EDUCATION INTELLIGENCE EDUCATION INTELLIGENCE. Presentation Title DD/MM/YY. Students in Motion. Janet Ilieva, PhD Jazreel Goh
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1 Presentation Title DD/MM/YY Students in Motion Janet Ilieva, PhD Jazreel Goh
2 Forecasting International Student Mobility Global slowdown in the world economy is expected to affect global demand for overseas study Decelerated economic growth in sending countries will affect the enrolment rate in domestic education and families disposable income Lower growth in domestic enrolments will cause slowing growth in the number of students opting to study abroad Deteriorated economic performance in leading host countries is likely to detract demand for overseas study Our forecasts are based on robust econometric investigation which closely examines the impact of macroeconomic factors on international student demand from key sending countries 2011 British Council. All rights reserved. This document may not be amended, copied or distributed without express written permission
3 The Forecasting Model for Country X Model 1: Domestic Higher Education (HE) Enrolments - positive relationship between economic growth and HE enrolments Model 2: International Students Globally - almost fixed % over time (balance between push and pull factors; also determined by parents disposable income) Model 3: Competitor Model - driven by country-specific factors: bi-lateral trade, tuition fees, exchange rates, etc British Council. All rights reserved. This document may not be amended, copied or distributed without express written permission
4 Model 1 - Forecasting domestic HE enrolments 1. Forecast tertiary school age population for each source country using historic UIS tertiary and school age population data. The age cohort for this population runs from the average age of secondary school completion, plus five years. E.g. in the UK, the age cohort is 18 to 23 years of age 2. Forecast enrolment rate in higher education based on panel data estimates of enrolment data and GDP per capita (for 13 countries). Fixed effects account for country-specific relationship between economic growth and enrolments into tertiary education. This produces a separate enrolment forecast for each country in the panel 3. Apply the forecast enrolment rate to the forecast of tertiary school age population and forecast HE enrolment in specific country 2011 British Council. All rights reserved. This document may not be amended, copied or distributed without express written permission
5 log(enrolment rate) log(enrolment rate) Strong relationship between economic development and enrolment in emerging markets Developed countries 5 4 GREECE FINLAND NEW SLOVENIA ZEALAND SWEDEN DENMARK UNITED STATES LATVIA NORWAY RUSSIAN FEDERATION HUNGARY AUSTRALIA ICELAND POLAND ESTONIA SPAIN ITALY BELGIUM ISRAEL UNITED FRANCE JAPAN KINGDOM NETHERLANDS IRELAND PORTUGAL CZECH REPUBLIC AUSTRIA SWITZERLAND Emerging markets y = -0.00x R 2 = 0.00 y = 7.60x R 2 = log(gdp per capita, PPP $) BURUNDI CUBA UKRAINE BELARUS KAZAKHSTAN THAILAND LEBANON BULGARIA URUGUAY ROMANIA VENEZUELA PANAMA GEORGIA JORDAN ARMENIA PERU PHILIPPINES COLOMBIA TUNISIA TURKEY MEXICO EL SALVADOR CHINA ALGERIA TAJIKISTAN INDONESIA AZERBAIJAN SOUTH MAURITIUS AFRICA INDIA MOROCCO GUYANA UZBEKISTAN YEMEN CAPE VERDE GUATEMALA CAMEROON GUINEA NAMIBIA GHANA BENIN CAMBODIA PAKISTAN SWAZILAND LESOTHO MADAGASCAR ETHIOPIA BURKINA FASO log(gdp per capita, PPP $) 2011 British Council. All rights reserved. This document may not be amended, copied or distributed without express written permission
6 The enrolment ratio is forecast to rise from 25.2% in 2008 to 34.1% by This increase is enough to raise the demand for tertiary level education in China from 22 million enrolments in 2008 to over 34.4 million enrolments by 2015.
7 Demand for tertiary education in Malaysia, '000s 1,100 1, Number of students in higher education 000s (actual) Baseline EIU forecast Optimistic scenario Pessimistic scenario 300
8 Model 2 Demand for International Higher Education Objective forecast the number of tertiary level students that will study abroad Two-stage approach 1. Forecast the share of tertiary level students in the respective sending country that will study abroad. We call this the leakage rate (based on push and pull factors and parents disposable income) 2. Apply the leakage rate to the forecast of demand for higher education enrolment derived in Model British Council. All rights reserved. This document may not be amended, copied or distributed without express written permission
9 Number of households earning over US$25,000 per year. There is an indication that rising income levels significantly above the threshold are creating a more favourable environment for tertiary level education at home.
10
11 Model 3 the competitor model Objective forecast the number of international students from respective sending countries that choose to study in Australia, Canada, UK and US from 2010 to Forecast the share of international students that choose to study in each of the eight competitor countries. This is based on panel data estimation measuring the relationship between intake of source country students and various other factors (e.g. tuition fees, trade links, exchange rates, economic growth, income level, etc). A separate panel regression model was developed for each of the source countries 2. Apply the share for each competitor country to the total pool of international students in the competitor set derived in Model 2 and forecast students from each sending country going to study in Australia, Canada, UK and US from 2010 to British Council. All rights reserved. This document may not be amended, copied or distributed without express written permission
12 Estimated number of Chinese tertiary level students in Australia, '000s Baseline EIU forecast 120 Optimistic scenario Pessimistic scenario 100 Chinese students studying in Australia (undergraduate and postgraduate), 000s
13 Estimated number of Malaysian tertiary level students in Australia, '000s Baseline EIU forecast Optimistic scenario 5 Pessimistic scenario Malaysian students studying in Australia (undergraduate and postgraduate), 000s 0
14 However, limited application when non-economic factors are playing Estimated Numbers of Indian Students in Australian Higher Education Baseline scenario Optimistic scenario Pessimistic scenario Real data Linear (Baseline scenario)
15 Examples from the US: under- and over-performing markets Estimated number of Chinese tertiary level students in USA, '000s 140 Baseline EIU forecast 120 Optimistic scenario Pessimistic scenario 100 Chinese students studying in the US (undergraduate and postgraduate), 000s Linear (Chinese students studying in the US (undergraduate and postgraduate), 000s)
16 Summary findings Rapid growth in disposable income has allowed more parents to educate their children abroad. Households in India earning over US$25,000 will reach 4% in 2015; such households in China will reach 5.7% in the same year (up from 0.05% in 1999) and 30% in Malaysia The leakage rate for Chinese students who will opt to study abroad will drop slightly from 1.5% in 2000 to 1.4% in 2015 resulting in almost half a million Chinese students studying abroad Leakage rate in India will stay at 1% over the forecast period and will be just under 250,000 students Leakage rate in Malaysia will remain at 4.3% 2011 British Council. All rights reserved. This document may not be amended, copied or distributed without express written permission
17 Recruiting from China competitor analysis Significant increase in Australian market share from 19.5% in 2010 to 24.4% in 2015 Chinese students going to Canada increased from 7.1% in 2000 to 13.9% in 2008 and is expected to remain at this level in 2015 Our central forecast estimates a significant decrease in overall market share for the US against the competitor set, from an estimated 30.4% in 2010 to 24% by One of the main reasons behind the drop is a decrease in trade between the US and China UK will see some marginal decrease in its market share of Chinese students, which will settle at 12% 2011 British Council. All rights reserved. This document may not be amended, copied or distributed without express written permission
18 Malaysia competitor analysis Australia will continue to be the top study destination for students from Malaysia with a market share growing to over 50% UK will remain the second favourite destination for Malaysian students with market share at 31.6% The US is set to see some decline in market share which is forecast to drop to from 15.7% in 2010 to 13% in 2015 Canada s market share is seen as remaining unchanged at 3% 2011 British Council. All rights reserved. This document may not be amended, copied or distributed without express written permission
19 Direct Implications for Australian Higher Education Institutions Evidence from the US suggest under-performance of international student recruitment during tight immigration control Liberalising immigration policies may lead to over-performance initially, expect a one to two year-lag before moving towards normalisation of the trend Bi-lateral trade so far was found the most significant macroeconomic determinant of future student mobility across the panel data countries Re: China tuition fees were found to play a major role in the students choice of country Re: India and Malaysia exchange rates and cost of living were found to be most important. Further depreciation of the AUD will have a positive impact on recruitment from these two markets British Council. All rights reserved. This document may not be amended, copied or distributed without express written permission
20 Full reports Students in Motion are available at:
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