TOPICS: How Nepal could benefit from trade in education

Education is an expanding business. While the demand for higher education is growing on the one hand, trans-border education is increasing on the other. Market for higher education has increased worldwide in the last two decades. Almost two million students receive formal education outside their own country today. It may be right to think about Nepal’s opportunities in educational service trade.

The WTO provides a basis for promoting rule-based trading system. Trade in services, including educational services, is in the domain of General Agreement on Trade in Services under WTO. It also sets a comprehensive definition of trade in services in terms of four different modes of supply: 1. Cross-border supply or services from one country to another (An example is distance learning programme), 2. Consumption abroad or services supplied in one country to the consumers of another (consumer of one country moves to educational services in another country), 3. Commercial presence or services supplied through any type of business or professional establishment of one country in the territory of another (medical college with foreign equity participation established in Nepal), and 4. presence of persons or services supplied by nationals of one country in the territory of another (a professor of another country supplying through his physical presence services in an educational institution in Nepal).

Because of technological advancement Mode 1 is important, and also movement of experts (Mode 4) is important for labour-abundant countries like ours. But for Nepal, most important modes are 2 and 3. At present, thousands of Nepalis are spending millions of rupees in foreign educational institutions for training. Nepal has to develop educational institutions with high quality and recognition to retain domestic students. Also, establishment of quality institutions, coupled with natural and cost-related advantages, will definitely help Nepal to attract foreign students.

Commercial presence may help overcome resource constraints. Affiliation with resource abundant countries/institutions is a good way. However, such presence looks for many things; among which, market size, good policies, political stability and other incentives are important. Nepal’s commitment towards policy stability and other incentives are reflected in education-related regulations and also in Nepal’s schedule of specific commitments in service sector that Nepal has made in course of accession to WTO. Nepal has made a commitment to open three sectors — higher education, adult education and other educational services.

Nepal’s commitment to allow foreign equity up to 80 per cent is attractive. However, many hurdles are still affecting investments in Nepal. Therefore, a debate should be immediately initiated to identify such hurdles; secondly, actions should be taken to remove them, and thirdly, preparation of a road map to facilitate the process of commercial presence of foreign educational institutions is needed.