An education hub is where high-quality education is provided for in a specific region. For Australia, education services are the third largest export.

Education generates more than $12 billion per year. Creating a hub improves a country’s workforce through knowledge generation, transfer, and retention. Educational hubs act as a growth engine. Entrepreneurs and state governments who own the colleges and universities make money out of the tuition fees and accommodation. Nations get to internationalize and modernize their education system. Moreover, renowned universities open up branch campuses in the country.

Wealth Creation Engine

In some rich countries, education services contribute a lot to national income. In a developing country, education is a growth industry that provides money-making opportunities to local entrepreneurs. To put this into perspective at the business level, in Malaysia, a starting salary for fresh graduates is on average between 2000 – 5000 MYR which translates to 50,000 MYR per year. A 3-year degree at a private university cost anywhere between 30,000-50,000 MYR. 

This means you only have to capture three students to cover the cost of one staff’s salary. It gets better if you open a medical college such as Cyberjaya University College of Medical Sciences where one medical student recruited will generate close to 500,000 MYR. With economies of scale, you stand a chance to make a handsome profit.

To address staff costs, there are systems that allow you to run your campus efficiently. You can use a campus management system or student information system.

The Big Picture

Countries Amount to GDP (USD)
UK 32 Billion
US 39 Billion
Australia 25 Billion
The 32 billion USD contribution came from 428,000 international students. Each student pays for tuition and accommodation. In the US, there are 974,000 international students. In Australia, 624,000. As the table above displays, students having a reputation for being poor are in fact rich. Consider that some students are on scholarships and even more come from wealthy families. It is 2018 and globalization is here.

Those who can afford, have always preferred to send their children to study overseas at reputable universities. This explains the large number of international students at universities such as Oxford, Harvard, Cambridge, Boston University, NYU, Imperial, HKU, Manchester, Duke.

The Fine Print…the Age of Glocal

Education HubEducation hubs depend on universities. Universities are catalysts to grow an area into an active economic zone. This is evident in London where there is the London School of Economics, UCL, King’s College of London. At the same time, London is the banking capital of the world, London is also an education hub of the globe. The students feed into the working world. Where they once studied, these students earn salaries and spend on food, housing, and entertainment. In fact, when they were students, they spend on these items too.  In the UK, Manchester is known as a university town where students go to watch Manchester United play at Old Trafford after class. An example of a once barren land brought alive is Cyberjaya, in Malaysia. Cyberjaya was a ghost town. Now, it is bustling with MNC offices, Arab restaurants, and shopping malls. What fuels the growth is local students and international students who study in MMU, Lim Kok Wing, AMU, CUCMS, and UIM.

Contribution to Local Businesses

Countries Amount to GDP (USD)
UK 49 Billion

In Malaysia, many of the private universities such as Lim Kok Wing University Cyberjaya and Universiti Teknologi Petronas (UTP) are owned by Malaysian(s) and government companies. The benefit goes directly to entrepreneurs like Lim Kok Wing and the Malaysian companies. Telekom Malaysia, a national telco owns Multimedia University Cyberjaya. 
Petronas a national oil company owns UTP in Tronoh.

statistics-cyberjaya
Cyberjaya Population (Image courtesy of investcyberjaya.com)

The universities are profit making on their own and attract students from all over. Quality education is provided at competitive prices for local students while higher fees are charged to international students seeking education at value for money. Tronoh, like Cyberjaya, slowly becomes a town. 

Making Local Education World-Class

Aside from that, local education quality also improves for the benefit of both local and international students. “A (UNESCO) report in 2014, ‘Higher Education Asia: Expanding Up, Expanding Out’, highlighted cultural, comfort, cost, value for money, language of instruction and quality of life as the key criteria for international students to choose Malaysia as their educational destination.” What is worth noting here is that those qualities mentioned above are enjoyed by Malaysians as well.

Foreign Direct Investment Gains

Foreign direct investment floods in when foreign universities open up branches in an education hub. In Malaysia, Xiamen University from China, Nottingham University, Heriot-Watt University, from the UK arrive with their SOPs and money. Local laws require shareholding from local institutions or entrepreneurs. This offers profit sharing opportunity to local edu-preneurs. Software providers, caterers, facility management companies also benefit.

Hubs Create Jobs in Education Field

Campus Management System

Booming education business means jobs for degree holders. The degree holders who are passionate to teach. The Ph.D. holders who are interested to do research and contribute to commerce and industry with innovation and invention. In the case of the UK, a specific example can be found in elite academia. Cambridge had Ramanujan and Professor Hardy who did research in mathematics that proved useful in the study of black holes. In the US, we famously have Zuckerberg of Facebook who worked on a side project while studying at Harvard. Reed College has Steve Jobs of Apple who dropped out but worked on a project of his own, a computer. Steve, in his commencement address, pointed to the value of education from some of his classes that inspired the design of Apple products such as elegant fonts. The number of jobs created is great, the Steve Jobs birthed also makes for a good story. 

The Numbers

Most of the jobs spawned are educator jobs such as lecturers, tutors while the rests are admin and support services such as marketing manager in university. 378,250 people were employed in the universities in 2011–12, which was equivalent to nearly 1.3% of all people in employment in the UK in 2012. Universities spent some £26.68 billion in 2011–12. This expenditure generated £37.63 billion of output in other UK industries.

This means education generated additional output and employment in other sectors of the economy through secondary or ‘knock-on’ multiplier effects.

Create Jobs in Other Fields

Countries Jobs
UK 693,000

The above table shows jobs in business services, restaurants, dobby shops. It represents a multiplier effect of 2.17 (693,000/250,000) where one job created in University creates two other jobs outside the university sector to serve the overall student needs. Without students, waiters will have no customers to serve and be out of work! In the US, we have Silicon Valley. In the UK, we have Manchester and London.

In Malaysia, we have Cyberjaya. In Hong Kong, HKU. Taiwan, Taipei. These are all towns with strong student and professional populations. The students easily convert into professionals. They constitute customers for small businesses in F&B, entertainment, and travel. 

Export Earnings for the Country

The higher education sector generated an estimated £10.7 billion of export earnings for the UK in 2011–12. £3.8 billion of this was from expenditure on fees and accommodation from non-EU students and a further £3.4 billion was from expenditure on goods and services bought off-campus by non-EU students. The cost of living expenses by the international students also contribute a lot. 36.4 billion to UK GDP. The off-campus expenditure of their international students and visitors contributed a further £3.5 billion to GDP.

In 2015, Malaysia has increased its target of hosting international students to 250,000 by 2025. By the end of 2016, the nation has already attained a total of 172,886 international students. All these students have cost of living spending. Leisure visitors such as the friends and family of international students visiting also spend during their visits.

Universities themselves also directly and frequently provide holiday accommodation for leisure visitors, group tours and summer school participants, as well as for individual visiting scholars.

Smart Economics: Hubs Block outflow of Currency

Between 1978 and 2016, it is estimated that more than 4.5 million Chinese studied outside their home country, to the benefit of the universities in the US, the UK, Australia, Canada and beyond. Today China itself is a hub. This enables China to create jobs for people in the country whilst empowering locals through education. Local people are more motivated – and financially more able – to study in their own country. The yuan does not flow out when exchanged for USD to pay for USD tuition fees. 

Nations Get Talent from Anywhere

For the international student, Science Innovation Center in Shanghai offers a two-year residence permit for international students who work or do an internship. International students have the opportunity to become expats and spend their income in China.

Education Hubs are Good for Innovation and Nations

Students from around the world who study in the United States also contribute to America’s scientific and technical research. “Research, science or technology parks” located at or near universities and colleges host a range of entities that are goods and services producers and R&D performers.” Public research universities serve the national interest. Universities have become the primary sources of U.S. research, discovery, and innovation.

Countless start-ups and patent grants in a number of industries have sprung from the research clusters that have formed, in conjunction with private counterparts, around the University of California, Berkeley; University of California, San Diego; University of Michigan; the University of Texas at Austin; and the University of Illinois at Urbana-Champaign.  In 2012–2013, the University of North Carolina system and its affiliated medical institutions added $27.9 billion in income to the US economy.

 

Conclusion

In summary, we would like to emphasize that there is money to be made by investing in education. If you look at the cross section of society there is a growing population of people with money to spend on private education (think China and India). The privileged have always sent their children to study abroad in hopes their children will get a good education.

The trend now with education hubs is when a good education is provided for locally, or regionally, locals or citizens of countries in the same region send their children to study closer to home. This is because reputable universities have their branches worldwide. So, students go to the branch campus to get the same education at a lower cost.

Education hubs play an integral role in unlocking value for society as per below.

  • Universities together with the expenditure of their staff, international students and visitors is a significant industry with valuable impact on the national economy.
  • Effective in contributing to GDP.
  • Effective in generating jobs and supporting jobs.
  • Effective in supporting innovation and the next technological leap forward
  • Effective in providing a good opportunity for local businessmen to make money.
  • Effective in attracting large universities to do FDI by opening branch campuses.

 

 

References:

1. “Australia’s international education exports grew by 22% in 2017”. http://monitor.icef.com/2018/04/australias-international-education-exports-grew-22-2017/

2. “Australia education exports hit record levels.” https://www.timeshighereducation.com/news/australias-education-exports-hit-record-levels

3. “International Education is actually Australia’s third largest export.” https://www.timeshighereducation.com/news/australias-education-exports-hit-record-levels

4. “International Education remains major export earner as student numbers surge.” http://blog.deloitte.com.au/international-education-remains-major-export-earner-student-numbers-surge/

5. “Victoria’s Economy.” http://trade.vic.gov.au/victorias-capabilities/why-melbourne/victorias-economy

6. “Malaysia as Education Hub looks positive.” https://www.thestar.com.my/news/nation/2014/06/21/msia-as-education-hub-looks-positive/

7. “Asia: countries vying to become education hubs.” http://www.universityworldnews.com/article.php?story=20110318130607540

8. “Universities Generate 95 billion for UK economy.” https://www.timeshighereducation.com/news/universities-generate-ps95-billion-uk-economy

9. “The impact of Universities on UK Economy.” https://www.universitiesuk.ac.uk/policy-and-analysis/reports/Documents/2014/the-impact-of-universities-on-the-uk-economy.pdf

10. “China’s Role in International Education by the numbers.” https://www.huffingtonpost.com/entry/58261332e4b02b1f5257a10a

11. “Shanghai looks to develop its international education potential.” http://www.chinadaily.com.cn/china/2016-07/25/content_26206752.htm

12. “10 of the best places to study abroad in 2018.” https://www.topuniversities.com/university-rankings-articles/qs-best-student-cities/10-best-places-study-abroad-2018

13. “Cyberjaya Population Statistics.” http://investcyberjaya.com/people-statistics/