Trends in International Trade in Higher Education Services: Implications and Options for Developing Countries

International trade in higher education services has grown rapidly in recent years in a variety of forms. The most common form of this trade is the movement of students to study in foreign universities, which has been supplemented by the delivery of foreign higher education programs and institutions to transition and developing countries.

Among the factors propelling demand for foreign higher education services are the excess demand for domestic higher education and the need for internationally recognized qualifications in emerging regional and global markets for highly skilled labor. Several countries have also encouraged foreign collaboration to improve the quality of domestic higher education.

However, there are concerns in developing countries about possible negative effects of this trade on under-funded and inefficient domestic higher education systems operating within weak regulatory systems. The possibility of losing sovereignty over a sector that is vital to national development is another major concern. As a result, despite the growth in international higher education trade, most developing countries have been unwilling to make binding commitments in the current round of the General Agreement on Trade in Services
(GATS) negotiations and in bilateral trade agreements.

This research project analyzed data from the United Nations Educational, Scientific, and Cultural Organization (UNESCO) on international student flows, the International Monetary Fund’s balance of payments, trade statistics of selected countries, and GATS schedules.

The project findings showed that this trade is bound to increase and diversify due to growing demand for foreign qualifications and increasing competition among industrialized nations in the higher education market. The findings also showed the increased entry of higher education institutions.

from developing countries, which can compete on both price and quality. These developments offer options for developing countries, including low-income countries, to expand and strengthen their domestic higher education systems.