Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

Overcoming our shyness, or how education could be a €4bn export business

Last week, the Irish government announced “Investing in Global Relationships – Ireland’s International Education Strategy, 2010-2015“, or a “plan to lure international students“, as RTE so attractively put it. The plan has three key quantitative aims by 2015:

  • To increase overall international student numbers by 50% to 38,000
  • To boost the number of English language students by 25% to 120,000
  • To increase from 23% to 35% the proportion of full-time international students undertaking postgraduate programs

Education as an export is huge business internationally – as discussed below, it’s Australia’s third biggest exporter – so it’s hugely important, now that the Department of Education has shed its mindset of “controlling the number of foreigners”, that Ireland get it right. Ireland’s brand new strategy, however, has received a mild response at best – see for example the post and comments on irisheconomy.ie. In his response, outgoing DCU President Ferdinand von Prondzynki is wary of numerical targets and the signals they might send. Key diaspora website, Irishcentral.com, was less than impressed with the overall strategy, believing the most significant outcome was that:

The Irish government is set to clamp down on international students who attempt to over stay their visas. Starting January 2011 the Department of Justice intends to impose strict regulations regarding the length of time foreign students can remain in Ireland.

This post looks at the long-term and short-term aspects of education as an export. Is this strategy a step in the right direction or does it miss important long-term opportunities? And could a well-thought-out strategy for education even help stimulate the economy out of recession?

Standing in New Zealand’s wake

Currently, there are about 25,000 foreign-born students in Ireland, a figure the Government would like to see reach 38,000 by 2015. Why the paucity of ambition, though? This is huge potential market: consider the UK forecast, made in 2004, that international student numbers would increase from 2.5 to 5.8 million by 2020. New Zealand has had “Education as an Export” strategies since the 1990s and is currently reaping the dividends. The contrast with Ireland could not be more striking. In 1998, less than 4% of tertiary students in New Zealand were foreign-born, while in Ireland, that figure was 5%. According to Education at a Glance 2010, almost 25% of students in New Zealand are foreign-born, compared to just 7% in Ireland.

New Zealand has managed to deliver 7.3 foreign students now for every 1 foreign student they had in 2000. Ireland’s lofty ambition is to try and have 2.6 foreign students in 2015 for every 1 it had in 2000. In other words, Ireland would like its market share to tread water. The chart below shows the ratio of foreign students for OECD countries in 2008 compared to 2000 (the percentage in brackets after each country is for foreign-born students in 2008).

Education as an export - growth in foreign-born students (and 2008 level in brackets)
Education as an export - growth in foreign-born students (and 2008 level in brackets)

It’s not just the paucity of ambition, it’s the lack of detail in the plan itself. Consider Australia, where one quarter of students are foreign-born. The Australian Bureau of Statistics valued education exports at €8.9bn, compared to tourism (which had exports of €8.2bn and ran a trade deficit, not a substantial surplus). This makes it the third largest exporting sector in the country, after coal and iron ore. In Ireland, not only do we not know how much education as an export earns the country, there is no plan to find out. The best the report can do, in relation to the immediate economic impact, is to state:

The total direct economic impact (i.e. tuition fees and living costs but without economic multipliers) is estimated at €682 million… A simple (and possibly conservative) estimate of indirect employment supplied to the Group suggests that 13 jobs are created for every 100 international students in Ireland.

And that’s it – no intention to find out more. This isn’t rocket science and the government needs to join up its various bits and pieces, like the CSO and the Department of Education and Skills, to get things done right.

The reason that the lack of statistics is a particular concern is because of the quality of the strategic objectives that are listed. It would be perhaps excusable if collecting statistics was squeezed out by more important goals. But it’s hard to think that the 10 objectives listed would pass the SMART test (i.e. that each is specific, measurable, actionable, realistic and time-bound). Consider these three strategic objectives, for example:

  • “Ireland will enhance its performance through partnership and collaboration”
  • “Government policies and actions will be consistent and supportive”
  • “North-South and EU co-operation will enhance Ireland’s international education performance”

All noble ideas, certainly, but actionable? Specific? Measurable? Hardly. Unfortunately, we have a strategy for exporting education that says more about what Ireland’s diplomats will do on St. Patrick’s Day (three mentions in the report!) than on data-driven market intelligence.

Overcome Ireland’s shyness

It’s clear that Ireland is the shy kid of the Anglo-Saxon world, happy to hang out with its brothers and sisters but afraid to make new friends. About 40% of foreign-born students in Ireland are from our five Anglophone brethren (Australia, Canada, New Zealand, the UK and the US). In New Zealand the corresponding figure is just 20%. For Australia, Canada, the US and the UK, no more than 10% of students come from Anglophone countries.

What’s particularly telling is the contribution of India and China to the student populations of English-speaking countries. In the UK, one in five students is Indian or Chinese while in Canada, it’s one in four, and in the US, it’s as high as one in three. In both Australia and New Zealand, about 40% of students are either Indian or Chinese. In Ireland, it’s just 12%, the same proportion as Sweden and behind Denmark.

The lack of data analysis in the Strategy document shines through here. Somewhat amazingly, Ireland’s new strategy document singles out the US diaspora as a market for further tapping but fails to mention the world’s biggest student market, China, apart from a brief nod when discussing global trends, let alone South-East Asia, the Middle East or South America. We should learn from our older brothers and sisters and start making new friends fast!

Learning from the RCSI

The Royal College of Surgeons in Ireland (RCSI) has been in this market a long time, much longer than, for example, New Zealand. There are students from more than sixty countries in the college, with many coming from the Middle East. The rest of Ireland could learn a lot from how the RCSI does business. For example, Oliver Lyons (no relation) over on irisheconomy.ie has figures for student visa applications from 16 countries to Ireland and to the UK. They are based on FOI requests here that are compared with publicly available (sigh) information in the UK.

The overall refusal rate in Ireland for the 16 countries analysed was 29%, compared to 28% in the UK, so it doesn’t look like we slam the door in people’s faces (yet). However, the UK received 33 times as many applications as Ireland in total. Now, the UK is a bigger country than Ireland – but only 14 times as big. So clearly the UK is attracting more than twice as many applications per capita than we are, taking size out of the equation. We’ve got some marketing to do.

Digging a little deeper, the gap in visa applications is not equal across regions. For every student that applied to Ireland from six Middle East/North African countries (Libya, Turkey, Iran, Saudi Arabia, Kuwait and Bahrain), over 150 applied to the UK! What’s even more amazing is that the refusal rate in Ireland was just 5%, so clearly the candidates are of a good quality. But again, there is no mention of any Middle Eastern countries in Ireland’s new strategy.

This comes back to a root point about Ireland’s education system and the public service in general. A private institution like the RCSI is structured in such a way that when it sees a huge opportunity, like good quality candidates from the Middle East, it views it as actually costing money not to try and seize the opportunity. Ireland’s state education sector is currently not set up the same way. Prof. Brian Lucey, who runs Trinity’s M.Sc. in Finance, one of the few with CFA linkages, sees bureaucratic red tape and the funding structure of the sector as a whole, as a major stumbling block to capitalising on the opportunity of education as an export. As he says on irisheconomy:

One issue that strikes me is that at present we have an (imho incorrectly applied) Employment Control Framework on the third level. So, even self-financing courses cannot hire faculty to work on them, even on contract. I could see us expanding the MSc in Finance from 55 to 100+, if we could hire a couple more people. 50 times €15,000 [€750,000] is more than enough to hire two staff plus an admin and some left over for collegiate purposes.

Until very recently, the Department of Education had a target for foreign-born students – but the target was a maximum, not a minimum. It will take more than a strategy document to change the mentality of the Department and the whole sector into one that sees itself as a competitive indigeneous exporter, but as New Zealand shows, it can be done.

Could education help our economic recovery?

Clearly, exporting education on a large scale would boost college coffers. Suppose Ireland’s proportion of foreign-born students was brought in line with the UK’s over the next decade, meaning an extra 36,000 students enrolling. The back of my envelope tells me that this would be worth up to €500m in extra tuition income for universities. (I don’t think capacity would be that much of an issue either, as this would likely mean that the 15 larger institutes would take an extra 1,500 each while thirty smaller ones – there are over 60 higher education institutes in total in Ireland – would have to absorb an average of an extra 500 each.)

But education as an export has huge potential to drive Ireland’s wider economic recovery also. The benefits to the wider economy would be substantial:

  • Between academic staff and support staff in the education institutes themselves, between 6,000 and 6,500 jobs would likely be created – this is based on the ratio of staff to students in the Dublin universities.
  • New students will be travelling to and around Ireland, buying food, clothes and lots more, and will need places to live. Currently, according to the CSO, 100 people support 11 jobs in retail, transport and accommodation. If the new students only needed half that, that’s a further 2,000 jobs outside the education sector that would be created.
  • Can you think of a better way of using our property overhang? With at least 100,000 vacant properties in the country, 36,000 extra students would use between 10,000 and 15,000 of our empty properties. Futhermore, they could be how we find a use for anywhere up to 6 million square metres of commercial property, if the Trinity ratio of 162 sq.m. of facilities per full-time student is anything to go by.
  • That is of course before even considering wider benefits, like the research done by the newly hired academic staff, the new Irish diaspora created, multicultural benefits for the Irish population or the multiplier effects of their spending on the economy…
  • Using the Australian figure of ~€20,000 in exports per student, by reaching targets of 87,000 foreign-born higher education students and 130,000 English language students (which I’ve left out for reasons of space), education in Ireland could become an indigenous sector with €4.3bn in exports. For comparison, agri-food and financial services will both generate about €6bn in revenues this year, tourism about €2.5bn.

These are all surely very good reasons why we should seize the opportunity of education as an export. However, Ireland needs a more ambitious strategy that is realistic and data-driven.

  • Observer ,

    • Ronan Lyons ,

      Thanks for that, Observer – FG policy seems strong on tactics/institutional arrangements, which wouldn’t be my focus.

      • Brian J Goggin ,

        Something strong on tactics would be an improvement on the governmental aspirations. I remember efforts at increasing numbers of overseas students back in the late 1980s; a quick glance at the Irish Times archive shows that the proposal to increase numbers comes up every few years. At least one university has recently changed its terms to suit potential American students so that they could complete a one-term visit and be home by Christmas. But what’s not clear is whether overseas students want to be slotted in on existing courses, designed for Irish students, or whether they need products designed specifically to meet their needs.

        bjg

        • Antoin O Lachtnain ,

          I think this is a great concept, and there are major opportunities.

          However, one thing that has to happen is that the professionalism of operations in education has to be better when you are charging people ten grand a spin. i am not talking so much about the core ‘product’ as all the things around rooms, organization, cleanliness, etc.

          • Imogen Bertin ,

            Not to detract from the main very good thrust of this article, but just a point of information. The CSO has had a statistician on secondment to the Department of Education and Science for a few years now. If you look at the increasingly improved presentation of the DES statistics you can see Nicola Tickner’s excellent work.

            • Ronan Lyons ,

              Hi Imogen,
              Thanks for that excellent piece of institutional knowledge – my hopes for future stats on education exports have risen!

              Hi Antoin,
              Certainly, one of the aspects I didn’t mention is product quality but only because it almost goes without saying that this has to be good (and respond to customer feedback) for this to be deliverable. No harm raising it!

              • Richard Tol ,

                There is an opportunity here. The main issue, however, is that lack of entrepreneurship in the universities. Last week’s report is a good example. Why does the national government publish a report about this? Why don’t the universities just go out and do it?

                • Ronan Lyons ,

                  I won’t make too many excuses for them, but I will say it must be in part to do with being answerable to the Dept of Education (which had upper limits, not lower limits on foreign students until last week) and, related to this, not being able to hire or raise money as they’d like (as per Brian Lucey’s point).

                  Which of course touches on a broader issue that Ireland will have to deal with. Do we want the Dept of Finance running a €70bn megalith in a €150bn economy, so that when it goes wrong, it goes spectacularly wrong? Or would we prefer 70-100 large public service organisations with average budgets of €500m-€1bn, each having responsibility for budgets, understanding what value they add in society? (Hmm, I’ve probably loaded that choice a little…)

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                    • Mike ,

                      Great piece Ronan! There are three major blockages to increasing international student numbers: (1) Departmental mind-set: Education has a policy of restricting numbers of international students and a maximum quota within each institution! (2) Attitude of Dept of Justice to visa requests (they block them, as the Fine Gael policy document shows!) and (3) the culture in our State funded Universities/Colleges to International students. They are seen as a ‘moneymaking’ option in bad times and the students very quickly realise that! The Economist had an article on this also a few weeks back: http://www.economist.com/node/16743639.
                      The Fine Gael Policy document has a lot of merits, but the ambition is modest! €5b to €7b should be the target!

                      • laura ,

                        It all looks nice on paper, but there are 2 problems:

                        1. standards are hugely inconsistent in the “private sector” of education (refer to Fas subcontractors – if standards were non existent at this level how much worse can they be at direct provision level?) Value for money is difficult to assess and using the state funded 3rd level sector would deny access to Irish students who really need it

                        2. There is considerable levels of anecdotal evidence that language study and privately provided “3rd level” courses of dubious quality are heavily used as a back door to gaining a visa for those who otherwise would be unable to attain one. My father has worked for some years as a security man and almost all of the non EC staff are so-called “international students” who are in fact working part time and sending the shekels home. This is evidence that far from the mythical “rich yank” the government thinks its attracting, in fact it is attracting low waged, low educated international migrants who cannot access the Irish workforce via the normal visa system (whether this is good or bad is a separate issue).

                        The only segment of the Irish 3rd level sector with bona fide students and proven high international standards is the regular publicly funded state system. But bringing in international students would deny places to Irish students – it would effectively generate a situation anamolous to the two-tier healthcare system where Irish students would be bumped out by wealthy international students and dumped onto alternative courses.

                        There are only 3 ways to stop this:
                        1. Certify private providers to EC standards (using existing frameworks) and regularly scrutinise the providers
                        2. Insist that state funded providers do not allocate places away from Irish students – international students must be 100% funded by their own fees if this is to succeed
                        3. Lock such students entirely out of the workforce and demand a considerable level of cash on deposit (like you require if you apply for a Canadian or Aussie visa) as evidence of ability to self-support. Visas given to such students must absolutely be refused work permits under all circumstances – otherwise the scheme will not work

                        • Ronan Lyons ,

                          Hi Laura,
                          Thanks – this post deliberately didn’t touch issues of quality, as I’m not an expert in that area, but I would wholeheartedly agree that without the quality, this would come to nothing. I notice you left out in your comment institutions like RCSI, which are private but of very high quality and attract plenty of top-notch international students. I understand that RCSI is very optimistic about what it could do, if allowed to by the Dept of Education, in terms of promoting education as an export.

                          Also, as the employment boost at the bottom suggests, this would not be squeezing out Irish students. It would be expanding the capacity of the education system.

                          • taipeir ,

                            As somebody who lives in Taiwan it’s always been a mystery why Ireland is the only major true native English speaking nation not to capitalise on the education industry for foreign students…just goes to show how backwards thinking the people running the show are when they are still focused on getting a few more American students instead of the millions of potential students from Asia!

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                                […] each of which could create somewhere in the region of 10,000 jobs – much as I did with education as an export last year. Real domestic recovery will come when a number of these types of plans are put into […]

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