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

Emerging issues in Vocational Education Emerging issues in Vocational Education and Training:and Training:

Impact of Globalisation on Tertiary Impact of Globalisation on Tertiary EducationEducation

Presentation to VISTA forum

Angel Calderon

[email protected]

Melbourne, November 2008

RMIT University Slide 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


Globalisation in context

Global trade flows

Internationalisation of market for goods, production and services

Education is a service industry, open to competition in Australia

Global mobility of capital

Global mobility of people

Global diffusion of knowledge ^

Borderless production chains ^

Sustainability *

* Not covered

^ partially covered in this presentation


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.


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.


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.


Trade flows - regional trade agreementsAbbreviatio

n Name Countries

AFTA ASEAN Free Trade Area Brunei Darussalam Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam

ASEAN Association of South East Asian Nations

Brunei Darussalam Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam

CACM Central American Common Market

Costa Rica El Salvador Guatemala Honduras Nicaragua

EC European Communities Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Poland Portugal Romania Slovak Republic Slovenia Spain Sweden The Netherlands United Kingdom

GCC Gulf Cooperation Council Bahrain Kuwait Oman Qatar Saudi Arabia United Arab Emirates

LAIA Latin American Integration Association

Argentina Bolivia Brazil Chile Colombia Cuba Ecuador Mexico Paraguay Peru Uruguay Venezuela

MERCOSUR Southern Common Market Argentina Brazil Paraguay Uruguay

NAFTA North American Free Trade Agreement

Canada Mexico United States

PAN-ARAB Pan-Arab Free Trade Area Bahrain Egypt Iraq Jordan Kuwait Lebanon Libya Morocco Oman Qatar Saudi Arabia Sudan Syria Tunisia United Arab Emirates Yemen

SPARTECA South Pacific Regional Trade and Economic Cooperation Agreement

Australia New Zealand Cook Islands Fiji Kiribati Marshall Islands Micronesia Nauru Niue Papua New Guinea Solomon Islands Tonga Tuvalu Vanuatu Western Samoa

Source: World Trade Organisation


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.


Australia’s trade policy

Australia's Bilateral and Multilateral Agreements

Singapore - Australia FTA (in effect since 2003)Thailand - Australia FTA (in effect since 2005)Australia - United States FTA (in effect since 2005)Australia New Zealand Closer Economic Relations (in effect since 1983)Australia-Chile FTA (signed in 2008)

Australia-ASEAN-New Zealand FTA Negotiations Australia-China FTA Negotiations Australia-Gulf Cooperation Council (GCC) FTA Negotiations Australia-Japan FTA Negotiations Australia-Malaysia FTA Negotiations

Australia-India FTA Feasibility Study Australia-Korea FTA Study Indonesia-Australia FTA Feasibility Study

Free Trade Agreements in effect

Free Trade Agreements under Negotiation

Free Trade Agreements under Consideration


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.


Australia's trade in goods and services (current prices, $m)

2005-06 2006-07 2007-08 % change

2006-08% change

2007-08

Imports 210,794 227,808 253,018 20% 11%

Goods 154,425 169,535 184,148 19% 9%

Services 41,849 46,112 50,962 22% 11%

Exports 196,274 215,647 235,110 20% 9%

Goods 169,716 183,527 204,935 21% 12%

Services 41,078 44,281 48,083 17% 9%

Total trade 407,068 443,455 488,128 20% 10%

Balance on trade -14,520 -12,161 -17,908 23% 47%

Australia's trade in education related services…

Imports 741 780 846 14% 8%

Exports 9,745 11,109 13,710 41% 23%

Education related services as a share of …

Import services 2% 2% 2%

Exports services 24% 25% 29%

Source: DFAT, June Quarterly, 2008.


Trade flows – global trends

• 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).

Does increase in imports and exports suggest integration into global trade?


Trade flow – Intra- and inter-regional trade 2007

North AmericaSouth and

Central America

Europe Asia

North America 51% 7% 18% 19%South and Central America 30% 24% 21% 16%Europe 8% 1% 74% 8%Asia 20% 2% 19% 50%

Region of destination

Source: WTO, World Trade Developments, 2008.

Region of origin

How much of regional merchandise trade occurs within the same region?


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.


People mobility – Flow of migrantsMain source country of immigrants (Top 20)

Source country Immigrants

Mexico 11,502,616 Russian Federation 11,480,137 India 9,987,129 Others (South) 9,687,330 China 7,258,333 Ukraine 6,081,890 Bangladesh 4,885,704 Turkey 4,402,914 United Kingdom 4,158,909 Germany 4,095,015 Kazakhstan 3,710,351 Philippines 3,631,405 Italy 3,459,027 Pakistan 3,415,952 Morocco 2,718,665 Egypt, Arab Rep. 2,399,251 Poland 2,316,438 Serbia and Montenegro 2,298,352 United States 2,261,443 Vietnam 2,225,413

Main destination country of immigrants (Top 20)

Destination country MigrantsUnited States 38,354,709Russian Federation 12,079,626Germany 10,143,626Ukraine 6,833,198France 6,471,029Saudi Arabia 6,360,730Canada 6,105,722India 5,700,147United Kingdom 5,408,118Spain 4,790,074Australia 4,097,204Pakistan 3,254,112United Arab Emirates 3,211,749Hong Kong, China 2,998,686Israel 2,660,881Italy 2,519,040Kazakhstan 2,501,779Cote d'Ivoire 2,371,277 Jordan 2,224,890 Japan 2,048,487

Source:


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.


People mobility – Migrants South Asia

• 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.


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).


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.


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).


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


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.


Production chains – changes in sectoral employment

Employment by sector, Australia and World Regions, 1996 and 2006

Sectoral employment in

Country / regionAgriculture (%) Industry (%) Services %

1996 2006* 1996 2006* 1996 2006*

Australia 5 3.6 22.4 21.1 72.5 75

meanwhile…

Developed Economies & European Union 6.2 4.2 28.5 24.7 65.3 71.2

East Asia 48.5 40.9 24.3 25.6 27.2 33.5

South-East Asia & the Pacific 51.0 45.4 16.5 18.6 32.5 36.0

South Asia 59.7 49.4 15.2 21.0 25.1 29.6

World 41.9 36.1 21.1 21.9 37.0 42.0

Industries with largest workforce in selected economies- Manufacturing - Wholesale / retail trade; repairs of vehicles & goods- Real estate, renting and business activities- Health and social work- Construction


What is that…? Changing the tune here… Policy changes have greater impact than macro economics

Australia's historical growth in selected measures

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Year

Per

cen

t ch

ang

e

Growth in real per capita GDP Growth in real per capita HFCEInflation Growth in VET student numbersGrowth in HE student numbers

Responding to policy imperatives, reviews and sectoral reforms.


Growth in Australia’s tertiary education system

Changes in VET numbers also respond to State policies

What do the numbers tell us about the Australian education sector without the macroeconomic noise?

Growth in Australian student numbers in VET and HE and population aged 15 and over - 1987 to 2007

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Growth in population aged 15+ Growth in VET student numbers Growth in HE student numbers


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)



• 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.



• 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


Emerging VET issues - Australia

• 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

Trade flows Mobility of capital

Diffusion of knowledge Borderless production chains

Mobility of people


Participation

• 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

• 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.


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.


People mobility - Skill migration

Source: Immigration Department

Category 1997-98 2005-06 2006-07 2007-08 2008-09 ProjSkill migration 77,880 97,340 97,920 108,540 133,500 Other categories 42,180 45,590 50,280 50,090 56,800 Total migration 120,060 142,930 148,200 158,630 190,300

Australian Migration Program by year

Does Australia’s skilled migration intake inhibit, limit or represent an opportunity for Australian providers to educate, skill or up-skill people?

70%50%

Skill migration as percent of total Australian migration program

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

1997-98 2005-06 2006-07 2007-08 2008-09 Proj


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).


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.

Projected Australian government expenditure on education (per cent of GDP)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Schools HE VET

2006-07 2011-12 2016-17 2026-27 2036-37 2041-42 2046-47 Aspiration

Source: Intergenerational Report, 2007.


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?


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)


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)


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.


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.


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.

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

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