The International Branch Campus Models and Trends, Line Verbik, Deputy Director, the Observatory on Borderless Higher

r Education presented at the session: International Branch Campuses: does reality fit the models?, Going Global, December 2006. This presentation is based on a report published by the Observatory on Borderless Higher Education (2006) The International Branch Campus: Models and Trends, URL: http://www.obhe.ac.uk/products/reports/. Introduction The number of international branch campuses has increased significantly over the past decade. Since undertaking its first study of offshore campuses in 2002, the Observatory has followed developments in this area closely and recently published a major report, identifying just over 80 offshore campuses. The definition of a branch campus is still less than straightforward and lacks global consensus. It is used in this article to designate an off-shore operation of a higher education institution which is operated by the institution or through a joint-venture in which the institution is a partner and in the name of the foreign institution. Upon successful completion of the study programme, students are awarded a degree from the foreign institution. Most branch campus establishments offer degree level provision, however, only a relatively small number has pure research based courses, such as PhDs, amongst their offerings. Twothirds of the establishments included in the study offer more than one subject area. Those institutions, which offer only one discipline are most likely to provide business or IT courses (similar to the situation found in other types of transnational education). The study shows that the majority of branch campus provision is from North to South. Whilst American institutions continue to dominate this type of overseas delivery, institutions from more and more countries (e.g. Australia and the UK) are engaging in branch campus development. Driving rationales for sending institutions include full control over delivery, the desire to stand out in an increasingly competitive transnational education market, more opportunities for external funding and changing regulations in some host countries. The sites for branch campus operations are becoming equally diverse, although findings point to a higher level of activity in countries where financial incentives are provided. Models for the establishment of offshore campuses This presentation will focus mainly on the models for establishment. Whereas earlier campuses were funded primarily through internal resources, many operations initiated over the past decade have received support from governments or other public or private organisations. The Observatory study identified three main approaches to establishing offshore campuses: self-funded, in receipt of external funding and through provided facilities. The operations included in the report are more or less equally divided between the three models, however the latter two are more commonly found amongst newer establishments. Model A: Wholly funded by the institution Of the 68 branch campuses, for which a funding model was identified, 37% have been established solely through funding from the home institution. However, evidence suggests that this approach to offshore operations might become less common as institutions seek more collaborative approaches. The size of the investment required to establish a fully fledged branch campus and the fact that the institution would be solely accountable for any losses serve to discourage many from operating through this model. Advantages connected to this type of approach include the absence of requirements from partners in terms of what is expected in return from investments, repayment, when the operation should break even and specification for subjects which should be provided. Of the 16 branch campuses in Model A where a date of opening could be ascertained, 6 were opened after 2000. However, many of the projects are amongst the first branch campuses established (e.g. US Webster Universitys operations in Austria and the Netherlands 1981 and 1983 respectively and US Alliant International Universtitys campus in Mexico from 1970) or were established by a for-profit institution (e.g. University of Phoenixs and DeVrys

Observatory on Borderless Higher Education, 2006

operations in Canada and the Netherlands). Both of the latter institutions operate from multiple campuses in their home countries and have raised capital for their continued expansion through stock offerings. There are also a number of what could be characterised as smaller scale operations (limited programme offerings and facilities). These include the Chicago School of Business campuses in London and Singapore, which offer Executive MBA programmes from existing facilities in the cities business districts and Boston Universitys facilities in Belgium, which focus on business related diploma and degree programmes. The concentration on potentially profitable subject areas such as business and the limited outlay of capital on campus facilities (e.g. leasing or renovating existing buildings) may represent attempts to more quickly realise returns on the institutions investment. Model B: External funding 35% of the branch campuses for which a funding model was identified, fall under this model, which can be divided into two main sub-categories: In receipt of host (central or regional) government funds/support and in receipt of external support from private companies or other organisations in the host or home country. In some cases funding comes from more than one external source, for example a financial contribution from the host government and support from the home government through state approved loans. Institutions wishing to establish a presence abroad seem to be increasingly opting for funding through Model B. With the exception of three operations, all branch campuses included in this category have been established in the last decade and 70% in 2000 or later. Primarily host government funded/supported Most branch campuses in receipt of financial or other assistance from the host government have established a presence following an invitation from central or regional authorities. Whilst there are obvious advantages in gaining host government support and funding, an institution will have to carefully evaluate whether the project is in line with its overall mission and its own institutional goals. In addition, it will have to consider whether it is willing to cover the costs beyond that which the host country contributes. Examples of projects in this category include some of the operations established under Singapores World Class Universities initiative, including the new University of New South Wales campus due to open next year, the US Carnegie Mellon Universitys branch campus currently under establishment in the Australian state of South Australia, the UKs University of Nottingham in Ningbo, China and Australias Swinburne University of Technologys campus in Sarawak in Malaysia. External support from private companies or other organisations in the host or home country A range of branch campus establishments have been created with contributions from external private and public organisations. The opportunities and challenges are almost exactly the opposite of those stated in Model A, with the advantages being the financial contribution and shared risks, and the disadvantages including expectations of the investors in terms of return on investment and influence on the operation. Examples of campuses in receipt of investment from public or private organisations include the UKs University of Nottinghams operation in Malaysia, US Temple University in Japan and George Mason University in Ras Al Khaimah in the United Arab Emirates. Model C: Facilities provided Model C is perhaps the latest development within branch campus funding models, but a category which already accounts for 28% of the establishments for which a funding model was identified. With the exception of one institution, all developments in this category have been established within the last six years. Campuses established through Model C make use of facilities provided by a company or a national government often as an enticement to draw foreign providers to the host country. Examples include the Knowledge Village in Dubai, the United Arab Emirates and Education City in Qatar. In both cases, a designated zone with purpose built academic and student facilities is provided for institutions, which, depending on individual arrangements, either lease or take over the facilities. The main advantage for institutions operating through this model is

Observatory on Borderless Higher Education, 2006

the reduction in the size of the start-up funds required. The potential drawbacks include the regulatory environment for the operation (e.g. Knowledge Village operates outside United Arab Emirates jurisdiction and under the guidelines of the company which owns the site) and potential changes in costs outside the institutions control, such as rent increases. Model C operations are currently found in the economically advanced states of the Gulf. The reasons for this concentration are likely to include available public and private funding for such initiatives, lack of capacity and maturity of the domestic higher education system and developed strategies to change the main foundation for the economy (i.e. become less dependent on oil). Other countries (e.g. South Korea and seemingly Japan) are in the process of establishing special zones for foreign investment, including in education, however none of them seem to have local investment on the scale of the two examples cited above. Examples include: five US institutions (including Texas A&M University and Carnegie Mellon) operating in Qatars University City and more than 15 institutions (including UK Middlesex, Heriot-Watt universities, Indias Manipal Academy of Higher Education and Canadas University of New Brunswick) in Knowledge Village. The main findings and observations The study undertaken by the Observatory points to several trends and emerging patterns. In terms of sheer numbers, branch campus activity has increased significantly over the past decade (albeit from a very low baseline) and substantially since the last Observatory study was undertaken just over four years ago. Institutions appear to be increasingly reluctant or unable to carry the entire costs and risks associated with establishing a campus, leading to a larger number of recent operations being established under Model B and C. Whilst the institutions included in this study are more or less spread evenly across the three models, it is suggested that with time, Model B and C will become more prominent. That being said, further reports of uncertain operating environments (for example concerning licenses and rent) similar to those which appeared last year from one of the zones included in model C, could potentially lead to institutions being less willing to operate through a model which affords them limited control over certain aspects of the operation. There is little to suggest that branch campus development has peaked. Whilst the market for transnational education in places such as Singapore and Hong Kong might be reaching saturation point, demand for this type of provision still seems to be increasing in many countries. Branch campus operations will be able to draw on this demand and in places with stronger competition for students, such institutions might have a competitive edge over other types of transnational provision. With opportunities for external funding, increased competition in the international education market and an enhanced focus on regulation of transnational education, institutions might find offshore operations in the form of campuses a more and more appealing option. From an importing countrys point of view, foreign branch campuses can bring investment to the region, research and development contributions and collaboration, prospects of long-term presence and contribution to capacity in subject areas such as science and engineering, to a greater extent than other types of transnational education. This is not to suggest, however, that fully-fledged branch campuses will become the dominant type of transnational education in the near future. These are still resource intensive operations, which carry significant financial and reputational risks regardless of the increased opportunities for funding.

Observatory on Borderless Higher Education, 2006