Growth and dynamics of Australia's education exports

Abstract

Australia is the third largest global exporter of education services and generated $18.6 billion in 2009–2010. The education sector ranks as the top services exports and number three of all export earners in recent years after coal and iron ore. This study analyses the major determinants of Australia's education exports. Using the Johansen cointegration technique, a stable long run relationship is found between education export earnings, real exchange rate, world income and terms of trade. It is also found that policy reforms relating to opening up the education sector from the mid 1980s had a positive growth effect on the sector.

Acknowledgements

The author acknowledges the encouragement and invaluable discussions on the analytical and modelling issues with Professor B. Bhaskara (Bill) Rao, Professor S. Chatterjee, Professor Raja Junankar and Professor J. Lodewijks. The responsibility for the opinions expressed and any errors in this article rest solely with the author.

Notes

¹ Other services include computer and information services, licence fees, other business services, marketing and other trade related services, operational leasing, miscellaneous business, professional and technical services, legal, accounting, management consulting and public relation services, advertising market research and public opinion polling, research and development, architectural, engineering and other technical services.

² Previously defined VTE is currently defined as VET. These two acronyms are synonymous throughout this article.

³ In this study, we used the real exchange rate index defined by the Reserve Bank of Australia. Real exchange rate is measured as RER = eP _d/P _f, where, e is the nominal effective exchange rate between Australia and its trading partners, P _d the domestic price level, P _f the weighted average of foreign prices of Australia's major trading partners. Thus, an increase of RER indicates a real appreciation and a decrease a real depreciation.

⁴ Rigorous analysis of trade in education services is constrained by availability of the data at the national and international levels. Until early 1990s we do not have systematic records of cross-national educational statistics.