Hedging Bets

A new report from the Observatory on Borderless Higher Education argues that colleges should consider cross-border operations if they want to secure a spot in fast-changing higher education systems.

July 1, 2014

A new report argues that Western universities should take a more strategic approach to using transnational, or cross-border, higher education as a way to hedge against anticipated declines in international students that may result from the continuing development of higher education capacity in Asia. A wide range of cross-border activities, including dual or joint degree programs and articulation agreements with local higher education providers, international branch campuses, and distance learning, are included under the definition of transnational education (TNE) put forward in the report from the Great Britain-based Observatory on Borderless Higher Education.

“TNE allows traditional destination countries to act proactively and position themselves in a fast-changing market by participating in capacity-building efforts in source countries while this opportunity is still available,” states the report, titled “Transnational Education vs. International Student Mobility: Substitutes or Distinct Markets?” and available at the Observatory website for a fee. “In this way, countries like the U.K., the U.S.A. and Australia can secure their longer-term existence in local higher education by accessing this market before the gap between supply and demand disappears.”

“Universities should not consider it a threat to their international student market; quite the opposite,” Vangelis Tsiligiris, the report author and the college principal (or president) of MBS College of Crete, said in an interview. 

For the report, Tsiligiris examined as his case studies the relationships between the U.K. as the TNE-exporting country and China, Hong Kong, Malaysia and Singapore as the host countries. In analyzing data from the U.K. Higher Education Statistics Agency and United Nations Educational, Scientific and Cultural Organization, Tsiligiris found only “weak evidence” for a “direct substitution effect” in which students would opt to stay home to take advantage of a TNE opportunity rather than go overseas to pursue their degrees. 

Although in each of the cases save for China the host countries have seen stagnating or declining outbound mobility numbers, there isn’t any clear-cut evidence to suggest that the simultaneous increases in U.K. TNE enrollments are a main cause of this, Tsiligiris said in an interview. Rather, he said the main cause is the growth of domestic higher education capacity – of which TNE is but a small part. 

The report quotes several experts on the reasons why local students tend to choose TNE options rather than go abroad, including the lower cost, visa restrictions in the destination country, a desire to stay close to family and friends, work commitments, local government policies intended to reduce mobility, the wide range of TNE programs available, and the reputation of the degree-awarding institution.

The report argues that as capacity develops in a given country, demand for TNE will be increasingly shaped by “pull factors” (such as reputation, quality and employability) rather than “push factors” (such as limited capacity of the local higher education system).

But it also emphasizes that the maturation of the TNE market in a given country is not inevitable and depends on governmental legitimization of cross-border models: indeed, as the host country seeks to increase capacity by establishing new higher education institutions, Tsiligiris argues that TNE enters into a “thrive or die” period in which it “either gains its place within the formal education sector or remains a shadow market.”

“Over all I think the case is that for students that can afford and are geared toward studying abroad, they continue to do so; they’re still choosing the main destinations that they used to choose in the past,” Tsiligiris said. “But this situation is not static. It’s changing fast because systems are developing in offshore locations, not only in terms of supply but also in terms of quality.”


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