The Determinants of International Student Demand in New Zealand and the OECD

Abstract

Tertiary education, once a purely domestic affair, has become an increasingly globalised industry over previous decades. Whilst the international sector has grown to being New Zealand's fourth largest export market (Ministry of Education, 2016), there is a lack of credible research on the demand of international students.

This thesis aims to provide a greater understanding of the determinants of international student demand, both in New Zealand and internationally. I firstly provide a descriptive analysis of the trends in the international student market for New Zealand and 27 OECD countries. Secondly, I use a fixed-effects approach to analyse the demand of international students within New Zealand, using fees data at the course-by-university level. Thirdly, I then generalise this approach to the international market to provide an analysis of the demand for international students travelling to the OECD.

The findings from these analyses imply that the demand for international university education is relatively inelastic. The impact of a marginal increase in fees decreases the number of EFTS/students at a proportion of less than one. Furthermore, this effect is generally not statistically distinguishable from zero.