleviate people of their ignorance
(Mungazi, 2001).
The USA, coming out of the war relatively unscathed in terms of struc-
tural damage compared to war-devastated Europe, took the lead in stimu-
lating and guiding these educational efforts that were deemed to lead to
international cultural understanding as a means of overcoming irrational
nationalism (Mungazi, 2001). Thus, under the auspices of federal sponsor-
ships of foreign students through aid, Fulbright scholarships and other
related programmes that financially supported educational exchanges, the
number of foreign students in the USA jumped from 7542 in 1944/5 to
26,759 in 1948/9 (Bu, 2003: 164).
Similarly, educational exchange programmes were used during the Cold
War era as an instrument promoting capitalism in response to the Soviet
propaganda of communism (Coombs, 1964). Large numbers of foreign
students were thus ‘subsidized’ to study in the USA where they were
expected to learn the American way of life and, upon returning home,
help spread the benefits of capitalism and reorient public opinion towards
favouring American policies (Mungazi, 2001).
Such an ‘aid’ rationale to overseas student policy was however not
unique to the USA. For instance, from 1950 onwards, government policies
towards foreign students in Australia and New Zealand were expressed as
part of the Colombo Plan, to provide aid-related assistance to students

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from developing countries of the Commonwealth (Smart and Ang, 1996).

Likewise, colonial powers such as Britain also subsidized foreign students
in the post-war period as part of their global responsibilities, especially
towards their colonies (Williams, 1981). However, in the latter’s case,
this subsidization was not restricted to colonial students only. On the
contrary, an open door attitude was generally supported where foreign
students, no matter their country of origin, were treated on the same basis
as home students, resulting in the former not having to pay any differen-
tial fees to receive their cross-border education (Williams, 1981). Such
government initiatives, either as a form of economic aid or as part of the
‘total diplomacy’ approach used in the Cold War (Coombs, 1964), led
overseas student numbers in the publicly financed sector of education to
rise dramatically between the 1950s and 1970s.
But, as the number of overseas students grew and the value of the sub-
sidy to them mounted, many countries became increasingly unwilling to
continue with their educational aid programmes (Williams, 1981). This
situation gave way to a shift in overseas student policy from a traditional
‘aid’ approach to a ‘trade’ rationale through the introduction of a full-
cost fees policy (Throsby, 1985). Ironically, while many initially thought
that a trade rationale would reduce the flow of foreign students (Maxey,
2000), their number actually increased significantly leading to the inter-
national education sector becoming a major export earner in a number
of host countries. In Australia, for example, Smart and Ang (1993) esti-
mated that in 1986 there were 20,000 ‘subsidized’ foreign students while
only 2000 were full-fee paying. In 1991, however, while there were only
6000 ‘aid’ students, there was a burgeoning 48,000 full-fee paying ones.
Consequently, seeing the trade potential of education, many host countries,
with the exception of a few nations such as France and Germany (Table 3),
have to date predominantly adopted a trade perspective in their overseas
student policy.
Looking ahead, with the inclusion of educational services as part of the
GATS, all trends seem to indicate an increase in its commercialization.
Although at this stage, education remains one of the least committed sec-
tors under the GATS,4 the growth which is taking place within the current
low level of liberalisation (Knight, 2002b) would tend to suggest that the
international education industry is full of trade potential even if complete
liberalisation in the sector is never achieved.
Indeed, the surge in international student mobility at the tertiary level
under the ‘trade’ rationale has meant that education has become one of
the largest and most dynamic service industries. Estimated at approximately
US$30 billion in 2002 and accounting for 3 per cent of the OECD’s total

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Journal of Research in International Education 5(3)

Table 3 Level of tuition fees in public universities for international students com-
pared to domestic students

Tuition fee structure countries Countries

Differentiated tuition fees for international Australia, Belgium*, Canada, Ireland*,

students compared to domestic students.
Similar tuition fees for international and
domestic students.
Free education for either international or
domestic students.
New Zealand, the Netherlands*, the
UK*, the USA
France, Greece, Italy, Japan, Korea,
Spain, Portugal
Denmark, Finland, Germany, Norway,
Sweden, Czech Republic, Poland

Note: * For non-European Union or European Economic Area students.

annual export of services (Alderman, 2001; Johnston, 2002), traded edu-

cational services has become a major business in a number of countries
including the USA, the UK, Canada, Australia and New Zealand (Larsen
et al., 2002). For instance, in 2002, education export earnings in the UK
amounted to £7 billion (British Department of Trade and Industry,
2004). For the USA, it accounted for approximately US$12 billion in
2003, making international education the fifth largest service sector
export (International Institute of Education, 2003). In New Zealand, edu-
cational services contributed NZ$1.5 billion in export earnings in 2000
(New Zealand Ministry of Education, 2002) and was the fourth largest
service sector export according to the OECD (2002). Likewise, education
export was the third largest service sector in Australia (OECD, 2002) and
was estimated at AUS$ 3.7 billion by the Australian Department of Educa-
tion, Science and Training in 2001 (DEST, 2003). Table 4 illustrates the
general trends in educational export earnings in a selection of host
countries for selected years. While in absolute terms it can be observed
that the USA is the largest export earner from traded educational services,
in relative terms Australia’s education export earnings are highest.
Furthermore, while the above estimates were calculated on the basis of
direct earnings from the export of education, indirect earnings in terms of
spending on accommodation, food and other items also contribute to
increasing the significance of the international education industry even
further. For example, statistics from the New Zealand Trade Consortium
and the New Zealand Institute of Economic Research (2000) estimate
that for every dollar (NZ$) earned directly from the export of education
in 1999, another NZ$1.15 was earned indirectly. Furthermore, when the

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Table 4 Exports of education services in a selection of host countries (in current
prices)

1989 1997 2001

Exports Total Exports Total Exports Total

(US$ services (US$ services (US$ services
million) exports (%) million) exports (%) million) exports (%)

USA 4575 4.4 8346 3.5 11,490 4.2

UK 2214 4.5 4080 4.3 11,141 –
Canada 530 3.0 595 1.9 11,727 2.0
Australia 584 6.6 2190 11.8 1,2145 13.1
New Zealand – – 280 6.6 11,353 8.1

Source: Vincent-Lancrin (2004).

multiplier effect is taken into consideration, these estimates become pro-

portionately larger, highlighting the increasing importance of education
as an export industry (Throsby, 1991). Likewise, when considering that
international students can also provide a number of non-financial benefits
such as providing the foundation for strong foreign and trade relations, the
significance of the international education industry should not be under-
estimated (Williams, 1981).
This trend in the export of education can be expected to continue as eco-
nomic growth and development is increasingly being linked to human
capital investment (Romer, 1986). There is now wide recognition that
an educated workforce is critical for sustained international competitive-
ness in the so called ‘knowledge economy’. Sophisticated machinery has
made even the most elementary task on the factory floor one where a mini-
mum level of literacy is necessary and, as the level of technology sophisti-
cation increases, the need for the labour force to continually improve itself
through education increases. Based on present trends, such demand can be
anticipated to be especially high among developing countries as they strive
to reduce their respective development gaps when compared with their
developed counterparts. However, due to the lack of educational resources
in many of these developing countries, the supply of domestic education is
unlikely to match its corresponding demand (Hirsch, 2002). Hence, this
unmet demand, notably among the upper and middle classes, will have
to be satisfied through cross-border education.
Such conditions have led many observers to expect an increase in the
potential for educational trade. Furthermore, developments in modern

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Journal of Research in International Education 5(3)

transportation and communication technologies facilitate the pace and

potential of student mobility underpinning the assumption that the pro-
spects for growth in the export of education are virtually unlimited. In
fact, the OECD estimates that the number of tertiary education students
involved in some form of cross-border education could reach around
five million over the next twenty years (OECD, 2002).
Recognizing this potential for international education as a major indus-
try, for both financial and non-financial reasons, many countries have taken
up the cause of marketing their respective education sector to potential
buyers. The Education UK brand campaign, for example, was launched
in January 2000 to promote British education overseas (Education and
Training Export Group, 2000). Likewise, IDP Education5 in Australia has
become a pacesetter in developing the export education industry through
such initiatives as education counselling, publications and exhibitions
(Smart and Ang, 1993). Such increased competition is leading to changes
in the dynamics of the international education industry. The next section
overviews what some of these changes might be, based on the emerging
trends that have been highlighted above.

Future of cross-border education

This section presents possible scenarios of how the international education
industry might develop in the future. These scenarios are advanced based
on the extrapolation of the trends and developments that have been
analysed in the previous sections. It is to be noted that although scenario
forecasting can be implemented through sophisticated techniques such
as Delphi analysis and Monte Carlo simulations, it is not the intention in
this article to get to that level of statistical technicality. Rather, the aim is
simply to extrapolate future trends based on current and past developments
of cross-border education. As such, the scenarios advanced in this section
are to be considered exploratory in nature rather than deterministic. They
are not meant to be exhaustive but are simply a rough guide to the possible
future that current players in the international education industry might
encounter. Figure 7 presents a diagrammatic representation of these
scenarios.
Under the status quo scenario, the international education industry is
likely to remain largely unchanged. Student mobility will continue to be
the dominant form of cross-border education although programme and
institution mobility will develop. The revenue-generating rationale for
the internationalization of education will retain its stronghold and the
GATS will still play a limited role in the international education sector as

338
 Naidoo: Tertiary-level international education
Changes in industry dynamics

Capacity
development
Increased
competition

Status quo

Year 2005

Short term Medium term Longer term

(<5 years) (5–10 years) (>10 years)
Time

Figure 7 Changing dynamics in the international education industry

no further major commitments are made to liberalise trade in educational

services. After all, the growth that has taken place in the international
education sector to date has occurred within the current low level of
liberalisation. The status quo scenario is likely to last to 2010 when the
implementation of the Bologna Convention in Europe is expected to
have major repercussions on the global cross-border education industry.
Indeed, the confusing variety of qualifications in Europe has led the
Bologna convention to call for a revamp of European higher education in
order to increase the international validity and portability of European
qualifications. Such restructuring would lead to the increased competition
scenario as more European countries become attractive study destinations
to international students.
Indeed, in the medium term, as the export of education grows in popu-
larity and the success of a few education exporting countries gets high-
lighted, a growing number of countries will establish themselves as
emerging education exporters. This is for instance already happening to
some extent in Europe where countries such as the Netherlands, Sweden
and Denmark have reformed their education systems to offer courses
taught in English so that these are accessible to international students.
Thus, while in the past international student mobility to these countries
have been limited due to language barriers, the introduction of degrees
taught in English now mean that they will increasingly be able to tap
into the international education market. Similarly, the increased inter-
national validity and portability of European qualifications as a result of
the Bologna convention will lead to an increased competitive intensity in
the international education market place. This increased competition

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Journal of Research in International Education 5(3)

would reinforce the revenue generating rationale behind the internationa-

lization of education. Host institutions and host countries will become
more aggressive in marketing themselves to international students. Those
that fail to market themselves effectively risk losing market share as more
and more competitors enter the industry. Similarly countries such as the
USA, where international students perceive that they are not welcomed
anymore as a result of fears of terrorism, might lose market share as inter-
national students will now have a greater number of alternative study des-
tinations to chose from. Programme and institutional mobility will also
continue to grow. New private higher education providers would be seen
entering the international education market place. Some of them would
even partner with traditional universities to give their qualifications on
offer some sort of academic credibility. Faced with increasing competition,
many traditional universities will also start collaborating to a greater extent
in order to fend off mutual competitors. More academic consortiums such
as Universitas 21 (see http://www.universitas21.com) and the Association
of Pacific Rim Universities (see http://www.apru.org) are likely to emerge
as more educational institutions seek to embark on multilateral as opposed
to bilateral collaboration in an increasingly competitive global market
place. Trade liberalization of the education sector will also pick up. As
the internationally driven goal of providing basic education for all is
progressively achieved, it can be assumed that the demand for higher
education will increase. Unfortunately, due to a lack of resources, higher
education institutions in most developing countries will be unable to
keep pace with the associated demand that occurs as more and more
students gain access to primary and secondary institutions. Consequently,
demand for cross-border higher education will continue to rise signifi-
cantly. Unfortunately, with such an increased demand, traditional universi-
ties in host countries may not be able to accommodate all international
students. Such disequilibrium between supply and demand would lead
host countries to liberalize their education sector to allow new private
higher education providers to tap into a booming export industry. Source
countries will also liberalize their education sector to allow both private
and traditional universities from overseas to set up operations in order to
improve access to domestic education.
In the longer term, such liberalization would make the GATS even more
prominent in regulating trade in educational services. Legislation will have
to be put in place to avoid the growth of degree and accreditation mills.
Indeed, learners will increasingly need to be protected against qualifica-
tions of questionable quality through accreditation systems that cover

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 Naidoo: Tertiary-level international education

cross-border education including commercial and non-traditional delivery

modes. Some source countries that are currently embarking on a capacity
building rationale to the internationalization of their education sector
would by then be in a position to become international education ‘hubs’
(for example, Singapore and Malaysia). Having seen the boom in the
export value of cross-border education, these countries would have aspired
over the years not only to increase access to local education opportunities
but also to attract international students as a source of export earnings.
Over time, these countries might even become more competitive in attract-
ing international students than the traditional western host countries. Their
often close geographical proximity to other education importing countries
(for example, Singapore/Malaysia’s proximity to other Asian education
importing countries) would make them attractive study destinations.
Although in the national context some countries such as Singapore and
Malaysia might aspire to reach a capacity building scenario in the next
five years, the fact that institution mobility involves a number of risky
initiatives including adverse financial exposure, jurisdictional issues and
quality management issues among others, means that many traditional uni-
versities are currently simply playing a ‘wait and see’ game before deciding
whether to go offshore or not. Consequently, a capacity building scenario
becoming established in the international education industry is unlikely to
materialize in the short to medium term.

Conclusion
Cross-border education has experienced tremendous growth in the last two
decades or so. While international student mobility has been the most
prominent form of cross-border education, programme and institutional
mobility are also becoming increasingly common. This article has had as
an objective the analysis of available statistics in documenting these con-
temporary developments in cross-border education. From this analysis, a
picture of the future of international education was advanced. It must
however be acknowledged that the painted scenarios are by no means
meant to be exhaustive. They are rather based on extrapolation of the
recent and emerging trends, and are meant to be used as a starting point
in helping the current players in the international education market place
to develop a clearer idea of their futures. Only time will tell whether
these predictions pan out in reality.

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Notes
1. This is the earliest year for which data are available.
2. Host country/region refers to the study destinations of international students. Source
country/region on the other hand, refers to the country/region from which inter-
national students come.
3. Due to limited number of university places, the gross enrolment rate at public tertiary
institutions has traditionally been low in China. In 2000, for example, the OECD esti-
mates that only 11 per cent of the domestic students applying to Chinese higher educa-
tion institutions were admitted, leading to a high proportion of Chinese students going
overseas to study as a substitute to domestic higher education (OECD, 2001).
4. Only 24 of the 144 WTO members have made commitments to education and only 21
of these have included commitments to higher education (WTO 2001, cited in Knight,
2002a).
5. See http://www.idp.edu.au

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Biographical note
VIKASH NAIDOO, MCom, is Associate Director (International Relations) at the
University of Auckland, New Zealand. He was previously a policy analyst at
the Ministry of Education, New Zealand. [email: viknaidoo@gmail.com]

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