Emerging issues in Vocational Education and Training: Impact of Globalisation on Tertiary Education

1. Emerging issues in Vocational Education and Training:Impact of Globalisation on Tertiary Education Presentation to VISTA forum Angel Calderon Angel.Calderon@rmit.edu.au Melbourne, November 2008

2. About this presentation • Context of globalisation -> Phases • Trade liberalisation • Challenges • Trends • Australia’s relative standing • Economic / social challenges • Education • Global and domestic educational challenges and emerging issues RMIT University

3. Globalisation in context Global trade flows Global mobility of people Internationalisation of market for goods, production and services Sustainability * Global mobility of capital Global diffusion of knowledge ^ Education is a service industry, open to competition in Australia Borderless production chains ^ * Not covered ^ partially covered in this presentation RMIT University

4. Globalisation • The term globalisation is generally used to describe an increasing internationalisation of markets for goods and services, the means of production, financial systems, competition, corporations, technology and industries. • In turn, this gives rise to increased mobility of capital, faster propagation of technological innovations and an increasing interdependency and uniformity of national markets. Source: OECD – dictionary of terms. RMIT University

5. Phases of globalisation • Increase in trade flows (mobility of goods and services) • Mobility of capital • Mobility of people and skills • Borderless diffusion of knowledge • Borderless production chains. RMIT University

6. Globalisation and Education • Inclusion of trade in educational services in the General Agreement on Trade in Services (GATS) in 2000 generated an impetus for internationalising education on a new un-chartered path: • Provide market access. • Non-discrimination once a provider is in the market (National treatment principle). • No discrimination between the treatment of member countries. • Source: Calderon and Tangas, OECD, 2006. RMIT University

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8. Trade flows - Australia’s Trade Policy Howard and Rudd governments have actively pursued bilateral and multilateral relations in light of slow progress in GATS. Australia’s two way trade in goods and services was worth A$488billion in 2007/08. Australia’s trade services rose 47% to A$17.9b – deterioration of deficit over the past year reflects stronger growth in imports relative to exports. RMIT University

9. Australia’s trade policy RMIT University

10. Multi- or bilateral agendas • Australian government has supported GATS round of negotiations, “Doha” (multi lateral approach). • Recognising slow progress in Doha, the Australian government has moved swiftly to negotiate bilaterals. • GATS is the lesser devil in trade liberalisation. • Problem with bilateral and regional agreements is that entrenches some level of protectionism and partner preference. RMIT University

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12. Trade flows – global trends Does increase in imports and exports suggest integration into global trade? • In terms of imports (1953 to 2007) • Increase • USA (13.9% to 14.5%). • Asia (15.1% to 25.3%). • China (1.6% to 6.8%). • Japan (2.8% to 4.4%) • Increase • Australia and NZ (2.3% to 1.4%). • South and Central America (8.3% to 3.3%). • Africa (7.0% to 2.6%). • In terms of exports (1953 to 2007) • Increase • Asia (13.4% to 27.9%). • China (1.2% to 8.9%). • Japan (1.5% to 5.2%) • Europe (39.4% to 42.4%). • Decrease • USA (18.8% to 8.5%). • Australia and NZ (3.2% to 1.2%). • South and Central America (9.7% to 3.7%). • India (1.3% to 1.1% - fluctuated). RMIT University

13. Trade flow – Intra- and inter-regional trade 2007 RMIT University

14. People mobility – Migration • Number of immigrants worldwide: 190.6 million or 3.0% of population (UN). • Over 47% of the migrants from developing countries are believed to be residing in other developing countries. • Migration flows in recent years, relative to population, are weaker than during the last decades of the nineteenth century. However it may change given current global economic turmoil. RMIT University

15. People mobility – Flow of migrants Source: RMIT University

16. People mobility – Migrants East Asia & Pacific • Emigration • Number of emigrants: 19.3 million or 1.0% of population. • Top 10 emigration countries: China, Philippines, Vietnam, Indonesia, Malaysia, Thailand, Dem. Rep. of Korea, Myanmar, Lao PDR, Cambodia. • Identified destinations: high-income OECD countries (50.0%), high-income non-OECD countries (27.3%). • Immigration • Number of immigrants: 4.4 million or 0.2% of population (compared to 190.6 million or 3.0% for the world). • Top 10 immigration countries: Malaysia, Thailand, China, Philippines, Cambodia, Indonesia, Myanmar, Dem. Rep. of Korea, Papua New Guinea, Lao PDR. RMIT University

17. Emigration Number of emigrants: 22.1 million or 1.5% of population Top 5 emigration countries: India, Bangladesh, Pakistan, Afghanistan, Sri Lanka. Identified destinations: high-income OECD countries (20.3%), high-income non-OECD countries (25.3%), intra-regional (34.5%), other developing countries (11.4%); unidentified (8.5%). Emigration rate of tertiary educated (top 5 countries): Sri Lanka (27.5%), Afghanistan (13.2%), Pakistan (9.2%), Bangladesh (4.7%), India (4.2%). Immigration Number of immigrants: 11.2 million or 0.8% of population (compared to 190.6 million or 3.0% for the world). Top 5 immigration countries: India, Pakistan, Bangladesh, Nepal, Sri Lanka. People mobility – Migrants South Asia RMIT University

18. Mobility of capital – Foreign direct investment (FDI) • Foreign direct investment inflows raise to $1,833 billion in 2007 – an increase of 30% from previous year. • Over the past 20 years annual growth has been in exceed of 20% pa. • Financial and credit crisis will have a dampening effect on FDI in coming years. • FDI inflows into developed countries grew faster than any other region. • 68% of FDI inflows occurred in developed countries compared to 27.3% for developing economies (14% SEA and Oceania). RMIT University

19. Mobility of capital - Remittances • The total value of workers’ remittances in 2007 was estimated to be US$318 billion. • Remittances represented 0.7% of total global GDP in 2006. • Inward remittance flows doubled between 2002 to 2007. • The true size of remittances, including unrecorded flows through formal and informal channels, is believed to be larger. RMIT University

20. Global production chains • Offshoring of goods and manufacturing • Mexico’s experience under NAFTA (shift to China • Maquilas in the northern America corridor (presence of Korea, China and Taiwan) • Offshoring of services (ICT) • Outsourcing • Multi national enterprises • Re-exporting (Japan -> China -> USA). RMIT University

21. Global diffusion of knowledge • Education flows • Greater mobility of students across borders • Relevant bloc models • Bologna Process (Europeanisation of Education) • MERCOSUR agreement • APEC – English language • Country partnering to support VET development • Australia VET model in China, India and Latin America RMIT University

22. Global diffusion of knowledge • Science, Technology and Innovation • Encompassing international cooperation • Research and Development • Technology traffic • Internet, Telephony, Mobile, ICT • Patents • High value trade • ICT, Technology-value add • Service expertise. RMIT University

23. Production chains – changes in sectoral employment RMIT University

24. What is that…? Changing the tune here… Policy changes have greater impact than macro economics Responding to policy imperatives, reviews and sectoral reforms. RMIT University

25. Growth in Australia’s tertiary education system What do the numbers tell us about the Australian education sector without the macroeconomic noise? RMIT University Changes in VET numbers also respond to State policies

26. Emerging VET Issues - Global • Massification of education – increased participation in tertiary education: • Business • Engineering • Technology, ICT • Science. • Development national systems – retaining own nationals and attracting students from neighbouring countries: • China (attracting from Asia-Pacific) • India (attracting from Middle East) RMIT University

27. Emerging VET Issues - Global • Pursuing domestic interests, emerging educ-hub countries setting own regulation approaches. • Australia is a mature education market and seen as ‘aggressive’ marketer and the one to beat. • Maturing emerging markets (e.g. China and India) are building own capability whereas new emerging markets are seeking more refined partnerships. RMIT University

28. Emerging VET Issues - Global • Target emerging educational markets: • Countries where rate of exports and imports are growing faster than GDP • Countries where exports and imports are considered high-value i.e. technology oriented products. • Pakistan • Sri Lanka • The Philippines • Vietnam • Turkey RMIT University

29. Growth in domestic and offshore participation Public and private financing Ageing infrastructure Governance and accountability Institutional capability Skill shortage in the immediacy; short and long term Preparedness for workforce development Managing system reputation Emerging VET issues - Australia Trade flows Mobility of capital Mobility of people Diffusion of knowledge Borderless production chains RMIT University

30. Proportion of the Australian population in the principal age group for education (5-24 year olds) has decreased – from 36% in 1965 to 27% in 2006 (IGR 2007). VET domestic participation rates are projected to increase slowly (IGR 2007). VET annual rates fluctuate so growth is likely to be not greater than 2% per annum. Balancing regional participation and provision of education. Participation RMIT University

31. Participation • Growth in international numbers will depend on a number of issues • External forces • Government responses to financial crisis (e.g. rescue package; USA rebalancing trade deficit with China; policy responses (e.g. protectionism of certain industries) • Australian policy changes • Migration levels • Review of Innovation, Manufacturing, Education and Training, et al. RMIT University

32. Financing • Australian government spending on education is projected to grow in real per person terms – but overall spending is projected to fall slightly as a proportion of GDP from 1.85% in 2006-07 to 1.78% in 2046-47 (IGR 2007). • Ageing of the population detracts from growth in real education spending. • The driver of real per person growth is the assumed indexation of costs per student by wages and educational participation rates. RMIT University

33. People mobility - Skill migration Does Australia’s skilled migration intake inhibit, limit or represent an opportunity for Australian providers to educate, skill or up-skill people? 50% 70% Source: Immigration Department RMIT University

34. Financing • Viability of VET providers may be affected by factors, e.g. • State governments funding approaches to ‘domestic’ enrolments • International demand in a tighter and more competitive environment. • Relative reputation strength of the system together with pathways alternatives. (Australian ranked #3). RMIT University

35. Expenditure on education as a % of GDP Aspiration reflects target we should aim for to support Australia’s ongoing development and investment in human force development. RMIT University

36. Infrastructure • Expenditure on upgrading institutional facilities is likely to decline if government infrastructure programs are not specifically targeted to support VET. • Under current economic conditions, new facilities may not be built – a compound effect likely to be felt in years to come. • PPP – the new building pathways. To what extent education can leverage off Nation Building projects to support further growth in the sector given global competition? RMIT University

37. Governance and accountability • Issues of structure and management • Responding to (greater) public scrutiny • Increase in legislative reporting requirements • Availability of performance data across all VET providers (both private and TAFE) RMIT University

38. Institutional capability • Enterprise agreement • Ageing workforce • Workforce development – return to learning. • A new wave of productivity requirements. • Language and communication skills in a globalised education environment (cross cultural awareness) RMIT University

39. Take away messages • Education is a ‘truly’ globalised service industry – rapidly growing in developing and emerging economies. • Implications of trade liberalisation in educational services have been underestimated and are not reversible. As a consequence changes are yet to be completely felt. • Most countries entering into free trade agreements are including educational services into the mix, resulting in new entrants characterised in niche and labor-market driven markets. • Examine more closely trade data to assess extent of emerging trends likely to have an impact on vocational education and training. • Distinguish between training for the short to the medium and long term. • Increased emphasis on service industries away from secondary industries (ie manufacturing) and primary (agriculture). This in turn result in urban growth. RMIT University

40. Take away messages II • Broadening of education into the trading mix of developing nations (China, India, Middle East and Gulf countries, Vietnam, Philipines, Central and South America). • Deepening of education, ie market segmentation, specific sustainable economic needs • PhDs in science, engineering and ICT, • Postgraduate in certain fields; secondary education. RMIT University

41. Post data • An updated version of this presentation will be made available in December. This update will contain list of references, data sources and tables used to generate the charts. RMIT University