Globalization, economic crisis and national strategies for higher education development potx

International Institute
for Educational Planning
N.V. Varghese
Globalization, economic
crisis and national
strategies for higher
education development
Research papers IIEP
Globalization, economic crisis and
national strategies for higher education development
Globalization, economic crisis and national strategies
for higher education development
N.V. Varghese
International Institute
for Educational Planning
The views and opinions expressed in this book are those of the authors and do not necessarily
represent the views of UNESCO or IIEP. The designations employed and the presentation of material
throughout this review do not imply the expression of any opinion whatsoever on the part of
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or concerning its frontiers or boundaries.
The publication costs of this study have been covered through a grant-in-aid offered by UNESCO
and by voluntary contributions made by several Member States of UNESCO, the list of which will
be found at the end of the volume.
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5
Abstract
Higher education has undergone tremendous expansion in the recent past. The growing employment
opportunities and the increased skills needed to compete in the global labour market are important
reasons for the expansion of the sector. This paper argues that higher education in the context
of globalization has become a market-determined process, replacing the near monopoly enjoyed
by the state. The growth of private and cross-border higher education refl ects this change. The
paper discusses cross-border education through three different forms – through the mobility of
institutions, of students, and of teachers. Cross-border student mobility is encouraged since it is
a good source of getting future highly skilled workers in certain specialized areas. Institutional
mobility is very often from the developed to less developed countries. Student mobility, on the
other hand, is from the less developed to developed countries. The United States of America (USA)
is the preferred destination for cross-border education and nearly three fourths of all cross-border
students are hosted by 10 member countries of the Organisation for Economic Co-operation and
Development (OECD).
The current economic crisis, although it started from the fi nancial systems of the developed
countries, is global in its reach as it spreads to both middle- and low-income countries. The initial
indications are that the crisis will result in heavy losses in employment and in household income
levels. The crisis may lead to reduced funding for education from all sources – government, private
sector and households. Many universities with investments in foreign banks have already lost their
investments. Student support systems, scholarships and student loans will be severely affected.
Some of the largest providers of student loans have lost heavily during the crisis, and some of them
have fi led for bankruptcy protection in 2008. The fi nancial crisis may lead to a freeze on recruitment
and a cut in programmes. The crisis may also lead to reduced aid fl ows.
This paper points out that leaving the education sector to markets may not be a good option. It
argues for active state intervention in higher education. There is a need to redefi ne the role of the
state in the changed circumstances. The ideal situation would have been full state funding but
it has to be recognized that the state has an important role to play, even when it does not have

adequate resources to fi nance the higher education sector. The state needs to take responsibility
for developing rules for establishing private and cross-border institutions, for putting in place
mechanisms to ensure quality and regulations to ensure equity. Given the limited resources at
its disposal, the state may better target its limited resources to disadvantaged groups to improve
overall equity in higher education.
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6
Contents
Abstract 5
Contents 6
List of abbreviations 7
1. Introduction 8
2. Globalization and demand for skilled labour 11
3. Globalization and market orientation in higher education 14
4. Globalization of higher education and cross-border mobility 16
4.1 Cross-border institutional mobility 16
4.2 Cross-border teacher mobility 17
4.3 Cross-border student mobility 18
5. The economic crisis and its implications for higher education and employment 22
6. National strategies for the development of higher education 25
7. Concluding observations 28
References 30
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7
List of abbreviations
AICTE All India Council for Technical Education
DFID Department for International Development
EFA Education for All
FDI foreign direct investment
GATS General Agreement on Trade in Services

GDP gross domestic product
GER gross enrolment ratio
IBE International Bureau of Education
IBM GBS IBM Global Business Services
ICT information and communication technologies
IIEP International Institute for Educational Planning
IIM Indian Institute of Management
IIT Indian Institute of Technology
ILO International Labour Offi ce
IMF International Monetary Fund
IT Information technology
JSE Johannesburg Stock Exchange
MNC multinational corporation
NUEPA National University of Educational Planning and Administration, New Delhi
OECD Organisation for Economic Co-operation and Development
R&D research and development
RIHED Regional Centre for Higher Education and Development
SNU Seoul National University
TERI The Education Resources Institute
TOI Times of India
UGC University Grants Commission
UIS UNESCO Institute for Statistics
UNESCO United Nations Educational, Scientifi c and Cultural Organization
UK United Kingdom of Great Britain and Northern Ireland
USA United States of America
USDC United States Department of Commerce
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8
1 Introduction
The education system has been expanding globally. More people are investing more of their time

and money in education now than in the past. Although all levels of education have experienced
expansion, the rate of growth has, perhaps, been greatest at the higher education level. Between
1991 and 2005, the number of students enrolled in institutions of higher education worldwide
more than doubled from 68 to 137.9 million students (UNESCO Institute for Statistics – UIS, 2007).
Gross enrolment ratio (GER) increased from 13.8 to 24 per cent in the same period. The GER
varies between 5 per cent in the African region to 70 per cent in North America and Western
Europe. While the target of the member countries of the Organisation for Economic Co-operation
and Development (OECD) is to achieve the goal of universalizing tertiary education (OECD, 1998),
many countries, especially in sub-Saharan Africa, still remain at a higher education enrolment level
of less than 5 per cent and are concentrating their efforts in the struggle to universalize primary
education.
While all regions are benefi ciaries of the expansion of higher education, expansion has been uneven
as shown in Table 1.1. Between 1990 and 2005, GER almost doubled in the Arab region, increasing
from 11 to 21 per cent, and in South and West Asia from 6 to 11 per cent; in East Asia and the
Pacifi c, GER tripled from 7 to 24 per cent. In Latin America, the increase from 17 to 29 per cent
was moderate. However, expansion of higher education in Africa was slow – an increase from only
3 to 5 per cent. Since higher education grew more quickly in other regions, inter-regional disparities
increased.
Table 1.1 Higher education enrolment in 2005
Regions
Enrolment in
millions
Enrolment
share
GER 1990 GER 1999 GER 2005
Arab States 6.8 4.9 11.0 19.0 21.0
Central and Eastern Europe 19.4 14.1 39.0 57.0
Central Asia 2.1 1.5 19.0 27.0
East Asia and the Pacifi c 41.6 30.2 5.9 13.0 24.0
Latin America and Caribbean 15.3 11.1 17.0 21.0 29.0

North America and Western Europe 33.4 24.2 35.6 61.0 70.0
South and West Asia 15.8 11.5 6.0 11.0
Sub-Saharan Africa 3.5 2.5 3.0 4.0 5.0
Total 137.9 100.0 13.8 18.0 24.0
No data available.
Source: UIS (2007) and UNESCO (1998).
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Introduction
9
Expansion of the system is due to several factors. First, there is the pressure resulting from expansion
at the lower levels of education. While part of this expansion is in response to the voluntary demand
for education, another part of it is in response to public action. The promulgation of laws governing
compulsory primary education has increased national commitment and international support to
achieve the Education for All (EFA) goals. These initiatives have generated demand for primary
education, even from the most disadvantaged groups and from those living in remote areas. As a
result of the expansion of the lower levels of the education system, demand for education at the
secondary and post-secondary levels has in turn increased. The move, in many countries, towards
the universalization of secondary education has increased the number of candidates eligible to
enrol in higher education, thus putting additional social pressure to expand the higher education
sector.
Second, the rapid expansion of higher education in the recent past is also a refl ection of increasing
employment opportunities for university graduates. The public sector used to be the largest
employer of university graduates in developing countries. Employment in the public sector has
declined and many countries, in the context of globalization, have promoted the private sector of
their economies. The slowdown in employment generation in the public sector has, very often, been
offset by employment creation in the private sector. Furthermore, recognizing the changing skill
requirements in the context of globalization, many countries not only universalized school education
but also ‘massifi ed’ their higher education systems. Now it is globally recognized that an expanded
higher education sector has become a necessary condition for a country’s growth in the present
environment; it is important in promoting faster technological catch-up and in improving a country’s

ability to maximize economic output (World Bank, 2002). As noted earlier, the OECD countries are
moving towards the universalization of tertiary education (OECD, 1998) while countries in Africa
are taking steps to expand higher education to ‘accelerate catch-up’ (World Bank, 2009).
Third, recent trends in expansion also indicate the fast growth of private and cross-border education.
The number of students pursuing studies in domestic and private institutions has increased and,
in cross-border institutions, it has almost doubled to 2.7 million in the last decade. Although better
job opportunities and higher salary expectations can be important reasons, the growth also refl ects
changes in the provision of higher education facilities.
This paper addresses issues related to the globalization of higher education, focussing on cross-
border education – the cross-border mobility of students, of teachers and of institutions. The
expansion of cross-border education refl ects the increasing demand for domestic degrees in the
employment market in the developed world, and for foreign degrees for migrant workers in the
employment market in the developing world. The cross-border education market seems to have the
propensity to attract good brains from the developing world to meet the requirements of the global
labour market, both domestic and foreign. Private individuals are willing to pay a higher price for
cross-border education since the returns from their investment are high. Private agencies are also
willing to invest in cross-border education since such an investment is profi table. This paper argues
that higher education in the context of globalization has become a market-determined process,
replacing the near monopoly position previously enjoyed by the state. Therefore, there is a need
to review and revise public policies for promoting higher education. The state needs to redefi ne
its role in facilitating expansion with equity and in ensuring quality. The current fi nancial crisis has
underlined the need for public intervention to regulate market processes. National strategies for
the development of higher education need to focus on developing regulatory measures to promote
equity and quality as the system expands. These regulations are equally or even more needed in
the cross-border segment of higher education.
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10
Introduction
The paper is organized as follows: Section 2 discusses the increasing demand for higher skills in
the global labour market. Section 3 analyses the way in which market principles have permeated

the process of globalization of higher education. Section 4 deals with the cross-border mobility
of institutions, students and teachers in higher education. Section 5 discusses the implications
of the current economic crisis for the globalization and the development of higher education.
Section 6 deals with national strategies to develop higher education, and the fi nal section draws
some conclusions from the analysis carried out in the paper.
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11
2 Globalization and demand for skilled labour
The knowledge economy is at the centre of development in the current context. Knowledge
economies have grown faster and many of them have sustained a momentum of growth over
the past decades. Employment opportunities, too, have expanded globally on two fronts. First,
there has been an increase in employment in the developed countries where production is more
knowledge-based. Skill requirements are high and have attracted highly skilled workers from other
countries. In fact, the migration of highly skilled workers has been encouraged to meet the skill
requirements of the expanding knowledge economies of the developed countries, led by the USA.
Second, there has been an increase in domestic employment opportunities in developing countries
due to the increase in foreign direct investment (FDI) and the growth of private enterprises, including
fi rms focussing on outsourcing.
Let us examine the effect of the increase in employment opportunities in the developed world.
The skill requirements in the knowledge economy are not only different from that of the traditional
manufacturing sector, but also the level of skills required and the qualifi cations demanded for job
entry are also high and continuing to rise. Studies show that, in countries such as Canada, nearly
70 per cent of all new jobs will require a post-secondary level of education (International Labour
Offi ce – ILO, 2004).
Many of the knowledge economies have not been in a position to produce the skills required. Even
countries with the largest network of higher education institutions, such as China, India, and the
USA, could not produce highly skilled workers in suffi cient quantity to meet their domestic demand
and the global market demand, especially in the knowledge-intensive segments of the economy.
This has resulted in competition among the developed countries to attract the best brains from
other countries, notably from developing countries. This in effect led to a ‘battle for brains’ (Chanda,

2000) or a ‘global hunt’ for talent (Kapur and McHale, 2005) to maintain the technological edge
and the economic competitiveness of the host countries.
Many developed countries changed their visa rules to accommodate skilled and information and
communication technology (ICT) workers from other countries. For example, the introduction of the
H-1B visa in the USA has helped attract skilled workers from other countries, and helped the infl ow
of highly educated Asians. Nearly one million highly skilled workers entered the USA under the H-1B
visa scheme between 2000 and 2003. The European Union is introducing the ‘Blue Card’ visa to
attract skilled workers from developing countries. It is also noted that the average qualifi cation
level of the migrant population is higher than that of the indigenous population. For example, while
9 per cent of all Americans born in the USA possess a university degree (Master’s level), 38 per cent
of Indians born in the USA possess the same. This shows how the visa rules and immigration
policies are biased in favour of the highly skilled (Kapur and McHale, 2005). Countries such as
Australia, New Zealand and the United Kingdom (UK) have introduced point-based emigration
policies which give preferential treatment to candidates with higher level qualifi cations.
The second aspect, namely domestic employment opportunities in developing countries, has
also increased in the context of globalization. Liberalization policies, introduced during the
structural adjustment period, have helped attract foreign direct investment (FDI) and multinational
corporations (MNC) to developing countries. Outsourcing became an attractive strategy for large
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12
Globalization, economic crisis and national strategies for higher education development
fi rms in developed countries and it became an avenue for lucrative jobs in some developing
countries. One of the reasons for the expansion of FDI and outsourcing activities is the intellectual
environment created by the network of universities and the highly skilled labour pool in benefi ciary
countries. A very good example of this phenomenon is the emergence and rapid expansion of
outsourcing fi rms in countries such as China or India.
As can be seen from Table 2.1, FDI approached the trillion US dollar (US$) mark and generated
a total of 2.87 million jobs in 2007. The largest benefi ciaries of FDI have been in the Asia-Pacifi c
region, followed by North America and Europe. The Middle East remained the region with the least
FDI infl ow which may partly be due to the availability of domestic resources in the region.

Table 2.1 Foreign direct investment and jobs in 2007
Region Investment
(in billion* US$)
New jobs created
(in millions)
Asia and the Pacifi c 395.2 1.20
Europe and North America 345.1 1.16
Latin America 58.3 0.27
Middle-East 55.9 0.09
Africa 92.0 0.15
Total 946.8 2.87
* Equivalent to one thousand million.
Source: The Earth Times, 4 March 2008.
The USA was the largest recipient of FDI; in 2007, the country received US$237 billion in FDI,
accounting for 13.6 per cent of gross domestic product (GDP), and employing fi ve million workers in
the USA, accounting for 4.5 per cent of private sector employment (Table 2.2). Nearly 80 per cent of
the FDI to the USA came from Europe and Japan in 2006 (United States Department of Commerce
– USDC, 2008). Among the countries, the UK had the highest FDI in the USA. “China and India
cemented their key roles as sources of investment (FDI) in 2007, with the two countries now
accounting for almost 6 per cent of global jobs created from foreign investment, compared to
4 per cent in 2006” (IBM GBS, 2008).
Table 2.2 FDI and employment generation in selected countries in 2007
Countries Investment in billion US$ Jobs in millions
USA 237.0 5.00
China 90.4 0.37
India 52.5 0.25
Russian Federation 45.1 0.16
Vietnam 40.2 0.19
Source: For USA, USDC, 2008. Other countries: The Earth Times, 4 March 2008.
The development of the software sector is a clear indication of the benefi ts of globalization in India.

The share of software in India’s exports increased from 4.9 per cent in 1997 to 20.4 per cent in
2002-2003 and software accounted for US$28.5 billion of export earnings in 2004-2005. The
sector is expected to create another four million jobs in the future. Countries such as China, India,
the Russian Federation and Vietnam are the largest benefi ciaries of FDI infl ows and subsequent
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Globalization and demand for skilled labour
13
employment generation. Although the jobs generated by FDI or by outsourcing may not form a large
share of total national employment, these jobs are associated with high-level skills, high salaries,
and attracting university graduates.
With liberalization policies, multinational corporations (MNCs) increased their presence in developing
countries through the expansion of existing fi rms and the entry of new fi rms. These fi rms look for
highly skilled workers though, initially, the MNCs were generally engaged in activities which required
less skilled workers than their parent companies. This trend is changing and these companies,
located in many countries such as China, India, the Republic of Korea, Malaysia, Singapore, and
Taiwan, have entered into activities that require highly skilled personnel. They welcome talents from
national universities, graduates with foreign degrees or degrees awarded by foreign universities in
the countries hosting these companies.
The domestic private sector – outsourcing and others – also grew appreciably in the last two
decades or so. Many of them adopted new technologies, aligned with knowledge-based production
and the globalization process. Public policy, too, was conducive in promoting these initiatives. These
technology-intensive fi rms have generated employment which also demanded high-level skills and
higher education qualifi cations. The skill requirements in many of the knowledge-intensive domestic
enterprises have been similar to the MNCs operating in the country or similar fi rms operating
abroad. This was also a process of economic integration of the less developed countries to global
transactions and networks.
One of the important contributory factors in attracting FDI is an easily available pool of highly skilled
workers. The attraction of FDI to the USA is because “the American workforce ranks as one of the
best educated, most productive and most innovative in the world”, and the “USA higher education
system is unparalleled” (USDC, 2008: 4). This is also the case with regard to the fl ow of FDI to other

countries. For example, the credit for attracting FDI and for the fast expansion of the software sector
in India goes to ‘technical young people and English-speaking scientifi c professionals’ (Business
and Economy, Indian Business Industries, 2008).
Over a period of time, many developing economies have been increasingly integrated into the
global production process. There has been a felt need to develop a workforce which meets the
requirements of global demand. This has been essential to meet international standards and
quality in production. Many countries, especially the benefi ciaries of the globalization process,
started re-orienting their education system, particularly higher education, to meet not only national
requirements, but also those of the global labour market. One indicator of this process is a shift
in emphasis in university study programmes, from traditional subject areas to engineering,
management and IT-related areas. Another indicator is the introduction of English language courses.
Countries have realized the importance of the English language in the globalization context and
recognize the premium enjoyed by the English language in cross-national transactions. As one of
the recent OECD reports notes, “English is the premier language of business and professions and
the only global language of science, research and academic publication” (OECD, 2008: 20). One
may notice as an indicator of reorienting higher education systems that countries such as China,
India, Indonesia, the Republic of Korea, Malaysia and many African countries have moved, on the
one hand, towards expanding higher education and, on the other, towards diversifying the providers
and programmes of study and towards promoting or introducing English language teaching; this is
also the case in Francophone African countries. All of these factors have contributed to reorienting
higher education to meet the skill requirements of the global market, whether located in the same
country or abroad, and to the globalization of education.
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3 Globalization and market orientation in higher education
Globalization has changed the purpose and orientation of education in many countries. While
universities were associated with and seen as an integral part of the national development efforts
in the past, they are increasingly becoming an integral part of the production of skills for the global
market. Higher education is becoming an attractive area of investment and the trade in higher
education brings more profi t than that in other sectors. As a result, competition has increased

between providers of education. In the past, competition was, in many countries, between public
universities, but today the competition is between public and private universities on the one hand,
and national and trans-national institutions on the other hand. Knowledge and the production of
knowledge are becoming a contested terrain left open to the market process.
Knowledge is universal, although the institutions producing knowledge, namely universities, are
very often national. Universities maintain a dual characteristic – international in content and
discourse, and national in ownership and operation. Internationalization implies the imparting
of knowledge, skills and values that have universal application. It can imply either cross-border
activities or changes in the orientation of courses offered in domestic universities, referred to as
‘internationalization at home’ or ‘campus-based internationalization’ (Knight, 2008). Globalization,
on the other hand, assumes a blurring of borders and national systems of education (Teichler,
2004).
Economic and educational activities have traditionally been dominated by the public sector.
The expansion of the private sector in economic activities led to the criticism that public-funded
education did not address the needs of industry and the economy, the argument being that the
corporate world knows what the market needs are and, therefore, can be a reliable provider of
education. This provided an opportunity for the corporate sector to operate in education and apply
market principles to the management of education institutions.
The provision and promotion of education activities under the market framework of operation are
based on the demand for and supply of educational services. While the demand for education
refl ects the paying capacity of households, the supply of educational services refl ects the capacity
and willingness of public or private agencies to invest in education. Globalization actively promotes
market ideology as a unifying force, linking economic activities at the national and cross-national
levels. With globalization, market operations are extended to social sectors and across borders.
Consequently, education in the context of globalization becomes yet another profi table venture,
cultural activities become commercial products, the public is defi ned as a customer, the university
becomes a provider, and the learner becomes a customer or purchaser of services (Yang, 2005).
Within the education sector, higher education becomes an eligible candidate for incorporation
into the market framework. Given the role of research and development (R&D), activities in the
knowledge economy investing in knowledge production (research) became rewarding economic

activities. Studies (OECD, 2008; Hanson, 2007) show a close association between ‘investment in
knowledge’ and innovations which improve domestic innovations and economic competitiveness.
Research and universities became valuable entities to the corporate sector and important agents
of the globalization of higher education. The research universities of the USA and their doctoral
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Globalization and market orientation
15
programmes have become a powerful engine for the globalization of higher education (OECD,
2008).
The academic prestige and standing of a university are closely linked to its research capacity and
its credibility. Many students seeking a foreign degree, especially a doctoral degree, would take into
account these factors when choosing the country and institution where they wish to study. This is
also a contributory factor in attracting a large number of cross-border students to countries such
as the USA, which has six of the top ten universities in the world (USDC, 2008).
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4 Globalization of higher education and cross-border mobility
The high demand for highly skilled persons in the developed world has promoted the migration
of skilled workers from the developing world. When it was found that study programmes were a
better source for future recruitment of skilled personnel, many countries opted to promote cross-
border education. The fast growth of cross-border student mobility is an indication of this trend.
Studies show that a majority of those who enter the USA as students would like to stay on after
completing their studies, and this is an attractive source of skilled personnel. Information on the
return plans of doctoral graduates in USA universities indicates that nearly 90 per cent of Chinese
and Indian doctorate students would like to stay in the USA after their studies. The percentage is
higher among science and technology graduates, given the better employment prospects (Kapur
and McHale, 2005). This shows that cross-border education is fertile ground for recruiting future
highly skilled workers in many developed countries (Tremblay, 2002).
Higher education, in the context of globalization, has become a market-driven activity, and education
has become a tradable commodity and part of the trade negotiations under the General Agreement

on Trade in Services (GATS) (Knight, 2002). GATS covers all internationally traded services and
overall covers 12 different service sectors including education. Within the education sector, GATS
covers fi ve categories of education services: primary, secondary, higher, adult, and others.
Cross-border trade in education under the GATS framework takes place in four modes. They are:
1. Cross-border supply of the service where consumers remain in their country. E-learning-based
distance education programmes are good examples of this type of cross-border education.
2. Consumption abroad where the consumers (students) cross the border. This includes full-time
study for a degree, part of the study at home and the remaining part in a foreign country, and
exchange and joint degree programmes.
3. The commercial presence of the provider in another country in the form of branch campuses
or twinning and franchising arrangements between universities from the developed and
developing world, but also between universities of the developed world as a whole.
4. The presence of persons in another country to provide the service. The most visible form of
this mode is the mobility of professors from one country to another as an employee of a foreign
university, as part of an academic partnership, or to teach in a branch campus.
This paper will discuss cross-border education manifested through the mobility of institutions,
teachers and students (modes 2, 3 and 4) since reliable information on mode 1 is not easily
available.
4.1 Cross-border institutional mobility
Institutional mobility takes place in different forms – through branch campuses, franchising or
twinning arrangements. A branch campus denotes the delivery of the programme entirely by the
foreign institution; franchising denotes the in-country delivery by an authorized domestic institution;
and twinning denotes joint ownership and delivery by institutions in the home country and the host
country. Although franchising and twinning are less visible than branch campuses, they constitute,
quantitatively, larger segments of institutional mobility (Martin, 2007).
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Globalization and cross-border mobility
17
Universities from Australia, the UK and the USA are more commonly found in other countries.
Malaysia has, for example, branch campuses from Nottingham University of the UK, and Monash

University and Curtin University of Australia (Sirat, 2006). As of 2004, China had more than
700 approved educational institutions having joint programmes with foreign institutions. Many
of these are from Australia such as the Universities of Queensland and Victoria which run joint
programmes with Chinese universities (Garrett, 2004).
Cross-border providers from different countries have branch campuses in Singapore. These include
Johns Hopkins University (USA) University of Chicago (USA), INSEAD (France), and Jiao Tong University
(China). Bond University and Monash University, both from Australia, and the Business School of
the Netherlands have branch campuses in several countries of Africa.
India has several foreign institutions in operation, mainly from the UK and the USA. A study of
131 foreign-affi liated institutions in India (Bhushan, 2005) showed that 59 were partnered with
universities in the UK and 66 partnered with universities in the US. In some cases, the same
institution has tie-ups with more than one foreign institution. For example, the Indian School of
Business has tie-ups with Kellogg, Wharton and the London School of Business. Several high-
level delegations have visited India to establish branch campuses or collaboration with Indian
institutions. For example, Professor Rick, President of Universities UK, led a delegation of UK Vice-
Chancellors to India in 2008 to discuss institutional collaboration and student and teacher mobility
between premier institutions in India and the UK (UK universities to support expansion of India’s
HE sector, media release from Universities UK, 29 April 2008).
Private higher education institutions offer an easy entry point for foreign institutions. In fact, in
many countries, transnational providers operate through private institutions and offer courses
in limited subject areas. They offer market-friendly courses, catering to private businesses, both
foreign and national. Courses in business administration, computer science, accounting, marketing,
economics and communication are very common in such institutions and nearly 80 per cent of
the courses offered by foreign institutions are either in business or hotel management (Bhushan,
2005). Collaboration with foreign universities and institutions helps local private universities since,
in some cases, it allows them to obtain academic credibility, quality appeal, and also enables them
to levy high fees, at times in hard currency.
4.2 Cross-border teacher mobility
Teacher mobility can be seen as an example of the impact of globalization on education. The
movement of teachers across borders, especially at the school level, shows how a less attractive

profession in the developed world becomes a very attractive position for migrant teachers from
the developing world. The cross-border mobility of teachers is primarily due to two reasons: (a) to
meet quantitative shortages; and (b) to enhance the prestige of the institution and the quality of
instruction. Teacher shortages can be due either to the non-availability of qualifi ed persons or to
the unattractiveness of the profession (Varghese, 2009b). The former is the case in many African
countries, while the latter seems to be the case in some developed countries. Another reason for
cross-border teacher mobility, in the context of globalization, may be to attract foreign students.
The globalization process has provided new employment opportunities, especially in the private
sector. These jobs offer higher salaries. Teaching jobs have traditionally not been fi nancially very
attractive and, with new avenues of employment opening up, the appeal of the teaching profession
has been further eroded. A study on teacher shortages in the UK has shown that salaries and working
conditions for teachers have not kept pace with those of other sectors (Robinson and Smithers,
1998). To overcome teacher shortages, the UK and USA governments (New York) have engaged
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Globalization, economic crisis and national strategies for higher education development
in the large-scale recruitment of teachers from Caribbean countries such as Jamaica, and from
African countries such as South Africa. This has led to teacher shortages in the sending countries,
which have accused the host countries of ‘raiding their resources’ (Appleton, Morgan and Sives,
2006) and have demanded compensation from the recruiting countries. Bilateral discussions have
resulted in the development of a strategy of ‘managed migration’ (Morgan, Sives and Appleton,
2006) and a Commonwealth protocol on teacher recruitment following the discussions at the
Commonwealth Education Ministers’ Conference held in Edinburgh in 2003. It needs to be noted
that teacher migration is not always from developing to developed countries. Teachers also move
within developed countries and among developing countries. Teachers from Australia, Canada and
New Zealand are found in the UK. Teachers from India, Kenya, Zambia and Zimbabwe are found
in Botswana. However, large-scale migration still continues to be from developing to developed
countries.
Teacher mobility in higher education takes different forms. Some universities have departments
specializing in regional studies and these departments attract teachers from those respective

regions. For example, the Center for Latin American Studies of Chicago University attracts at least
three visiting professors every year, and more than 30 professors from Latin America have visited
and taught in the university this decade (Tinker visiting professors). At times, teacher migration is
in selected subject areas. This is more often the case in those areas where there is high demand
from the corporate sector. As mentioned earlier, very often students, on completion of their doctoral
studies, would like to stay in the host country and take up a teaching job. It is estimated that more
than 8,000 Indian teachers work in universities in the USA. Indian professors, including some Nobel
laureates, are engaged in research and teaching activities, predominantly in science, engineering
and social science subject areas (Melwani, 2009). Under the Erasmus Mundus programme, more
than 1,000 university teachers from developing counties came to Europe between 2004 and 2008.
Under the same programme, efforts have been made to establish collaborative arrangements to
promote student and staff mobility between 12 European and 8 Indian universities (EurAsia News,
09.06.2008 ).
Some universities appoint foreign professors to improve their image and international competitiveness
in order to promote research, improve the quality of teaching, and to attract foreign students.
For example, the Ministry of Human Resource Development of the Republic of Korea plans to
recruit 300 foreign professors in the coming years. The proposal indicates that “It is part of our
efforts to enhance the quality of education at national universities to meet the global standard”
(Tee-Jong, 2008). Seoul National University (SNU), a state-funded university, is planning to recruit
150 professors to promote its international competitiveness. Further, language profi ciency to
lecture in English is an important consideration when recruiting domestic (Korean) teachers to
SNU (Korean Times, 22 January 2001 ). The Japanese Government has initiated steps to change
the faculty composition to attract more foreign students. Between 1983 and 1995, the number of
faculty members from foreign countries in Japan increased from 1,168 to 3,558 (Koshi, 1997).
4.3 Cross-border student mobility
Cross-border student mobility is increasing rather fast. In 2005, nearly 2.7 million students pursued
cross-border education (UIS, 2007). The market for cross-border students is expanding; the profi ts
remain very attractive and hence the competition among higher education institutions to attract
foreign students continues. The most familiar pattern of cross-border student fl ow used to be from
developing to developed countries. According to data from the UNESCO Institute for Statistics

(UIS, 2007), North America and Western Europe continue to be the favourite destinations for most
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Globalization and cross-border mobility
19
students from any region, except for students from Central Asia who tend to go to the Russian
Federation or to other Eastern European countries. Nearly three fourths of mobile students from
all regions, except Central and East Asia and the Pacifi c, seek higher education in OECD countries.
Nearly 90 per cent of mobile students from North America and Europe cross the border to study
in another country of the same region; 80 per cent of students from Latin America travel to North
America and Western Europe for their studies.
The USA attracts the single-largest share of foreign students (Table 4.1) followed by the UK,
Germany, France, Australia, and Japan. There has been a decline in the relative share of the USA
from 25 per cent in 2000 to 21.9 per cent in 2005. Australia, France and Japan have improved
their relative position while the share of others has declined. The nine countries shown in Table 4.1,
together, receive 72 per cent of all students studying outside their home country. Australia
experienced a rapid expansion in foreign student numbers in the 1990s and New Zealand in the
present decade. There was a dip in the share of foreign students in New Zealand between 2004
and 2005, but the government changed its immigration policy to attract more foreign students.
Accordingly, students who have completed their studies can prolong their stay by one year to search
for a job and, if they secure a job, as is very often the case, they can eventually apply for nationality
or residence permits.
Table 4.1 Distribution of foreign students by host countries (per cent)
Host country 2000 2004 2005
USA 25.0 22.0 21.9
UK 12.0 11.0 11.8
Germany 10.0 10.0 9.6
France 7.0 9.0 8.7
Australia 6.0 6.0 7.7
Canada 6.0 5.0 4.9
Japan 4.0 4.0 4.7

New Zealand 0.0 3.0 1.5
Russian Federation 3.0 3.0 3.3
Others 27.0 27.0 27.4
Total number of foreign student (millions) 1.9 2.7 2.73
Source: UIS (2007)
Table 4.2 shows the fl ow pattern of students among countries. The seven OECD countries hosted
68.8 per cent of cross-border students in 2005, while the 12 sending countries accounted for more
than one third of all cross-border students. This shows the concentration of host countries and the
spread of sending countries. Asian countries top the list of sending countries. China alone accounts
for 14.6 per cent of cross-border students, followed by India, which accounts for 5.2 per cent. When
compared with past trends (Varghese, 2008), China has reduced its reliance on the USA; the shift
was initially to Australia but later on the shift was towards Japan. India and the Republic of Korea
continue their reliance on the USA for cross-border studies. Germany attracts a good number of
students from Turkey and the Russian Federation. Hong Kong relies on Australia, the UK and the
USA in that order. Malaysia has increased its reliance on Australia.
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Globalization, economic crisis and national strategies for higher education development
Table 4.2 Inter-country fl ow pattern of cross-border students (2005)
Destination

Sending country
USA UK GER FRA AUS CAN JAP Total*
%
Total
(000)
China 23.3 13.2 10.2 21.1 67.8 394.7
India 60.3 12.0 3.1 15.8 90.9 139.4
Republic of Korea 57.7 5.2 5.1 22.7 90.7 97.4
Germany 14.3 19.8 34.1 63.3

France 13.1 22.5 12.5 11.7 59.8 52.2
Morocco 16.2 58.9 75.1 50.6
Turkey 25.8 50.4 76.2 50.4
USA 31.1 7.1 5.2 8.5 15.6 67.5 46.3
Malaysia 14.2 25.3 41.1 4.2 80.6 45.1
Russian Federation 13.5 30.1 43.6 39.4
Hong Kong 21.6 30.9 39.0 91.5 34.7
Iran 12.2 9.1 22.9 7.7 51.7 19.3
Total number of students (000) 590.1 318.4 259.8 236.5 207.3 133.0 125.9 849.1
Notes:* The percentages in the rows do not add up to 100 because all host countries are not included in the
table.
indicates that the number is insignifi cant
Source: UIS (2007).
Asia dominates among the sending countries and a majority of Asians study in three English-
speaking countries – Australia, the UK and the USA. These countries generate income from
hosting cross-border students. For example in 2005, the USA, which hosts the largest number of
cross-border students, earned US$14.1 billion; the UK earned US$6.1 billion and Australia earned
US$5.6 billion (Bashir, 2007).
Cross-border education is not a very signifi cant component of higher education in the Central Asian
Republics. Of these countries, Kazakhstan sends the largest number of students abroad (29,071),
followed by Uzbekistan (23,170). Students from these countries travel to the Russian Federation or
other countries in the region. For example, in 2005, 71.5 per cent of the cross-border students from
Kazakhstan and 41.8 per cent from Tajikistan went to the Russian Federation, while 68.9 per cent
of cross-border students from Uzbekistan and 29.2 per cent from Tajikistan went to Kyrgyzstan.
Turkey and Germany are also other countries hosting students from the Central Asian republics.
Why do people seek cross-border education?
One of the important motivations for seeking cross-border education is its capacity to enhance
employment opportunities and obtain higher returns to investment. Foreign degree holders enjoy
a premium in the labour market in developing countries. They are also preferred in their countries
of study. Therefore, during periods of skill shortages, students are a reliable way of recruiting

migrant labour. It is found that students who came from China and India to seek education in the
USA remain in the country (Tilak, 2007) and constitute a large share of the professionals in some
of the IT sectors in the USA. The incentive to employ cross-border students is also refl ected in the
visa rules of some countries, as mentioned earlier. Degrees from foreign universities also enjoy a
premium in the labour market in the country of origin. This is the case even when the institution
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Globalization and cross-border mobility
21
is a branch campus of a foreign university. MNCs are more willing to recruit people who have
certifi cation from the universities of their parent countries. The liberalization policies followed by
developing countries in the 1990s have attracted high levels of foreign direct investment as well as
the migration of fi rms and jobs. The demand for foreign degree holders in these sending countries
has increased. This has been an incentive to invest in cross-border higher education.
Another motivation for seeking cross-border education is for a better quality of education. A degree
from a good university is an attractive proposition to students. The continuing fl ow of students from
developing countries to developed countries is also due to the belief that the quality and standards
of higher education studies offered in universities in the OECD countries are superior to those
offered in the country of origin. One can fi nd a positive association between the global ranking of
universities and the preferred destination of students for their studies abroad. Universities in the
USA occupy the top positions in the global ranking, which encourages many students to apply to
universities in the USA. Students in Arab countries migrate to Egypt and Jordan to pursue their
higher education studies. A large number of students from Bangladesh and Nepal travel to India
to pursue their higher education studies. Similarly, students from mainland China seek higher
education in Hong Kong (Li and Bray, 2007).
There are exceptions to this pattern. For example, it is found that only a small share of students
sitting for competitive examinations in India actually gain admission to some of the prestigious
institutions, such as the Indian Institute of Technology (IIT) or the Indian Institute of Management
(IIM). Those who do not get admitted to these institutions seek cross-border education as their
next best option.
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22
5 The economic crisis and its implications for higher education
and employment
Many countries affected by the economic crisis are struggling to develop strategies to arrest the
adverse effects of job and income loss on their citizens. How does the crisis affect the development
of higher education in general, and that of cross-border education in particular? Many crises in
the past emanated from public sector investment/savings defi cits, leading to large-scale budget
defi cits and borrowing. The East Asian economic crisis was different from the earlier crises. Private
sector borrowing and fi nancial companies and their lending were responsible for the East Asian
economic crisis of 1998-1999 (Stiglitz, 1998). The current crisis has many similarities with the
East Asian economic crisis: It started from the fi nancial system and it has affected fi rst professional
and white collar jobs. However, it is different from the past crisis in that the fi nancial systems of
the developed countries are responsible for the crisis, which is global in its reach, as it spreads
to both middle- and low-income countries (World Bank, 2008). Some of the manifestations of the
crisis give scope for speculation, which is attempted below.
The leading economies of the world are experiencing the most severe crisis since the great
depressions of the 1930s and the crisis is changing the economic and employment outlook.
According to the International Monetary Fund (IMF), global growth has come to a virtual halt, with
the developed economies expected to shrink by 2 per cent in 2009. The World Bank President
and IMF Managing Director said that “the crisis has become global and no country could escape
it” (Education International, 18 January 2009).
The crisis, although felt more severely in the USA in the initial stages, is slowly but steadily spreading
to all countries. Income and job losses have been the visible forms of the crisis directly affecting
people. Many companies have declared losses and bankruptcy, and their employees are out on
the street. Those companies struggling to survive do so by downsizing and job cuts. A recent report
has shown that jobs are drying up around the world as the global economy enters the downturn.
“From lawyers in Paris to factory workers in China and bodyguards in Columbia, the ranks of the
jobless are swelling rapidly” (Schwartz, N. 2009: 1).
Employers are preparing for what many fear will be a long and painful recession, moving to
aggressively cut jobs and reduce costs to face the economic crisis. In one week in October

2008, companies that announced their plans to cut jobs included the Internet company Yahoo
(1,500 positions), the pharmaceutical company Merck (7,200), National City Bank (4,000) and
the cable company Comcast (Irwin and Rosewald, 2009). “At least 85,000 new job cuts were
announced in a single day Monday as the rampant fi nancial crisis hit more workers across the globe
and brought down Iceland’s government” (European stocks mainly drop, 26 January 2009).
The crisis has already claimed 3.6 million jobs in the USA and millions elsewhere. “The business
research group on Monday estimated the economy (USA) could lose two million more jobs this year
on top of the roughly 2.6 million erased in 2008. That would be about 60 per cent higher than the
average job losses over the past fi ve recessions (roughly two per cent)” (The Wall Street Journal,
January 2009 ). As of February 2009, British companies confi rmed the loss of 91,698 jobs over
the previous four months, (Telegraph, London, 17.02.2009). Further, it is estimated that, globally,
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The economic crisis and its implications for higher education
23
joblessness may reach 50 million by the end of 2009. The unemployment rate has increased and
is expected to reach close to double digits by 2010 in many of the developed countries including
Germany, the UK and the USA.
Job losses have not been confi ned to developed countries. The job loss between October and
December 2008 was estimated to be around 0.5 million in India. A recent report indicated that job
cuts by Microsoft have affected 5,000 Indian employees; nearly 100,000 Indians holding H-1B visas
are to lose their jobs. The USA stimulus plan contains a conditionality not to extend employment
opportunities to H-1B visa holders at the cost of workers born in the USA. This will affect workers
from several developing countries, notably India, who have been the single-largest benefi ciaries
of the H-1B visa programme over the past several years. A total of 23,485 Filipinos in the country
and abroad have lost their jobs as a direct result of the global fi nancial crisis – 19,443 workers
have lost jobs in the Philippines and 4,042 overseas (Trabaho Philippine, 28 January.2009 ). The
job loss in Laos is around 85,000. In China, too, job creation resulting from FDI is drying up. More
importantly, a large number of migrant workers are seeking jobs since the companies where they
were working have closed down.
There is a silver lining for India: some of the outsourcing fi rms are fi nding alternative measures

to counter the job losses. B.G. Srinivas, Senior Vice-President and member of Infosys’ Executive
Council, told the Times of India (TOI) that although there was a 5 per cent budget cut by European
companies, more European companies were outsourcing jobs to lower-cost countries such as India
to beat the recession, though the contracts were not large. Infosys and other Indian outsourcers
are expanding to Africa, Europe, the Middle East, and elsewhere to lower their dependence on the
United States, their biggest market (Srinivas, 2009 ). This may perhaps help arrest the job losses,
at least partly.
Some of the measures taken to counter the crisis at times reverse some of the aspects considered to
be promoting globalization, namely the cross-border movement of capital and people. For example,
job losses led to street protests in many countries and some of the protesters in the UK re-invented
the slogan of ‘British jobs for British workers’. Some of the responses by national governments took
the form of protectionist policies to protect local workers from foreign workers. The USA stimulus
plan, too, has shown protectionist trends when it stipulates that fi rms receiving an amount of the
stimulus plan should not recruit foreign workers under the H-1B visa, replacing USA citizens. These
policies go against the very concept of globalization that was based on opening up markets and
encouraging the liberalization policies, strongly propagated by those very same countries.
The crisis has affected education in several ways. First, the crisis has affected the job prospects
of graduates. A survey of 250 companies in the UK shows that vacancies are expected to decline
by 5.4 per cent and salaries by 8 per cent. Consequently, many employers are suggesting that
students take a year off (Spencer, 2009). This may have a negative effect on the demand for
higher education.
Second, the fi nancial crisis will lead to reduced funding for education. Governments may fi nd it
diffi cult to extend the same level of funding in real terms. The private corporations which used to
invest and contribute to education funds may not be able to do so. The capacity of households to
invest in the education of their children will be reduced in the context of job losses and reduced
income levels.
Third, many universities have lost their investments. For example, many universities had invested
their savings in banks which have become bankrupt. Universities, such as Oxford and Cambridge,
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24

Globalization, economic crisis and national strategies for higher education development
lost millions of pounds. Between July 2007 and June 2008, the Ohio State University endowment
fell by 11 per cent to US$2.03 billion. Other universities are similarly affected (Okoben, 2009).
Fourth, student support systems will be severely affected. Sallie Mae, the largest provider of student
loans in the US, lost US$1.6 billion during the crisis and the company is shying away from extending
student loans (Schwartzmann, 2008). The Education Resources Institute (TERI) the largest insurer
of student loans in the USA fi led for bankruptcy protection in 2008. The diffi culties in obtaining
loans may affect enrolment in those universities where fees are high.
Fifth, there may be a freeze on programmes and staff recruitment. There has already been a freeze
on recruitment in many universities since 2008. The University of Arizona is planning to amalgamate
certain departments and close down certain programmes. This means that students may have to
extend their stay in the universities and they have thus gone on strike (Richard, 2009).
Sixth, aid to education by bilateral and multi-lateral agencies may decline. The International
Conference on Education in 2008 noted that there is a collective failure to deliver on aid
commitments by donor countries (UNESCO/International Bureau of Education, 2008). The economic
crisis may further worsen the situation and the impact of the global fi nancial crisis on aid, especially
for developing countries, is threatening development, particularly when it comes to advances in
education (Elliott, L. 2008)
On an optimistic note, the World Bank President and IMF Managing Director have argued for
the inclusion of health and education in the fi scal stimulus plans introduced in developing and
developed countries (Education International, 18 January 2009 ). Further, an online education
survey conducted in Berlin in 2008 among education and training professionals indicated that
the economic crisis boosts e-learning, informal learning, and blended learning, and that the crisis,
with a shrinking education sector budget, is enlarging the use of technology (On-line Educa Berlin,
2008).
Among higher education segments, private and cross-border education may be more severely
affected by the crisis. Scholarship facilities for students will be on the decline, part-time jobs
to support their education in the host countries may disappear, student loans for cross-border
education may dry up, and reduced household income levels may not be able to support the full
cost of studies abroad. The crisis has affected higher income groups more severely than lower

income groups; the urban population more than the rural; and fi rm-based more than farm-based
workers. Therefore, it can be argued that the impact of the crisis will be more severe on higher
education, especially in the initial stages, and, within higher education, the private and cross-border
education segment will be more severely affected by the crisis.
Lack of regulation and inadequate state action are cited as reasons for the crisis. This gives us
an opportunity to think and review the impact of unregulated markets on economic growth and
educational progress. Deregulation was considered a virtue and a panacea during the height of
market-friendly reforms and the globalization process. It has become one of the unacceptable
policies in the present context.
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25
6 National strategies for the development of higher education
Universities and institutions of higher education traditionally were public institutions. The state
invested resources to set up universities and was responsible for funding and controlling their
activities. When governments were in fi nancial diffi culty in the 1980s, the state could not extend
adequate funding to cope with the increasing demand for higher education. This was an era of
low state funding and slow expansion of higher education. This encouraged market operations in
higher education that helped the process of globalization of higher education.
The options open to governments in the context of globalization were: (a) to continue the policy of
providing higher education through public institutions only, leading to limited access; (b) to expand
access to higher education through public and private domestic providers only; or, (c) to expand
access through domestic public and private providers as well as cross-border providers. Given the
fi scal state of the economies of the developing world, it was not possible to expand access through
public institutions. Therefore, most countries opted for option (b), and this encouraged market
operations in higher education and multiple providers. The choice of this option promoted the
private sector in higher education. With the expansion of the private sector and market operations
in higher education, cross-border higher education became a new and viable option (option c).
Many countries reformed their rules and regulations to encourage transnational providers. All of
these providers are operating simultaneously in many of the developing countries. Government,
which enjoyed a monopoly in the sector, needs to play more of a facilitative role than simply a

fi nancing and controlling one. This is where the role of the state becomes important.
There is a need to develop regulatory frameworks at the national, regional and international levels
for the operation of private and transnational providers. The Code of Good Practice in the Provision
of Transnational Education, which was established by the Council of Europe in cooperation with
UNESCO and adopted by the Lisbon Convention, is an example of regional regulations for Europe.
The code protects students from fraudulent degrees and qualifi cations and helps national authorities
devise regulations for transnational education (Verbik and Jokivirta, 2005). UNESCO and OECD have
also developed a set of guidelines for quality provision in cross-border higher education (UNESCO/
OECD, 2005). Other guidelines produced jointly by UNESCO and the Commonwealth of Learning
(Knight, 2006) provide more detailed guidelines for countries entering GATS negotiations.
Regulations are needed more at the national level to monitor the growth of institutions, both
private and cross-border. In some countries, regulating private universities is a three-staged
process – letters of interim authority which give temporary recognition followed by registration
which recognizes the existence of the university, and fi nally full accreditation. This seems to be a
good process and procedure. Therefore, it is important to review the process of granting permission
to open and operate private and transnational institutions. There have been instances of fraudulent
practices by some of these institutions and public authorities did not act strongly and promptly.
Governments in some countries insist that only accredited institutions in the home country will
be permitted to open branch campuses in the host country. Therefore, accreditation in the home
country becomes a necessary condition for cross-border collaboration or for the starting of a foreign
branch in another country.
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