Friday, July 8, 2011

The Financial and Economic Rationale for International Student Recruitment

The number of students studying at institutions outside of their home country is growing significantly. The tertiary level international student population worldwide grew by half a million to two million in the late nineties and the number is forecast to reach five million by 2025 (Martens & Starke, 2008). This growth is driven by an increased ability and willingness of students to study outside their country’s borders on the one hand (Mazzarol & Soutar, 2008; Naidoo, 2010); on the other, it is encouraged by proactive recruitment on the part of institutions, in many cases in the context of government policies that encourage international recruitment activities and national growth in the number of international students (Codd, 2004; Douglass & Edelstein, 2009; Naidoo, 2010).

This review investigates the notion that that at the institutional and national levels, international student recruitment is driven primarily by financial and economic motives [1]; and that this can be problematic for students, institutions, and the idea of higher education itself. The review draws on three literature streams: one comes from observers who accept the financial and economic rationales for international student recruitment, and write within a discourse that focuses on education as an industry and international education as a competitive market (Harman, 2004; Naidoo, 2006, 2010). Naidoo (Naidoo, 2010), for example, draws on “international business and marketing literatures” to investigate institutions’ “export readiness.” (p. 7) A second stream is critical of this development, referring to it as a neoliberal approach to education, and pointing out its negative effects (De Vita & Case, 2003; Enslin & Hedge, 2008; Tilak, 2008). The third stream attempts to take an objective look at international student recruitment through a research-based approach (Bolsmann & Miller, 2008; Toyoshima, 2007; Turner & Robson, 2007) This survey of the literature on financial and economic rationales for international student recruitment, and concerns about its impact, may be useful in raising awareness of the financial implications and the potential pitfalls of basing international student recruitment on a financial or economic rationale.

The Economic and Financial Value of International Students

There are significant financial implications to the rise in international student enrollments. International education has been described as “one of the largest and dynamic service industries,” and “a major business” (Naidoo, 2006, p. 335) in several English-speaking countries. OECD figures estimated the value of the industry as US$30 billion in 2002; it was worth £7 billion in the UK that year, US$12 billion in the US in 2003, NZ$1.5 billion in 2000, and AUS$3.7 billion in 2002 (Naidoo, 2006). By 2006, the value of the international trade in education services had risen to between US$50 and 60 billion (Naidoo, 2010). Around half of this revenue was earned by the top five education exporters: the USA, the UK, Australia, New Zealand, and Canada (Tilak, 2008). In each of these countries, education was among the top export-earning industries, and within this sector student mobility was the main source of revenue. Estimates of revenue earned through the presence of international students give a good indication of the growth of the industry. In New Zealand in 2003/2004, for example, education services were the fourth largest service export, worth NZ1.4 billion (Martens & Starke, 2008). The financial benefits are not limited to the higher education sector. In a discussion of the economic benefits of educational exports for Australia, Harman pointed out that missing from revenue estimates are, “employment in infrastructure necessary to support international students…income generated by visits to Australia of the parents, other family members, and friends of students,” (Harman, 2004, p. 113) in addition to an annual addition of 50 000 jobs to the Australian economy as a result of international students in Australian education.

The impact of international students on an institution’s finances can be significant. Lewis (2005) found that international fee-paying students accounted for 40% of tuition revenues at the University of Auckland. Fees from non-EU students in the UK made up between 17.7% to 33.5% of total fee income at universities in 2003-2004 (Bolsmann & Miller, 2008).

Hence, international student recruitment has a strong economic value at the national and institutional levels. It is one thing to establish this fact, however, and another to argue that international student recruitment is motivated first and foremost by economic and financial incentives. A survey of the literature reveals that this is indeed the case.

Economic and Financial: the Primary Rationale

The financial rationale for international student recruitment is not a new phenomenon, and has long existed alongside other rationales. Bolsmann and Miller (2008) described three rationales or strands that universities in England have followed. The first, Academic Internationalism, views the university as a place of learning for all nationalities. The second, Economic Competition, sees students as an economic resource for universities and therefore a source of competition among them. The third, a Developmental strand, saw international education as a means of providing aid and development to poorer countries, such as those of the British Commonwealth. The developmental strand was almost the almost exclusive rationale for international student recruitment in Australia until the mid-1980s, and had the aim of “establishing good relations with current and potential trading partners.” (Harman, 2004, p. 106) The first and third strands positioned universities, especially those in the U.S. and UK, to take advantage of the financial rationale by exploiting political and imperial connections to develop markets and earn income (Bolsmann & Miller, 2008).

The rationales for international student recruitment can be analyzed at the institutional and national levels. These levels may be closely intertwined. Jiang (2008) reviewed Knight’s (1997) four rationales for the internationalization of higher education. The four rationales are: political (for example spreading national influence and gaining knowledge of other cultures, systems, and languages); long-term economic (such as the need to maintain a country’s competitiveness in the global marketplace); academic (adding value to the academic program through international content); and cultural/social (understanding the relationship of one’s own culture and society to others). With the end of the Cold War and the rise of the global knowledge economy, the significance of the academic and cultural/social rationales for internationalization declined (Jiang, 2008). Universities were regarded as needing to become financially viable and globally competitive (Bolsmann & Miller, 2008). An example is provided in Cudmore’s study of Colleges of Applied Arts and Technology in Ontario, Canada, which revealed that two of the top three rationales institutions gave for international student recruitment were revenue generation and the developing of international trade links (the other was the opportunity to expose the student body to international perspectives) (Cudmore, 2005). Cudmore summarized the view of several observers that “the humanitarian motivation to recruit international students has declined, replaced by a motivation to boost revenue and export earnings.” (Cudmore, 2005, p. 47)

Some studies have focused on analysis at the institutional level. Bolsmann and Miller’s (2008) survey of administrators involved in international student recruitment at different types of universities in the UK suggested that the financial rationale is an underlying or driving force behind other rationales at the institutional level, or is intimately tied to them. While the desire to become a ‘world-class institution’ appeared to be a motivator, one respondent acknowledged that this status would allow the university to charge more for tuition. Another respondent stated that while gaining an international profile was a key reason for international student recruitment, the full fees paid by international students were helpful to the university. Yet another claimed that the university finance department treated international student fee revenue as the bottom line, and doubted whether there would be such a strong push to recruit international students if it were not for the income they brought in. Bolsmann and Miller concluded that although the respondents at different types of universities had a difference of emphasis in their rationale, they all appreciated the importance of the revenue generated by enrolling international students, and that the primary discourse around international students was “economic and market-orientated.” (p. 87)

Tian and Lowe, (2009) also writing on internationalization in UK higher education, expressed concern that even where academic rationales appear to justify internationalization in education, internationalization is motivated primarily by the economic rationale. Toyoshima (2007), in a study that compared long-established UK universities with post-secondary institutions that were converted into universities in 1992, found that the economic rationale was emphasized in the latter. All respondents but one from these institutions stated that the chief motivations for international student recruitment were financial. This suggests that newly internationalizing universities place financial considerations above all others, a hypothesis supported by Zhao and Wildemeersch in their study of internationalization in European universities, which found that, “(i)n most cases, the first step of many universities toward internationalization has a numeric orientation, with the number of international students as the main indicator of success.” (Zhao & Wildemeersch, 2008, p. 51)

At the national level, international student recruitment is described as a significant contributor of export earnings (Bolsmann & Miller, 2008), or as a major export industry (Codd, 2004). Following from this development, higher education is coming to be seen as a national strategy for global competitiveness. Douglass and Edelstein (2009), for example, recommended that the Obama administration promote higher education as an export industry and a national asset, and proposed that the administration build capacity in the sector.

Harman (2004), who investigated the development of higher education service export in Australia, also reached the conclusion that the most significant development in the internationalization of higher education was the rise in enrollments of full fee-paying international students. Although Harman described a broad governmental vision for higher education internationalization – including cultural understanding and the development of a more international outlook in Australia, following a period of approximately seven years during which the emphasis was on the commercial export of higher education - the most notable changes in export education that Harman acknowledged were all expressed in numerical terms, such as a 282% increase in international student numbers between 1990 and 2000, and an increase in the proportion of international students in Australian higher education from 5% to 14%. (p. 108) The most obvious benefit to Australian universities of increased international student enrollment, Harman stated, is financial (p. 113). Harman’s focus on the quantitative data associated with international student recruitment is typical of the market-centered discourse adopted by writers who view international education as a form of international trade. Other observers ground their discussion of international student recruitment in a discourse stressing global markets and competition, and the importance of international student fees to institutional success (Douglass & Edelstein, 2009; Mazzarol & Soutar, 2008). In this market-centered discourse, the focus is on student numbers and monetary value.

The literature surveyed confirms Jiang’s (2008) claim that higher education internationalization “is becoming increasingly dominated by economic imperatives that focus on exporting education and generating income from overseas students” (p. 347), indeed that “an economic rationale…dominates over political, academic, or cultural/social rationales.” (p. 352)

International Students and Full Fees

Underlying the revenue contributed by increasing numbers of international students are the full fees they pay to attend foreign institutions. In many countries, charging international students full fees is a relatively new development, but one which institutions have come to depend on. In New Zealand, only 13% of international students in higher education paid full tuition in 1990; this had risen to 95% by 2003 (Martens & Starke, 2008). Enslin and Hedge (2008) and Bolsmann and Miller (2008) detailed the history of how full fees came to be instituted for international students in the UK. Prior to 1967, international students and domestic students paid the same fees; all were subsidized out of public funds. A fee differential for international students was introduced in 1967 with the intention of reducing demand from international students and the strain on funds; ironically, this move encouraged institutions to step up efforts to recruit international students, since those students now represented a financial benefit to the institutions. In the 1970s, quotas on international student recruitment were put in place, while tuition fees for international students continued to rise and government support was withdrawn. In 1980, when the government withdrew all support for international students, it also removed limits on international student numbers, and full fees became an incentive for institutions to recruit them. According to Coate (2009) in reference to UK higher education, “the entire rationale for designating certain students as ‘international’ rather than ‘home’ is based on a need to decide who pays full-cost fees (of up to £18,000 for some courses) when registering.” (p. 276) Institutions in New Zealand, where the government has been the source of a significant amount of funding in the past, have come to depend on the income contributed by full-fee paying students (Codd, 2004). In Australia, the switch from government-subsidized aid to a full-fee model for international students confounded expectations that international student enrollments would decrease as a result; it is estimated that there were 20 000 subsidized international students in 1986, but 48 000 full-fee international students in 1991 (Naidoo, 2006).

Neoliberalism and the Rise of the Economic and Financial Strategy

The chief cause identified in the literature for the rise of international student recruitment as a financial strategy by institutions is the reduction in traditional sources of funding, in particular of government funding. This is linked in the literature to the rise of neoliberalism, an ideology that promotes private enterprise and the free market as deliverer of goods and services, and a reduced role for government (Tilak, 2008). Neoliberal policies are associated with reduced public funding, the deregulation of markets, and the privatization of welfare provision (Cudmore, 2005). The rising importance of the financial and economic rationales for international student recruitment is considered “part of a broader shift in policy and discourse towards neo-liberalism where universities are seen as contributors to the national economy and are expected to compete globally for international students who would pay fees.” (Bolsmann & Miller, 2008, p. 76) Higher education, in the neo-liberal world view is conceived as an investment in human capital that brings benefits to individuals, corporations, and the national economy (Bolsmann & Miller, 2008).

Diminishing state support associated with neoliberal policies has provided a strong incentive to institutions to recruit international students (Cudmore, 2005; De Vita & Case, 2003; Naidoo, 2010; Tilak, 2008). In Britain, the shift occurred when the conservative Thatcher government came to power in 1979 (Bolsmann & Miller, 2008; De Vita & Case, 2003; Toyoshima, 2007). This position did not change with the incoming New Labour government in the mid-nineties, and the Prime Minister’s Initiatives of 1998 and 2006 called for the universities to recruit large numbers of international students (Coate, 2009). The result is a higher education policy that stresses international student recruitment for economic gain and as a way to strengthen Britain’s competitiveness on the world stage (Enslin & Hedge, 2008). Douglass and Edelstein (Douglass & Edelstein, 2009) recommended that the Obama administration adopt this strategy to revive U.S. public institutions. Consistent with the neo-liberal perspective, rather than recommending direct financial support for the universities, they proposed that the universities become more entrepreneurial in international student recruitment.

Similar developments took place in other countries. Reductions in government funding are reported by Cudmore (2005) to have impacted Canadian institutions, such that revenue generation was the prime motivation for international student recruitment in the institutions he studied. Codd, in a discussion of educational commercialization in New Zealand, claimed that commercialization was “the latest phase of a neoliberal agenda for educational reform that began with the policies of decentralization, marketisation, privatisation, and the general subordination of education to economic objectives.” (Codd, 2004, p. 23) This agenda was pursued following the election of 1984 (Martens & Starke, 2008), when public education came to be viewed by the Treasury, the most significant influence on national policy, as a drain on the nation’s economy, and a sector that should therefore be subject to market forces (Codd, 2004). In New Zealand, universities conceived as enterprises (Martens & Starke, 2008) compete for resources, and a significant means of gaining access to financial resources is through the recruitment of international students. Many institutions are now dependent on the revenue generated by international students (Codd, 2004). International students have become, in Lewis’s (2005) telling, a cash cow for the funding of institutions.

The result of thinking of higher education in neo-liberal terms is, according to critics, a conception of education as an internationally traded commodity (Martens & Starke, 2008; Tilak, 2008), packaged and sold like other products and services (Cudmore, 2005) Bolsmann and Miller (2008) described how a neo-liberal approach to education, which views universities as competitive providers and students as rational consumers, can cause knowledge and learning to be packaged into discrete modules that can be bought and sold as a commodity. Critics such as these deny that higher education institutions are producers of commercial goods and that higher education is a commodity.


Problems Caused by the Economic and Financial Rationales

Institutions considering international student recruitment as a means to resolving financial problems need to be aware that this strategy can have negative consequences. Too great a focus on financial goals can divert institutional attention away from important matters such as attending to international students’ specific academic, social, and cultural needs; it can have detrimental effects on the institution as a whole; it can have negative implications for equality among students, institutions, and nations; and it may lead universities away from their purpose of serving the public good.

International students, like domestic students, have a need to make friends and be accepted into a social group. For international students in an unfamiliar culture, and in many cases speaking a foreign language, the need for social support and acceptance may be particularly strong. Many international students may desire to interact with students from the host country or gain access to the country’s culture (Marriott, du Plessis, & Pu, 2010), but may feel uncertain and anxious about how to do this (Zhao & Wildemeersch, 2008). If they are unable to interact with students from the host country, they may be deeply dissatisfied with their experience at the institution (Romm, 1991, cited in Harman, 2004). Indeed, while an institution may celebrate diversity and inclusion, the social integration of domestic and international students does not occur naturally (Tian & Lowe, 2009) Students from the host country, unprepared for interaction with international students, may engage in deliberate social exclusion of international students. (Tian & Lowe, 2009) Alternatively, domestic students may be passive in their relationships with international students and not make attempts to reach out to them; or they may hold racial or ethnic stereotypes about international students (Zhao & Wildemeersch, 2008). As a result, international students may perceive themselves as outsiders, which may lead to feelings of anguish and loss (Tian & Lowe, 2009), and may result in their socializing only with conationals (Zhao & Wildemeersch, 2008). Hence, institutions need to address and make provision for international students’ social and cultural needs.

International students may also experience difficulties in the classroom, in part because of their lack of familiarity with the academic traditions and practices of the host country. In universities in the UK, it has been found that lecturers and British students do not make special accommodations for Chinese students in the classroom, but that the Chinese students are left to rely on their own efforts to learn to participate and assimilate, a situation which can lead to feelings of distress and exclusion (Tian & Lowe, 2009). For their part, faculty may only see language difficulties, lack of participation, and inappropriate learning habits among international students (Zhao & Wildemeersch, 2008), and regard these as an academic deficit (Coate, 2009) that is the students’ responsibility, rather than a difference that is the institution’s responsibility to address. International students may thus come to be seen not as a resource that enriches the institution, but as a problem (Tian & Lowe, 2009). Institutions should therefore reflect on their position on educating international students. On the one hand, they may send a welcoming message to them; on the other, classroom practices may make no provision for the fact that these students may have differing and greater needs than many domestic students.

The above concerns may arise wherever institutions recruit international students; they may be exacerbated in cases where the institution is overly focused on the recruitment for financial reasons. The next concern is directly linked to international student recruitment as a financial decision: how are international students, recruited for financial reasons, perceived by institutions and policy makers? International students may come to be treated as an economic unit that brings income to the institution (Lewis, 2005), or as financially important but academically deficient (Coate, 2009) As payers of substantial fees, students may come to be treated by the institution as customers, and, positioned in this way, students may come to view their degree as a right because they have paid for it (De Vita & Case, 2003). While traditionally students studied abroad to gain ‘soft skills’ such as cultural exposure and language skills, they increasingly see it as a means of earning high-ranking academic qualifications and access to the job market (Martens & Starke, 2008). Rather than traveling abroad seeking knowledge and wisdom, they may be in search of qualifications, a phenomenon that has been referred to as “diploma disease.” (Dore (1976), cited in Naidoo, 2006)

There may be an ethical tension (Enslin & Hedge, 2008) between universities that declare a commitment to social justice on the one hand, and their practice of charging international students substantially higher fees than domestic students for no other reason than that they are international. An example of such a tension is the Code of Conduct implemented by the New Zealand government for institutions recruiting international students, which seeks to ensure international student welfare. While the implementation of such a code might be evidence of a genuinely caring attitude on the part of the government, when seen in the context of a national policy of international student recruitment having a rationale grounded in international competitiveness, such a code may in fact be evidence for a government seeking to strengthen the international education industry in order to enhance its ability to generate revenue (Lewis, 2005). Indeed, some commentators state explicitly that they are seeking to improve the quality of service of higher education institutions to international students in order to increase New Zealand’s international competitiveness (Marriott et al., 2010). Therefore, international student recruitment as a financial strategy may set up an ambiguous relationship between institutions and students, in which knowledge development and dissemination becomes another service industry with providers on the one hand and customers on the other.

There are further caveats at the level of institutional management. Institutions believing that international student recruitment will improve the diversity of their student body may be disappointed because, while there may be an expectation that international students should originate from a variety of countries, in fact, a relatively small number of countries may be particularly active in sending students abroad. These students may be particularly easy or relatively cheap to recruit, and this can lead to a majority of international students coming from one country and forming a separate cultural group on campus, as some institutions in the UK have found (Bolsmann & Miller, 2008).

The temptation to increase the number of full fee-paying international students on campus can also lead to concerns of an overdependence on international student revenue, and an uneven balance between international students and domestic students on campus (Harman, 2004). This can result in a dilution of the international students’ experience of studying in a foreign country, since they have insufficient opportunities to engage with students from the host country (Martens & Starke, 2008). Too rapid an increase in international student enrollments or a lack of institutional coordination can lead to institutions or individual departments that have had a domestic orientation becoming overextended and unable to serve the international population appropriately (Douglass & Edelstein, 2009; Naidoo, 2010).

A further concern at the institutional level lies in the tension between the traditionally cooperative nature of academia, whereby faculty engage in international collaboration and international students are recruited within an ideology of “transformational internationalization,” (Turner & Robson, 2007) with international activities embedded in institutional routines; and a competitive, revenue-generating orientation that can alienate faculty from institutional efforts toward internationalization, in which faculty may feel cynical about internationalization; or that they are victims of it rather than participants in it; or that international students are being recruited in order to secure their continued employment (Turner & Robson, 2007).

The practice of charging international students higher fees than domestic students has led to concerns that this practice may exacerbate inequality among students, institutions, and nations. University and college recruiters may target their efforts in countries where there are students who can afford to pay fees, while ignoring students in poorer countries (Cudmore, 2005), resulting in a cycle in which richer countries are increasingly able to compete in order to provide a high standard of living for their citizens, while poorer countries are unable to enter this “race” (Enslin & Hedge, 2008). Aggressive international student recruitment driven by institutions that have the ability and strong financial rationale to do so places these institutions in a privileged position as knowledge providers to the world, increasing inequality among institutions worldwide in favor of those in wealthier nations (Jiang, 2008). Some argue that in a world in which authority is shared between national governments and supra-national bodies such as the European Union and the World Trade Organization, where states are mutually dependent and global flows of people and finance are on the increase, it is no longer ethical to discriminate against nationals of other countries by assigning them the designation ‘international’ and charging them higher fees (Enslin & Hedge, 2008).

Finally, international student recruitment as a financial strategy raises concerns about the changing nature and role of universities. Higher education can be seen as either a public good that should not be subject to market forces, or as a private good that is subject to competition and can be sold for a profit (Marginson, 1993, as cited in Codd, 2004; Martens & Starke, 2008). A public good can be defined as one that is non-excludable and non-rivalrous; that is, it cannot be provided to some and not to others, and its consumption by some does not diminish the ability of others to consume it (Tilak, 2008). Public goods also produce externalities in the form of benefits to the public. (Tilak, 2008) If higher education fulfills these criteria, as has been argued (Stiglitz (1999), as cited in Tilak, 2008) then it is not amenable to being provided in a competitive environment. Those who argue for treating higher education as a service to be bought and sold emphasize the benefits to individuals, but may neglect to take into account the public benefits of higher education, which are thus in danger of disappearing (Tilak, 2008). Since universities in many countries are becoming less dependent on national governments for support, and the individual nations of the world are increasingly integrated, it can be argued that this public good extends globally rather than merely within-country (Enslin & Hedge, 2008). There is evidence, however, that the view of higher education as a private good has triumphed over the public good position, a situation that some find offensive (Harman, 2004). For example, export education has been described by the New Zealand government as primarily a commercial activity, which is particularly significant in a country where higher education was originally conceived as being free, accessible, and universal (Codd, 2004).


Conclusion

This review investigated the extent to which international student recruitment is driven by economic and financial rationales, and sought to describe problems caused when institutions and nations adopt these rationales. The literature suggests that the economic and financial rationale is the most important.

The recruitment of full fee-paying international students can be beneficial for institutions and nations. The practice may strengthen higher education by generating revenue for institutions, particularly when government support is being withdrawn. Export education might be seen as a first step in institutional internationalization, one that helps institutions prepare to operate in a more globally integrated world through the development of greater sensitivity toward international students by faculty, staff, and students, as well as through the internationalization of the curriculum and international collaboration in research (Harman, 2004). However, too great a focus on the economic and financial rationale for international student recruitment may lead to neglect of a number of important questions, including those concerning the welfare of international students, the impact on the institution and its management, inequality among students, institutions, and nations, and the purpose of higher education.

Institutional leadership teams should therefore consider the following recommendations before being tempted to use international student recruitment for revenue generation:

1. Develop a strategy for international engagement, one that makes internationalization a central part of the institution’s activities (Douglass & Edelstein, 2009). Internationalization does not stop with the recruitment of international students; it means integrating an international and intercultural element into the teaching, research, and service functions of the institution (Knight (1999), as cited in Jiang, 2008). International student recruitment must be accompanied by a willingness to attend to international students’ needs. Additionally, domestic students, as well as faculty and staff, need to be open to their presence.

2. Reflect on the purpose of higher education. Conceive of it not merely as a commodity to be traded, but as a tool for good, such as attaining global justice (Enslin & Hedge, 2008).

3. Consider how a broadly and deeply conceived institutional internationalization can be a means for personal and institutional transformation, as opposed to focusing on international student recruitment as a means of revenue generation (Turner & Robson, 2007; Zhao & Wildemeersch, 2008).

In the end, an ethical approach to education requires that institutional decision-makers pay attention to the needs of students and the consequences of having them on campus, and not merely to their financial value.

References

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[1] Following the American Heritage Dictionary (“Dictionary.com,” 2011), financial is defined as relating to money matters; economic is defined as pertaining to the production, distribution, and use of wealth. The two terms are used somewhat interchangeably in this review.