The Booming International Schools Sector
By Nick Clark, Editor, World Education News & Reviews
The demand for an English-medium international school education has been growing at a steady clip over the last 20 years to the point that the sector brought in an estimated US$34.4 billion in 2013, up from $20 billion in 2009, while educating close to 3.5 million students in 238 countries across the world.
These are among the findings of the International School Consultancy (ISC) Group, presented in March by ISC Business Development Manager Diane Glass through a webinar hosted by edWeb.net. Glass points out in her presentation that international schools are “no longer a small market catering to a niche group,” rather “the international schools market is now big business and is recognized as such by a broad range of investors, suppliers and providers.”
What Makes a School International?
While the market is hugely diverse and the characteristics of what exactly constitutes an international school is a matter of some debate, it is generally agreed upon that they share at least one characteristic in common, in that they offer a curriculum – national or international – different from that of the host country.
In the case of schools tracked by the ISC, a UK-based organization that researches trends and developments in the international school market, the curriculum must be taught wholly or partly in English in a non-English-speaking country, with delivery predominantly by a teaching staff of English speakers in order for it to be considered an international school. An exception to the latter rule is when the foreign curriculum is delivered in an English-speaking country, which might be the case for American schools in the UK or schools in countries like Kenya or India where English is an official language. In these instances, schools are included in the ISC database if they offer an international-focused curriculum.
Other stakeholders within the industry also believe that a school’s curriculum should emphasize international themes and global citizenship, and this should be reflected in the multinational make-up of the student and faculty body in order for it to be considered international.
While the rest of this article will focus on trends in the English-language international schools market, it should be noted that there are many other foreign-language international schools, most notably those that teach in German, French, Swiss and Dutch. Indeed, one of the most widely used curriculums in the market, the International Baccalaureate, is offered at 2,000 schools in a language different from English; almost as many as the 2,300 schools that offer the curriculum in English or bilingually (2012).
Traditionally, international schools have served the children of expatriate workers for whom the local education system wasn’t considered appropriate. Many of the first international schools were located in remote areas to teach the children of parents working in industries such as oil and gas. Curriculum was typically a national one, usually British or American, as opposed to the more common internationally focused curriculums that dominate today.
Until the turn of the century this type of school accounted for the vast majority of total enrollments. Through the course of the current millennium, however, that reality has been turned on its head, with local children – from generally wealthy families – now accounting for close to 80 percent of all enrollments. Today, it is the aspirational and growing middle classes of developing economies that are the key drivers of growth within the sector. They have transformed the market from a largely non-profit model to one that is predominantly for-profit, and teaching a curriculum with an international focus as opposed to that of a particular nation.
Looking at the top host cities for international schools in 2013, one can see that the majority of enrollments are now occurring in the major metro areas of newly wealthy Gulf nations, such as Dubai and Doha, or those of emerging economies such as China, Brazil and India.
A Huge Market
In the first decade of the current century, the number of students attending English-medium international schools grew by 140 percent, from 1 million to 2.4 million. Over the same timeframe, the number of schools doubled to over 5,000, the staff body grew one and a half times to over 225,000, and fee income more than quadrupled to over US$20 billion, according to ISC data.
In the four years between 2009 and 2013, at a time when the global economy was in a state of turmoil, fee income surged a further 71 percent to $34.4 billion while enrollments grew a further 42 percent to 3.4 million, and the number of schools increased by a third to 6,734.
The outsized growth in fee income is suggestive of a market where demand significantly outstrips supply, and where ability to pay is rising rapidly. Indeed, enrollment today is dominated by the richest 5 percent of non-English speaking local families, according to the ISC, and schools are being constructed and expanded at breakneck speed.
As a point of comparison to the international market for higher education, the OECD estimates that there were 4.3 million students enrolled in tertiary education outside their country of citizenship in 2011 (the latest year for which data is available). In 2011/12, NAFSA Association of International Educators calculated that international students in the United States, some 765,000 of them, paid $15.8 billion in tuition fees. The Australian government pegged 2011 tuition revenue from international higher education enrollments at the equivalent of US$5 billion, while Universities UK put 2011/12 fees revenue from international higher education at US$6.5 billion.
Combined, the world’s three biggest exporters of English-language higher education collected approximately US$27.3 billion in tuition fees in 2011/12. This compares to $34.4 billion in tuition revenue in 2013 in the international schools market. If one assumes consistent growth in tuition income between 2009 and 2013 (specific data for 2011 were not readily available at the time of writing), then tuition income for 2011 in the international schools market would be approximately $27.3 billion, equal to that generated by the top three exporters in the international higher education space.
Clearly, the international primary and secondary school market is substantial, resilient to negative macroeconomic trends, and should now be considered a big and thriving business.
Drivers of Growth
The internationalization of labor, the rapid growth of academic mobility at the higher education level, and the increasing dominance of English as the language of business have played perhaps the most significant roles in the growth of the international schools market.
Increased mobility of labor means larger numbers of expatriate families around the world are looking for high quality school options for their children. And tied into the internationalization of the labor market is the internationalization of higher education, with credentials from the world’s best universities increasingly seen as the gateway to successful career paths. International schools, therefore, are often seen as the first step on the ladder to finding a place at top-ranking English-medium universities and, ultimately, attractive career opportunities.
The other main driver of growth within the international schools market is ability to pay. In the United Arab Emirates, for example, top schools charge in excess of US$25,000 a year, while the most expensive schools in the big Chinese metro markets top $40,000 annually, essentially the same as what parents might expect to pay in tuition fees at top Western universities.
Despite the costs, demand remains high and continues to grow. Fast-growing economies, particularly in the Gulf and in Southeast and East Asia, have dramatically increased the pool of families that can afford these kinds of fees, although it should be noted here that not all markets are created equally, with fees in South Asia, for example, tending to be much lower.
Limits to Growth
Despite the fact that China hosts the second largest number of international schools globally, potentially explosive growth has been held back by strict government regulations. Currently, only foreign students or Chinese children with one foreign-born parent can attend foreign-owned and operated schools. This means that the 410 institutions currently operating in China are largely teaching children from the expatriate community.
However, some private Chinese schools are now able to offer international curriculums and demand is reportedly growing at a strong clip, with an increasing number of students opting out of traditional Chinese programs in order to boost their chances of enrolling in top Western universities. Additionally, there has been a relaxation in the regulations for Sino-foreign school partnerships, which since 2008 has led to strong growth in the number of foreign programs offered at Chinese schools. Given the appetite Chinese students have for overseas universities, especially at the undergraduate level, there would appear to be immense potential for the international schools market in China should regulations be eased further.
In Malaysia, a recent lifting of restrictions on domestic students’ eligibility to attend international schools has market watchers pointing to that Southeast Asian nation as a potential new engine of growth. Planned education hubs in Kuala Lumpur and Iskandar, combined with government incentives, are also likely to attract schools, students and teachers.
Another potentially significant market that is being held back by government regulation is Singapore, where domestic students are currently barred from attending international schools. According to ISC data, local students make up just 4 percent of enrollments at the city-state’s 70 international schools.
One further impediment to growth that market watchers point to in high-demand markets is the availability of qualified teaching personnel, especially those experienced in IB and British curriculums, and also those who are native English speakers.
Curriculum & Examinations
In the formative expatriate years of the international schools market, national curriculums – usually British or American – dominated, based on the mission and clientele of the particular school. Still today the English and U.S. national curriculums are dominant, being taught in 2,924 and 1,684 schools respectively, but they are quickly being matched by more internationally focused curriculums being taught bilingually or in English. Popular examples are the International Baccalaureate Diploma Program or the Cambridge programs leading to the International General Certificate of Secondary Education and the International A Level.
In Dubai there are currently 14 different curriculums on offer at the city’s 227 international schools. These curriculums weave a more international focus into their programs and are designed to promote a more global outlook among learners, although there does also tend to be an emphasis on local culture blended in. To this end, almost 30 percent of all international schools today are considered bilingual with English as the primary language of instruction combined with the local language.
With regards to examinations worldwide, 25 percent (1,761) of schools offer IGCSEs, 17 percent (1,220) the IB Diploma, 16 percent (1,081) American SATs or PSATs, and 14 percent (1,021) GCE A Levels.
Please see the companion piece to this article for a closer look at the top international curriculums around the world.
As one might expect with billions of dollars in tuition on the line, large multinational operators have started to dominate the high end of the market. The largest, GEMS Education, operates 70 schools globally, with 42 schools offering nine different curriculums in the UAE alone. Other large operators include: ACS International Schools (3 schools in England, 1 in Qatar); COGNITA (mainly UK based (42), but with a presence in Latin America, Europe and Asia, with a total of 65 schools); ESOL (9 schools in Cyprus and the Middle East); Nord Anglia (28 schools globally); Talleem (10 schools in the UAE & partnerships in the Middle East); and Yew Chung Education Foundation (5 schools in China and Hong Kong, and 1 in Silicon Valley).
All of these operators are expanding aggressively through acquisition, expansion, or the creation of new schools and they represent a powerful new force in the market. According to the ISC, there are currently some 180 schools planned or under construction around the world.
In addition to these large proprietary operators, a growing number of established (mainly UK) ‘brand name’ private schools are also entering the market, typically under licensing arrangements with local partners, although some also directly manage their branded international campuses. These include: Brighton College (Abu Dhabi & Al Ain, UAE); Dulwich College (Beijing, Shanghai, Seoul, Shanghai, Singapore, Suzhou, Zhuhai); Haileybury (Astana & Almaty, KZ); Harrow (Bangkok, Beijing, Hong Kong); Kent College (Dubai); Marlborough College (Malaysia); Repton (Abu Dhabi, Dubai); Shrewsbury College (Bangkok); and Wellington College (Tianjin, Shanghai).
Additional to school operators, there is a sub-industry of school service providers that are turning their attention internationally. These include multinational giants such as Pearson, which provides textbooks through its ownership of Penguin Radom House, in addition to curriculum and assessment services through its ownership of Edexcel, the UK’s largest awarding body. Other large curriculum providers include the International Baccalaureate Organization; Cambridge International Examinations; and Fieldwork Education, which offers the International Middle Years Curriculum and International Primary Curriculum.
Leading universities are also turning their attention to the international schools market in search of well-qualified, well-resourced students with English fluency. Universities are well aware that international schools provide fertile recruiting grounds as students often attend them with the specific end goal of studying internationally at the higher education level.
The international schools market has transformed itself from a niche market serving the educational needs of children of overseas workers and diplomats to a booming and highly lucrative market that now draws 80 percent of enrollments from local, typically wealthy, families in the countries in which they are located. Where schools were once mainly not-for-profit, the vast majority are now operating firmly with the bottom line in mind, and large proprietary operators have stepped in to develop chains of schools covering many of the key markets around the world.
The most established markets are in Europe; however, recent growth has largely been centered on the booming economies of Asia and the Persian Gulf, with significant activity also being seen in West Africa and Latin America. The countries that saw the largest growth in 2013 were the UAE with 45 new schools and Brazil with 41. Other countries that saw major growth were Saudi Arabia, India, China, Egypt and Indonesia.
In Dubai alone, there are currently 60 new schools planned for 2014 according to ISC research. In Doha, the capital of Qatar, there were 126 international schools in 2013 which is remarkable when one considers that the city’s population barely tops a half million people. By contrast, Shanghai’s 23 million people have just 110 schools to choose from; however, should government restrictions on Chinese students attending international schools be relaxed, the potential size of that national market would likely dwarf anything seen today.
Other factors affecting future growth include the continued movement of labor, continued population growth in booming economies, local governments’ desire to invest in attracting top-quality schools, and also the continued desire of students to study internationally at the higher education level.