The competitive position of Dutch schools of economics

Since English universities began charging substantial fees to undergraduates, there has been considerable interest in the possibility of English students studying elsewhere in the EU. The Netherlands is one popular destination. In this article Professor Ivo Arnold, Vice Dean and Professor of Economic Education, Erasmus School of Economics, Rotterdam, explains the situation from a Dutch perspective.

The recent decision of the UK government to substantially increase student fees for higher education will have an impact on international student mobility. Dutch schools of economics are well-placed to receive a larger inflow of UK students. At the same time, some Dutch politicians are concerned that higher international student mobility will increase the costs to the Dutch taxpayer. This article discusses the effects of the fee increase from a Dutch perspective.

Introduction

In February 2011, I happened to be in the UK for a conference. Watching the BBC news in my hotel room, I heard that Imperial College London had just announced that it was going to charge the maximum fee of £ 9000. The news item also included glimpses of Maastricht, a pretty small town in the south of the Netherlands whose university is a magnet for German students. The message was clear: the fee increase presents UK students with an international arbitrage opportunity. Back at Erasmus University Rotterdam, I called together my marketing team to discuss new marketing efforts specifically aimed at UK students.

This reaction illustrates the fact that in the Dutch system, educational institutions individually have an incentive to maximize their recruitment of foreign students. Students from within the EU pay a relatively low tuition fee (at present around € 1600). The remaining costs are covered by the Dutch government. However, this rational response of universities has led to such an increase in inbound student mobility that some politicians openly question whether the Dutch government should continue to cover the cost of educating foreign students.

This contribution sketches the general Dutch context regarding student mobility and internationalization. Next, I discuss the positioning of Dutch programs in economics. I conclude with a summary of the policy debate.

General context

Dutch higher education consist of 14 research universities (240,000 students) and 39 universities of applied sciences (416,000 students). Together, these institutions offer 1,088 English-taught degree programs. Inbound international student mobility in Dutch higher education has risen from 10.6 per cent of the annual intake in the academic year 2006/2007 to 15.3 per cent in 2011/2012. In absolute numbers, 20,723 international students enrolled in 2011/2012 in a degree program at either the Dutch research universities of the universities of applied sciences. The majority (73 per cent) originate from the European Economic Area. By far the largest group comes from Germany (43 per cent), followed by China (7.8 per cent) and Belgium (4.9 per cent). The UK is ranked in 8th position, with 887 students enrolling in 2010/2011. A recent development is that the Dutch system welcomes an increasing number of students from Greece. In spite of free education at home, they are fleeing their country because of low educational quality and diminishing job prospects. My own institution last year received a record number of 200 applications from Greek students for master’s-level courses.

In contrast, outbound mobility is low, with ca. 6000 Dutch students leaving annually for a foreign degree program. Behind neighbouring Belgium (31 per cent), the UK is the most popular destination for Dutch students (20 per cent). In contrast, just 10 per cent choose a German destination.

Inbound student mobility is split evenly between the research universities (46 per cent) and the universities of applied sciences (54 per cent). In the latter group, international student primarily enrol in bachelor programs. Foreign enrollment at the research universities is evenly split between the bachelor (52 per cent) and the master (48 per cent) level. The most popular subject area for foreign students is Economics (which in the statistics includes Business and Econometrics). This also applies to students originating from the UK.

Positioning of Dutch economics programs

‘Good quality at a low price’ would be an adequate summary of the competitive position of Dutch programs in the European landscape. In addition to geographical proximity, the strong presence of German students at Dutch universities can be explained by a difference in educational quality. Even though the German system is state-funded and has low or zero tuition fees, many German students prefer the small-scale, student-centered educational system in the Netherlands to the more traditional system in Germany, which is characterized by crowded universities and large-scale teaching.
In contrast, under the old fee system UK students didn't have a strong reason to study in the Netherlands. UK universities have a more modern approach to teaching than their German counterparts and are also more advanced in educational innovation than their peers in continental Europe. For example, the economics network of the Higher Education Academy, which gathers and disseminates good practices in economics learning and teaching, has no equivalent in the Netherlands. For students from the UK, educational quality is not a commanding reason to move to the Netherlands.

In the perception of international students, the value of a degree is mostly linked to the research reputation of the university. Research reputation is thus an important factor in international student recruitment. Compared to the size of the Dutch economy, Dutch universities do very well in the international rankings. The Netherlands has four universities in the top 100 of the Times Higher Education (THE) ranking. Twelve Dutch research universities are listed in the THE top 200, a score which is only surpassed by the US (75) and the UK (32). Relative to GDP, only Hong Kong does better. The competing QS ranking, published by the Guardian, also lists rankings by subject. In Accounting & Finance, two Dutch schools are listed in the top 50 (Erasmus University Rotterdam at 37 and University of Amsterdam at 45). A similar outcome is shown in the QS ranking for Economics & Econometrics (Erasmus University Rotterdam at 36 and University of Amsterdam at 44). In the Tilburg University Economics research ranking (which, admittedly, is constructed in the Netherlands), Dutch schools are also well-represented, with five schools in the top 100 (compared to 9 for the UK). While Dutch economics schools are thus not in the same league as the top US and UK schools, they are highly-regarded internationally. Among Dutch economics schools, Erasmus University, Tilburg University and the University of Amsterdam are the main players, in size, in diversity of their program portfolio and in reputation. A legacy of the Dutch Nobel-prize winning econometrician Jan Tinbergen is the strong Dutch tradition and position in econometrics. The Netherlands is one of the few countries where students can follow a full-blown bachelor program in econometrics from the start. Erasmus University offers the largest econometrics program, which is also offered in English. This implies that Dutch economics programs can be an attractive proposition for UK students who do not qualify for the top UK economics schools and are searching for alternatives with a favourable price-quality ratio.

Evidence is still scarce

Does the evidence show that UK students are flocking to the Netherlands? Unfortunately, it is difficult to provide a definitive answer to this. The data collected by the Dutch statistical agency lag behind and also do not offer a detailed two-way breakdown by subject and nationality of international students. A complete overview is thus still missing. Yet there are signs that the UK fee increase has an effect on inbound student mobility from the UK. In November 2011, Maastricht University reported a surge in inflow from the UK. Compared to 2009 the number of UK students enrolling at Maastricht University has increased five-fold. At Erasmus School of Economics, we currently see an increase the number of applications from the UK from 10 in 2011 to 25 in 2012. Though this is a high percentage change, it comes from a small base. The UK contingent therefore currently remains small compared to the number of German, Chinese and Greek students. While our institution very much welcomes this increase and its positive effect on the diversification of our international student population, it is hard to imagine that flows of this size will have a serious negative impact on educational institutions in the UK.

Policy debate

The Dutch policy debate on the imbalance in international student flows has not been triggered by the UK fee increase, but by the high number of German students and the way in which Dutch universities have acted in the German market through their marketing efforts and even by offering German-taught programs specifically aimed at German students. The radical right-wing PVV party has been the most vocal opponent but also more moderate voices question the continued subsidizing of the education of foreign students by the Dutch taxpayer. However, a recent report by the CPB — the Dutch government agency for economic policy analysis — concludes that the presence of foreign students also enriches the Dutch educational system. In addition, when foreign students remain in the Netherlands after graduation, they contribute to the economy by working and paying taxes. The CPB estimates that this effect is stronger than the cost of educating foreign students. Still, the government plans to curb the excesses in tailoring Dutch programs to the German market. In the European context, plans for reforming the funding of higher education in order to limit arbitrage opportunities will remain on the policy agenda.

Conclusion

Dutch economics programs offer good value-for-money and are thus an attractive proposition for UK students considering a low-cost alternative to studying in the UK. The preliminary data show that inbound student mobility from the UK is on the rise. But it comes from a low base and is still smaller than outbound mobility of Dutch students to the UK. Dutch universities generally regard an increase in UK students as an opportunity to further increase the diversification of their international student population. The high number of German students in the Netherlands and the aggressive recruitment efforts of some institutions in Germany have recently attracted political attention. A strong future increase in inbound mobility from the UK would therefore certainly lead to more calls for reform of the way we fund international student mobility in Europe.

From issue no. 158, July 2012, pp.20-21.

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