Assessing the Efficiency of the Australian Higher Education Export Sector

This paper examines the efficiency of the Australian higher education sector in exporting education services. Little attempt has been made to date to quantify this sector’s export efficiency, and therefore this paper attempts to contribute toward filling this void. Efficiency is measured by comparing export income generated by this sector with the domestic resource costs incurred in providing these services. As such this paper goes further than merely comparing university fees to costs by attempting to encapsulate wider net export revenues generated by overseas students expenditure in Australia. The approach taken is to apply the Domestic Resource Cost (DRC) methodology to higher education cost and overseas student expenditure data. Our results confirm that Australian universities are efficient in providing higher education to overseas students. The study also notes significant employment benefits from overseas student expenditure in Australia. Furthermore, sensitivity tests conducted imply that overall export efficiency could still be maintained in this industry even if universities were subsidising overseas student enrolments. This is a pertinent point that should provide some comfort to those with suspicion that Australian Universities may be under costing their degrees to overseas students. This study therefore recommends further efforts to promote the export of educational services on efficiency as well as on employment grounds.