Modern trends of the development of the international market of educational services

Annotation. The article is devoted to the analysis of modern trends in the development of the international market of educational services, which is an important and actively developing branch of the world economy and the place on it of Ukraine. The international market for educational services is characterized by increased competition, along with traditional leaders, a number of countries are pursuing an active policy to promote their own interests in this field. The article examines the factors that influence the changing positions of different countries in the world market of higher education, the current problems of international education.

Key words: international market of visibility, regional market of the highest education, international education, academic mobility, export of basic services, transcondonna osvita.

The main motivation to export educational services is to obtain significant funds and develop the economy. Education in the XXI century is becoming one of the fastest growing sectors of world trade in services. The Organization for Economic Cooperation and Development (OECD) estimates that around 140 million students are currently enrolled in 36,000 institutions of higher education. The international market of viscous industries is close to 100 billion dollar. According to UNESCO, in the world market for educational services, there are higher education institutions (HEIs) in more than 140 countries. According to statistics, a foreign student spends about one-fifth of his own expenses in the country of study, and four-fifths – for accommodation, meals, entertainment, etc.

Experts predict that in 10 years the number of students will double, largely as a result of the increase in the number of those who receive higher education in Asia and Europe. Under the influence of globalization processes, the number of students choosing to study outside their own country continues to grow; the report of the Organization for Economic Cooperation and Development (OECD) Education at a Glance 2012 shows that between 2000 and 2010, the number of foreigners entering universities outside their own country increased by 99% – from 2.1 to 4, 1 million people [6]. By 2025, according to the UNESCO forecast, the number of foreign students will reach 7.2 million. [8, p. 10].

If we talk in more detail about the volumes of the education market, then the assessments of specialists from different organizations are significantly different. According to the estimates of the World Trade Organization (WTO), the world market for education is 50-60 billion US dollars, while OECD experts believe that its size is 2 times inferior to the WTO estimates and equal to 30 billion dollars. Despite this, there is no doubt about the huge size of this market, and its growth rates are also quite large. Evidence of this process is the statistics of the dynamics of the number of foreign students studying outside their countries.

The main segments of the world market of educational services are services in the field of primary, secondary and higher education, adult education services and other educational services not included in other segments. In accordance with the provisions of the GATS, the sale of educational services is carried out in four ways, including [7]:

1. “Consumption abroad.” Assumes the transfer of the consumer to the country where the service is made. In the case of educational services, this is the acquisition of education by persons on the territory of a foreign country. This method is most common in the world market of educational services.
2.  “Transboundary” way. In this case, the border is crossed only by the service itself, and the consumer and producer at that moment are on the territory of different states. In the case of education, this is the acquisition of distance education. This way of supplying services became possible as a result of the development of communication technologies.
3. “Commercial presence”. Organization of the service provider of the country’s commercial presence on the territory of the other, where the service is to be provided. For example, there are the establishments of branches, representative offices in the territory of other states. This method is becoming more attractive for exporting countries, since it allows to cover those groups of foreign citizens who do not have the opportunity to go abroad for education. For example, since 2006 the number of branches of campuses of foreign universities in the world has increased by 43% [8].
4. “Presence of natural persons” implies the movement of individuals from the territory of one state to the territory of another for the provision of services. In terms of educational services, this is the mobility of teachers for working abroad.

The increase in export of educational services became one of the priority directions of foreign economic policy in many countries. A number of reasons can explain the growing interest of countries in the development of this segment of the world market of services.

First, the training of foreign citizens in the country’s higher education institutions is now bringing ever-greater economic benefits in the form of tuition fees, accommodation, food, transportation, entertainment, etc. For example, education was the third largest export item in Australia in 2008, the fifth item in the US and Great Britain [9]. In 2008, the income from the training of foreign nationals in Australia was 12.6 billion USD [9], it was 20 billion USD in the United States [10], and 14.1 billion pounds in Great Britain [5].

Leaders in the world trade in educational services are the countries of North America, Western Europe and some Asian countries. Almost 60% of the total number of foreign citizens receiving education abroad is in the United States (19.6%), Great Britain (11%), Australia (7.6%), France (7.4%), Germany (6%), Japan (4%), and Russia (4%) [8, p. 194]. Despite the fact that the list of countries leading in the world trade of educational services remained virtually unchanged over the past decades, there is a tendency to reduce their market share. For example, , the US share decreased by 1.6%, the United Kingdom by 1%, Germany by 3.4%, France by 2.6% compared to 2006. At the same time, new regional leaders are emerging as leaders in training foreign citizens: the PRC (1.8%), the Republic of Korea (1.5%), Malaysia (1.2%) and Singapore (1.2%) [8, p.196].

Almost 30% of all foreign students traveling abroad, accounted for only 4 countries: PRC (15.1%), the Republic of Korea (3.7%), India (5.8%), Germany (2.7%) [8, p. 204]. The specialties students choose for study abroad are business and management (23%), engineering (14%), humanities and arts (14%), social sciences and law (13%) [6].

Secondly, educational institutions strive to ensure the quality of education in the struggle to attract foreign students in accordance with international requirements. Inclusion of international components in the educational process inevitably leads to the reform in the system of training specialists and to increasing the competitiveness of an educational institution in the international educational space.

Thirdly, the training of personnel for foreign countries is becoming increasingly important in terms of spreading by the state of its achievements in the field of science and technology, language, values ​​and culture, which influence the formation of the image and the country’s position in the world community in one way or another. In addition, foreign students are also becoming an important source of population growth, a means of improving the demographic situation and the labor potential of the country. Thus, conducting an active immigration policy, the USA, Canada, Australia and a number of European countries receive about 1 million highly qualified specialists from among foreign citizens who have studied at universities of these countries during the year [6].

Globalization processes and market transformations change the demand structure in the labor market and cause new inquiries from consumers of educational services. Educational services, as products within the global market, have different qualitative and cost characteristics from elite to low quality. Knowledge received by consumers of educational services during their life forms new qualities of people, through which they, form different intellectual classes of a new society in the conditions of an innovative economy, in particular, a class of intellectuals. Ensuring the possibility of higher education for all segments of the population means confronting the social inequality, which is deeply rooted in history, culture and economic structure, and affects the ability of a person to compete. Geography, the unequal distribution of wealth and resources objectively determine the existence of groups of people with limited access to the global market. The growth of competition in the global market of educational services in the field of attracting foreign students has an economic basis: the cost of studying at universities for foreign students is higher than the cost of providing similar services to students in the country of the higher education institution.

In the context of globalization, the influence of the external environment and international competition on the transformation of national systems of higher education increased significantly; the determinants of development are changing; and the dominant components of higher education in the global market determine the priorities of the transformation of education systems in their totality in the context of ensuring their international competitiveness.

The main factors determining the choice of participants in the educational process of a particular higher education institution abroad are the language of instruction, the quality of higher education programs, the cost of training and immigration policies in the country; the same factors determine the level of competitiveness for exports of higher education services. In addition, the growth in the demand for international education is due to the economic and scientific expediency that consumers use services: in the long run, this can guarantee higher wages and better conditions for employment both in the domestic and foreign labor markets.

According to the Ministry of Education and Science of Ukraine, 63 thousand students from 146 countries of the world are studying in Ukraine. The share of Ukraine in the international education market by the number of foreign students is 1.5%. The amount of Ukrainian higher education services exports are given in Table 1. Ukrainian universities have sufficient potential to compete for the market share of educational services. In recent years, the number of foreign students increased significantly (Table 2). Foreign students education are attracted in Ukrainian by the relatively low studying and living cost, the fundamental nature of certain education areas (our physical, mathematical and chemical schools are recognized throughout the world) and the reputation of leading Ukrainian universities, which was preserved for many years.

As of the beginning of 2015/2016, the number of foreign students in Ukraine is 63,391. Of these, 165 persons are enrolled in the first and second levels of higher education (bachelor and master) and 63,226 people are enrolled in the third and the academic year (Doctor of Philosophy and doctorate). The universities of Kharkiv, Kyiv, Odessa and Lviv are the leaders by number of foreign students.

Most foreign students studying in Ukraine are from Asia. The geography of students from Africa is not so diverse; however, their number is also relatively significant. A very small percentage are citizens from the countries of the European Union. The total number of such students barely exceeds the mark of 50. Table 3 shows the number of students from different countries in Ukrainian universities.

Table 1: Amount of export and import of Ukrainian services in the field of education (according to the State Classifier of Ukraine DK 012-97 “Classification of Foreign Economic Activities”) during 2000-2014, ths. USD

Table 2: Number of foreign students studying in Ukraine

We cannot conclude that the demand for higher education services by foreigners is growing. Along with the decrease in the demand of foreigners for educational services of Ukrainian universities, an increase in the demand of Ukrainians for foreign education is observed. The dynamics of the departure of Ukrainian students abroad for the past five years has increased by 41.44% on average. The largest growth occurred to such countries as Poland (almost 4.5 times), Canada, Italy, Spain, Austria, Great Britain, and Slovakia (1.5 to 2.5 times). At the same time, there is a decrease in the outflow of Ukrainians to some countries, for example: the USA, Hungary, Sweden, Latvia, Moldova, and Belarus (from 10 to 45%). Regarding the structure of the most popular countries to which Ukrainians go to study, statistics shows that Poland (32%) and Germany (20%) were the leaders over the past five years. All other countries distributed the amount of Ukrainian higher education graduates roughly from 2 to 5%. The number of Ukrainian students which are studying only in European countries increased by a third over the last five years.

For Ukrainian higher education, the increasing export of educational services is beneficial, firstly, from an economic point of view, as the training of specialists for foreign countries is one of the most profitable items of income, especially in the context of poor financing of education. Secondly, the desire to attract foreign students prompts Ukrainian HEIs for educational activities, taking into account world standards of quality for education and training directions. With its significant export potential, especially in the field of higher professional education, Ukraine currently does not fully realize it, because our country accounts for about 1.5% of the total number of foreign students studying in the world. In the 2014/2015 academic year, 63,172 foreign students studied in Ukraine. However, according to experts, Ukrainian educational institutions have a much greater potential for providing educational services and can train about 500,000 foreign students [4, p. 213].

In order to assess the competitive advantages or disadvantages of Ukrainian education adequately, it is necessary first to analyze the requirements of the global market. Monitoring of the students’ preferences shows that business education is valued above all in the international market. Almost 20% of students study technical and engineering sciences and the most popular ones is information technology. Approximately the same number of students choose natural sciences. Medicine closes the list of preferences – 4-5%. In Ukraine, foreign students often choose medical and technical specialties, as well as double-diploma education programs for higher education according to international standard.

Informal education that should prepare people for rapid change is an important promising segment of the educational services export in Ukraine that will expand the export of educational services. This is a long-term concept of lifelong learning in Europe through training, seminars, etc. The development of e-learning and distance learning in the current conditions of intensive growth of the global Internet network is an important direction in expanding the scope of educational services in space and time. On-line education, which concept corresponds to the “life-long learning” paradigm, is the form of educational service offered by innovative universities. Over the past ten years, this area is undergone a significant transformation and is characterized by the formation of a global market for on-line educational services under the influence of technological developments and the development of Internet resources at the present stage.

The main preconditions for the emergence of open online training in developed countries is the massive demand for education throughout life; the desire of people to study according to individual curricula that do not fit into formal education programs; a constant rise in prices for formal education that cannot be adequately financed from state budgets; the desire of market participants for educational services to find an effective tool for attracting more students. The globalization of higher education implies that a higher education student can receive it in higher education institutions, both domestic and foreign (at home at branches and with the help of distance education). That is why taking into account the fact that the student acquires cross-border education mainly for his own money or the funds he attracts, the important characteristic of the “inclusion” of the country in the global educational space is the cash flow from the export and import of educational services. At the same time, Ukraine does not look competitive enough on the market for providing higher education services. There is no full awareness that higher education can no longer be limited to the training of specialists for the local or national labor market. In fact, for the students, the whole world is open, and hence the need to ensure their competitiveness becomes a strategic goal for all universities

Online education should play an important role in raising the academic level of Ukrainian teachers, monitoring their global trends in education, their integration into the international scientific community and the expansion of international contacts. Online education is one of the tools for implementing the globalization processes of the transformation of higher education in Ukraine, which in the long run can ensure its competitiveness in the international educational space.

In the context of global processes of internationalization of education one of the promising directions of development of the sphere of higher education in Ukraine is the orientation towards the formation and effective implementation of export potential and on its basis further integration into the world educational space. The expansion of internationalization is facilitated by the exchange of students (the attraction of foreign students to the national educational space) and teachers, the franchising of educational services (the creation of foreign branches of higher educational institutions with the right to use its educational programs, technologies and issuing its diplomas), the export of educational technologies (meeting the needs of foreign consumers in educational services on a commercial basis by the subject of the national system of higher education), increasing the prestige of international exchange of knowledge through visits by representatives of universities internationally days of conferences, symposiums, seminars etc.

The status of educational services’ export in each country is determined by the following factors:

• the prevalence of the language of instruction;
• economic and cultural attractiveness of the state;
• the authority of the country on the international level;
• the level of development of the national education system;
• the reputation of the university;
• the cost of studying and living;
• the flexibility of educational programs;
• level of support and support of foreign students;
• geopolitical, trade-economic, cultural-historical ties between the exporting country and the importing country;
• the level of advancement of national educational institutes in the global space.

As noted above, the world market for educational services has a significant financial content and, for a number of countries, the revenue from its operation is an important part of GDP, an increase in the export of Ukrainian educational services at this stage of the national economy development is a vital and promising direction for attracting additional financial resources in the educational sphere. Access to education, a wide range of educational services, a powerful intellectual resource and a high scientific and pedagogical potential should become the main competitive advantages of Ukrainian universities.

To increase the volume of exports of higher education services, it is useful to adapt international experience in the field of internationalization, informatization and mass education of higher education to the conditions of using the intellectual potential of Ukrainian universities. The quality of the intellectual potential of the university, as well as any higher educational institution, will be determined by the level of technology for the transfer of new knowledge in the global educational space. The quality of students’ training and their ability to carry out scientific research and effective innovation in future practical work is transformed into new qualities of staff, scientific results and innovative projects.

Table 3: Geographical structure of the foreign students contingent in Ukraine, 2016

Conclusions

For Ukrainian higher education, expanding exports of educational services is beneficial, firstly, from an economic point of view: the training of specialists for foreign countries becomes one of the most profitable items of income, especially in the context of poor financing of education. Secondly, in terms of improving the quality of education: the desire to attract foreign students encourages Ukrainian universities to form a system of training specialists, taking into account the requirements of the world labor market to the quality of education and training.

Diana Kucherenko
Ph.D. in Economics, Associate Professor,
Science and Research Institute of Social and Economic Development,

Olena Martynyuk
Ph.D. in Economics, Associate Professor,
Kyiv National Economic University named after Vadym Hetman

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