Big payoffs from international collaboration
Tertiary Talk - May 2018
New Zealand universities are increasingly benefiting from international collaborations. A large share of research is undertaken across national borders and international students have become a valuable export earner. However, the public and the broader economy gain the most from universities collaborating across borders. These benefits suggest it is worthwhile for the government to have a bigger role in supporting international collaboration initiatives.
The public gains the most
The direct beneficiaries of international collaboration activities are the universities themselves and their private participants. Through staff exchanges and joint research projects, universities see higher patent production, an increased rate of research published, and a revenue boost from international student enrolments. Meanwhile, individuals reap rewards from overseas work placement and student exchanges.
However, research by Deloitte Access Economics for Universities New Zealand found the public receive more financial value from international collaboration than the direct beneficiaries do. Deloitte Access Economics estimates that every $1.00 invested in international collaboration returns an average of $2.50 in economic activity over 15 years. Almost two thirds of this is accrued by the public (63%), a third to individuals (34%), and the remaining 3% to the universities.
Deloitte Access Economics assessed the benefits based on four different collaboration activities.
- International research collaboration - captures joint research between academics and researchers from separate countries.
- Academic staff exchanges - refers to academics and researchers conducting research in an overseas university and could include secondments and academic exchanges.
- Student exchanges - refers to students undertaking long-term and short-term study programs for either inbound international or outbound New Zealand students.
- Work placements - involves placing international students already studying in New Zealand (or New Zealanders already studying overseas) on short-term work assignments with local businesses.
Research collaborations and work placements are the best bet
Collaborative activities undertaken by universities are not equal, with benefits differing across initiatives. Figure 1 summarises the modelled results on the average returns to the New Zealand economy after 15 years.
Figure 1: Distribution of benefits from international collaboration by initiative
Net present value of increases in GDP after 15 years for every $1.00 invested, annual discount rate of 7%.
Source: Deloitte Access Economics
The two activities generating the highest return are student work placements and research collaborations, averaging $5.87 and $2.46 in economic activity after 15 years for every dollar invested, respectively. Most of this benefit is distributed to the public.
The benefits of work placements are two-fold. New Zealand businesses directly benefit from the work produced by international students during their placement. Local business also gains from the diversified skills of returning New Zealand students who undertook work placement in partner countries. Work placements generally are internships with local business, which are jointly funded by the host and partner country.
Research collaborations support economic growth through generating knowledge and new ideas and through the transfer of these ideas to business, government and industry, which improves economic productivity, according to research by Salter and Martin in 2001. The return on a $1.00 investment in research collaboration for universities is only $0.25 after 15 years, primarily due to new patents and additional international student enrolments. However, universities also gain through better research quality and improved university rankings.
The benefits extend beyond the quantifiable
Arguably of equal importance to the public and wider economy are the unquantifiable social and economic benefits of international collaboration. For example, cultural and soft diplomacy benefits are applicable across all initiatives. Returned international students bring with them trade and investment links as well as broader cultural understanding. Similarly, having a large proportion of international students abroad who have studied in New Zealand is likely to have important soft diplomacy benefits for New Zealand while the local population is likely to benefit from greater exposure to students from different cultural backgrounds.
The government could do more to support initiatives
Given a large share of the payoff from international collaborations are accrued by the public, the government could justifiably have a much bigger role in supporting international collaboration opportunities than it currently does.
The Government recognises the importance of fostering relationships between domestic universities and those overseas. The Education Minister has identified international collaboration as having a role in driving innovation, and continued support of Centres of Research Excellence (CoREs) - key funders of research collaborations between New Zealand and overseas universities. However, beyond this, there is much room for additional support. To capitalise on international collaboration, the government should focus funding efforts on encouraging high pay-off initiatives – such as work placement and cross-country research collaborations.
 The returns are measured through increases to Gross Domestic Product (GDP) in Net Present Value (NPV) terms over 15 years, from investing $1.00 in collaborating with a country for each of the four broad initiatives. The annual discount rate is assumed to be 7%.