Globalization, economic crisis and national strategies for higher education development: research papers; Research papers iiep; 2009

Why do people seek cross-border education? 
One of the important motivations for seeking cross-border education is its capacity to enhance 
employment opportunities and obtain higher returns to investment. Foreign degree holders enjoy 
a premium in the labour market in developing countries. They are also preferred in their countries 
of study. Therefore, during periods of skill shortages, students are a reliable way of recruiting 
migrant labour. It is found that students who came from China and India to seek education in the 
USA remain in the country (Tilak, 2007) and constitute a large share of the professionals in some 
of the IT sectors in the USA. The incentive to employ cross-border students is also re
fl
ected in the 
visa rules of some countries, as mentioned earlier. Degrees from foreign universities also enjoy a 
premium in the labour market in the country of origin. This is the case even when the institution 
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Globalization and cross-border mobility
21
is a branch campus of a foreign university. MNCs are more willing to recruit people who have 
certi
fi
cation from the universities of their parent countries. The liberalization policies followed by 
developing countries in the 1990s have attracted high levels of foreign direct investment as well as 
the migration of 
fi
rms and jobs. The demand for foreign degree holders in these sending countries 
has increased. This has been an incentive to invest in cross-border higher education. 
Another motivation for seeking cross-border education is for a better quality of education. A degree 
from a good university is an attractive proposition to students. The continuing 
fl
ow of students from 
developing countries to developed countries is also due to the belief that the quality and standards 
of higher education studies offered in universities in the OECD countries are superior to those 
offered in the country of origin. One can 
fi
nd a positive association between the global ranking of 
universities and the preferred destination of students for their studies abroad. Universities in the 
USA occupy the top positions in the global ranking, which encourages many students to apply to 
universities in the USA. Students in Arab countries migrate to Egypt and Jordan to pursue their 
higher education studies. A large number of students from Bangladesh and Nepal travel to India 
to pursue their higher education studies. Similarly, students from mainland China seek higher 
education in Hong Kong (Li and Bray, 2007). 
There are exceptions to this pattern. For example, it is found that only a small share of students 
sitting for competitive examinations in India actually gain admission to some of the prestigious 
institutions, such as the Indian Institute of Technology (IIT) or the Indian Institute of Management 
(IIM). Those who do not get admitted to these institutions seek cross-border education as their 
next best option.
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22
5
The economic crisis and its implications for higher education 
and employment
Many countries affected by the economic crisis are struggling to develop strategies to arrest the 
adverse effects of job and income loss on their citizens. How does the crisis affect the development 
of higher education in general, and that of cross-border education in particular? Many crises in 
the past emanated from public sector investment/savings de
fi
cits, leading to large-scale budget 
de
fi
cits and borrowing. The East Asian economic crisis was different from the earlier crises. Private 
sector borrowing and 
fi
nancial companies and their lending were responsible for the East Asian 
economic crisis of 1998-1999 (Stiglitz, 1998). The current crisis has many similarities with the 
East Asian economic crisis: It started from the 
fi
nancial system and it has affected 
fi
rst professional 
and white collar jobs. However, it is different from the past crisis in that the 
fi
nancial systems of 
the developed countries are responsible for the crisis, which is global in its reach, as it spreads 
to both middle- and low-income countries (World Bank, 2008). Some of the manifestations of the 
crisis give scope for speculation, which is attempted below.
The leading economies of the world are experiencing the most severe crisis since the great 
depressions of the 1930s and the crisis is changing the economic and employment outlook. 
According to the International Monetary Fund (IMF), global growth has come to a virtual halt, with 
the developed economies expected to shrink by 2 per cent in 2009. The World Bank President 
and IMF Managing Director said that “the crisis has become global and no country could escape 
it” (