GSB013 Economics for Managers
Introduction
Australia's overseas education sector is vital to its economy and global reputation. Due to its solid structure, tight standards, well-planned government activities, and unique educational courses, Australia is a preferred choice for high-quality education. Australia's arts and culture business boosts cultural diversity and economic prosperity by contributing significantly to the nation's GDP. Australia is a worldwide education leader, attracting students from around the world who contribute significantly to the economy. International students promote hospitality, retail, and tourism as well as educational institutions. Australia's aggressive promotion of educational excellence and global cooperation shows its commitment to global education standards and competitiveness (Mankiw & Taylor, 2019). Australia's overseas education sector's economic importance, political linkages, and macroeconomic responses are examined in this review. This analysis uses business economics and macroeconomic theories to examine how the sector performs within Australia's economic framework and adapts to external economic issues and opportunities.
A. Estimate the industrys contribution to Australias annual GDP. What proportion of GDP does this represent? Explain.
By the year 2019, Australia has established a solid track record in drawing students from other countries, with eighty percent of these students studying in-person within the country. On the other hand, there is the possibility of expanding our global student market by bringing our great educational offerings to markets that are located abroad and on the internet.
There have been rapid changes, expansions, and developments in online distribution that have taken place inside the sector over the course of the previous several years. By the year 2026, it is anticipated that the global market for online e-learning will have grown from a value of one hundred billion dollars to more than three hundred and sixty billion dollars. Students from all over the world who are unable to afford a local experience that is expensive and are looking for alternatives that are more adaptive and cost-effective are the driving force behind the expansion. Due to the proliferation of digital and online education, micro-credentials, and transnational education (TNE), students now have the ability to personalize their educational experiences in accordance with their preferred learning preferences and the location in which they would like to get their education (Bernacki, Greene & Lobczowski, 2021). Additionally, hybrid models have the potential to assist in the fulfilment of educational goals and skill requirements in partner nations, while simultaneously establishing substantial knowledge collaborations that boost Australia's bilateral relationship.
OECD countries spent an average of 5.1% of their gross domestic product (GDP) on primary to tertiary educational institutions. This figure represents both primary and secondary education. There was a 6.2% allocation of the gross domestic product (GDP) to education in Australia. 33% of this was allocated for basic education, 23% for lower secondary education, 12% for upper secondary education, 2% for post-secondary education that did not involve university education, 3% for short-cycle tertiary programmes, and 27% for bachelor's, master's, and doctoral or comparable programmes and programmes. The amount of money that is being spent on education is substantially influenced by the income levels of the countries that are being considered. When opposed to those with a lower per capita GDP, those with a higher per capita GDP often allot a greater amount of funds to each individual student. In Australia, the annual amount of USD 15,620 is allotted to each full-time equivalent student throughout all levels of education, ranging from primary to tertiary. This sum is higher than the average expenditure of USD 12,647 that is made by other nations that are members of the OECD.
Economic Theories & Analysis
Contribution to GDP By 2019, Australia's economy saw a substantial boost because of international education. The sector's contribution to GDP could be approximated yearly by looking at spending information on education to worldwide GDP. As of 2019, Australia invested 6.2% of its GDP in education as opposed to 5.1% in the OECD average. The industry's financial impact is substantial with USD 15,620 spent yearly on full time equivalent students. In case international students are a vast majority, millions are spent on education, housing and housing costs.
Connection to the government: The Australian government is active in education. The government also promises very high standards and student safety via laws including the Education Services for Overseas Pupils Act 2000. Research and infrastructure funding also indirectly benefits the industry via better education standards. Federal organizations like Australian training overseas market Australia as a worldwide education centre, attracting international students and creating employment.
Effects of unemployment: A two% rise in Unemployment can have a huge effect on education:
Reductions in household spending: Increased unemployment leads to decreased disposable income, therefore restricting the ability to pay for education especially for household schoolchildren (Nan, Zhu & Lynne Markus, 2021).
Federal finances: Quality and infrastructure may suffer because larger welfare payments suggest reduced education funding.
Employment market: Much more strict graduate job prospects might discourage international students from applying for internship or internship opportunities.
Visa policies: Increased unemployment would result in stricter immigration procedures, which would decrease international students coming to the nation.
Negative effects of inflation: A two% increase in Inflation impacts both international and domestic students:
Living costs: Higher inflation means increased living expenses for Australian citizens - making Australia less attractive to foreign students.
Fees for tuition: Students might also see tuition hikes as institutions try to cover rising operating expenses.
Exchange rates: Nevertheless, inflation might weaken the Australian dollar, making education inexpensive for foreign students - possibly offset several negative effects.
B. Describe and analyse the industrys relationship with Governments
The relationship between the Australian government and the education sector in Australia, and more specifically the education sector in international education, is one that is both extremely significant and intricate. The government plays a significant part in the supervision, financing, and advancement of this industry, while the industry itself provides a significant contribution to the economic and cultural diversity of the nation. Laws and regulations that control the overseas education sector are enforced by the Australian government. The purpose of these laws and regulations is to maintain the quality of education and to protect the health and safety of students who are studying abroad. The Education Services for Overseas Students Act of 2000 is a piece of legislation that was passed in order to provide a set of rules and regulations that govern the provision of education and training services to students who are from an international location.
The government also provides funding for the aim of conducting research and improving the infrastructure of educational institutions. This funding is allocated by the government. As a result, this has a positive impact on the overseas education industry in a roundabout way since it raises the standard of education and increases the resources that are available to students studying abroad. Through institutions such as the Australian Education International (AEI), the government of Australia is actively advocating for the education system in Australia on a worldwide basis. Because of this, it is easier to entice a higher number of students from other countries to come to Australia to pursue their undergraduate degrees (Welch, 2021). The international education sector is responsible for a substantial economic contribution to Australia. It is the third-largest export sector in the country and contributes billions of dollars to the economy on an annual basis. The government recognizes the economic contribution that this sector makes, which frequently leads to the creation of laws and policies that aim to promote and expand the sector. For the purpose of fostering cultural contact and variety, the presence of international students is a phenomenon that is actively sponsored and promoted by the government.
C. Using macroeconomic theories, determine and describe the following factors
i. Australias rate of unemployment increases by 2% from the current rate
There is a possibility that the demand for higher education in Australia will drop as a consequence of rising unemployment rates, which may lead to families having less money available for discretionary spending. With, it is possible that the unemployment rates in the host nation do not have a direct influence on students who are studying abroad. Finances of the government: The increase in the number of people who are unemployed may put pressure on the finances of the government because they will have to provide more money for welfare payments. There is a possibility that this will lead to decreases in school funding. This may have a negative impact on the quality of education and infrastructure in Australia, which may ultimately result in a reduction in the country's appeal to students from other countries. There is a possibility that the employment market in Australia may grow more difficult for graduates, which will discourage international students who are looking for work opportunities after they have completed their undergraduate education (Goodman, Parfitt, & Yasukawa, 2023).
Table 1: Education Expenditure and GDP Contribution
(Source: Leaner)
There are a number of macroeconomic theories that can shed light on the potential effects that a 2% increase in the unemployment rate in Australia could have on the Australian education sector, particularly the international education sector, rising unemployment rates almost always lead to a reduction in the amount of money that households have available for discretionary spending. The affordability of education for domestic students may be affected as a result of this, which may result in either an increase in the demand for options that are more inexpensive or a drop in the demand for services related to foreign education. The rise in the unemployment rate in Australia has the potential to reduce the attractiveness of the country as a destination of choice for students from other countries (Goodman, Parfitt, & Yasukawa, 2023). It is likely that a smaller number of international students may choose to pursue their education in Australia if it is determined that the economy of Australia is weaker as a result of rising unemployment. This would have a negative impact on the amount of money that is created from the tuition fees paid by international students. In response to rising unemployment rates, governments may choose to either reduce their budgets or redirect funds from education sectors, including international education efforts. Because of this, there is a possibility that Australian establishments located outside of Australia will receive less support or endorsement, which may have an effect on the number of international students that register.
Policies Regarding Visas and Immigration: Variations in unemployment rates may have an effect on visa policies, which in turn have an effect on international students. There is a possibility that increased unemployment rates will result in stricter immigration rules, which may in turn lead to a reduction in the number of overseas students who choose to study in Australia. The possibility of a depreciation in currency exchange rates exists in the event that increased unemployment rates signal a decrease in economic strength. If the Australian dollar were to depreciate, it would make it more affordable for international students to study in Australia using their own national currencies. This would potentially counterbalance any negative effects that the devaluation would have on student enrolments (Goodman, Parfitt, & Yasukawa, 2023).
Higher unemployment rates may have an effect on the competitiveness of Australian institutions, which in turn may have an effect on how people across the world perceive the quality and stability of educational institutions in Australia. It is possible that this will have an effect on the decision-making processes and enrolment patterns of students who are originally from other countries. If unemployment rates continue to rise, there may be more competition for part-time jobs, which are often held by overseas students in order to provide for themselves financially. If there is a drop in the number of work possibilities available, it may discourage international students from choosing Australia owing to concerns regarding their income and the cost of living. In response to increased unemployment rates, governments may priorities investments in education and research as a strategy to improve future employability and economic resilience. This might be done in order to improve education and research. This has the potential to reduce the severity of some adverse effects that will be experienced by the education sector over the longer run (Goodman, Parfitt, & Yasukawa, 2023).
ii. Australias inflation rate increases by 2% from the current rate
On account of increased inflation, the cost of living in Australia may become more expensive for students who are studying from other countries. The appeal of education in Australia may be diminished as a result of this in compared to education in other countries.In order for institutions to keep up with inflation, they might raise tuition rates, which would make the financial burden that overseas students already face even more difficult to bear.If inflation causes the value of the Australian dollar to fall, it may result in reduced tuition costs when measured in other currencies. This is because the Australian dollar depreciates in value. It can occur that this will assist to prevent some of the adverse effects from occurring. The influence that living expenses have on the behaviour of consumer (Parker, Martin?Sardesai & Guthrie, 2023). It is possible that this will have an effect on both domestic and international students who are enrolled in educational programmes in Australia. It may either reduce their capacity to freely spend money or make other nations more appealing for education if the costs of education in Australia continue to rise at an unsustainable rate (Parker, Martin?Sardesai & Guthrie, 2023). There is a possibility that institutions will face cost pressure as a consequence of inflation, which may result in the requirement to raise tuition rates in order to cover the rising operating expenses encountered. It is possible that this will make it more difficult for overseas students to study in Australia from a financial standpoint, which could result in a reduction in the number of students enrolling. It is possible that the impact of rising inflation on exchange rates and currency volatility will have an effect on the affordability of education in Australia for international students who pay their tuition fees in a currency other than Australian dollars.
Table 2: Macroeconomic Impact on Education Sector
(Source: Learner)
The allocation of funding for the education sector may be modified by governments in order to handle the impact of inflation. This is accomplished through the provision of education financing and assistance. Changes in funding could have an effect on the quality of educational and support services that are available to students from both the local community and students from other countries (Parker, Martin?Sardesai & Guthrie, 2023). Increased inflation rates have the potential to influence how people perceive the economic stability of Australia and how appealing it is as a site for research to be conducted. It is possible that this aspect will influence the decisions that international students make on their educational pursuits, and it may cause them to favour countries that have more robust economic circumstances. It is possible that the rising prices that are a direct result of inflation will have an effect on the global competitiveness of educational institutions which are located in Australia. When looking for educational options that are more affordable, international students may find that institutions located in countries with lower inflation rates appear to be more tempting than those located in countries with higher inflation rates.
iii. The Australian Government decreases the corporate taxation rate to 20%
A reduction in the amount of taxes levied on corporations may encourage increased investment in the private sector, which has the potential to boost economic growth. It is possible that this will result in an increase in tax revenues over time, which has the potential to be allocated towards subsidizing educational institutions. It is possible that an increase in the wealth of corporations would result in an increase in the number of sponsorships and partnerships between companies and educational institutions, which will lead to an increase in the number of options for research funding and scholarships (Hong, Lingard, & Hardy, 2023). The reduction of the corporate tax rate has the ability to stimulate economic growth, which, in turn, can improve job possibilities for graduates and raise Australia's appeal as a preferred choice for students from other countries.
Influence Australian education, particularly international education and the financial structure and allocation of education resources will be examined, financial resources for institutions reducing corporate tax rates could boost spending and company profits, including educational institutions. This may allow universities and other educational institutions to raise funds to improve their infrastructure, research facilities, and teaching programmes. Educational institutions can cut or maintain competitive tuition fees to attract more students, especially international students. This could lower Australian education costs and boost its worldwide competitiveness. Reducing corporate taxes can boost economic activity by encouraging investment, job creation, and business expansion. This may increase the need for qualified professionals, which might benefit graduates and make Australian universities more appealing (Hong, Lingard, & Hardy, 2023).
The cut in business taxes may improve Australia's reputation as a safe and successful place for international students. This may attract more international students seeking high-quality education and profitable work. Business revenues could affect education funding, forcing government priorities and spending. However, if reduced corporate taxes boost economic growth, governments may be able to maintain or enhance educational spending, benefiting universities and educational infrastructure. Global competitive positioning will lead to define the strengthening the economic climate and competitiveness, lowering company taxes in Australia might boost its global appeal (Hong, Lingard, & Hardy, 2023). Australia can increase its position as a top choice for international students seeking educational and professional possibilities. Educational and Research Investment Reducing tax rates may promote corporate profitability, encouraging universities and private schools to invest more in education and research and will lead to improve education and student amenities over time.
Conclusion
Australian education benefits from large government investments and well-planned initiatives and is vital to its economy and culture. The sector's third-largest exports and significant contribution to Australia's GDP highlight its economic importance. Australia's standing as a top educational hub is strengthened by the government's diligent oversight and financing of educational programmes, especially abroad ones, which ensures compliance and raises standards. The industry will face changing challenges and opportunities due to macroeconomic factors like unemployment, inflation, and corporation tax legislation. These challenges can impact student enrolment, institutional finances, and Australia's global education competitiveness.
Australian adoption of digital and transnational educational trends shows its commitment to innovation and adaptation, making it well-suited to global education needs. Australia maintains its global education leadership by investing in education and international connections. This commitment fosters a diverse and inclusive learning environment that prepares students for global achievement. Australia's education system boosts economic growth, cultural exchange, and intellectual growth. It shows global dedication to excellence. Australia is well-positioned to shape education and boost global prosperity and innovation. Government, educational institutions, and stakeholders may empower learners through continual partnership.
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