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Universities as Firms: The Case of U.S. Overseas Programs

NBER Volume, Forthcoming

Posted: 27 Jan 2009 Last revised: 21 Sep 2013

E. Han Kim

University of Michigan, Stephen M. Ross School of Business

Min Zhu

City University of Hong Kong (CityUHK); World Bank - Development Research Group; University of Michigan, Stephen M. Ross School of Business

Date Written: July 16, 2009

Abstract

We observe two waves of overseas programs offered by U.S. universities: A supply driven wave in the late 1980s to the mid 1990s, and a current wave beginning in the early 2000s, with distinctly different players. We compile a comprehensive dataset on overseas degree programs and host country characteristics. The data reveal that universities behave much like multinational corporations when they make investments overseas. Finance plays an important role. Real GDP per capita and tertiary school age population are two key determinants of the location choice. Asia and the Middle East are popular destinations for U.S. overseas programs, driven by market size and oil money, respectively. U.S. universities offer lower tuition discounts in countries with higher real GDP per capita. Undergraduate degree programs are discounted more than master degree programs because of greater local competition. When universities reduce costs through partnerships with local universities or through financial support from local governments, the savings are not passed on to local students in the form of lower tuition.

Keywords: higher education, overseas program, foreign direct investment

JEL Classification: I20

Suggested Citation

Kim, E. Han and Zhu, Min, Universities as Firms: The Case of U.S. Overseas Programs (July 16, 2009). NBER Volume, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1329164 or http://dx.doi.org/10.2139/ssrn.1329164

E. Han Kim (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-764-2282 (Phone)
734-763-3117 (Fax)

Min Zhu

City University of Hong Kong (CityUHK)

83 Tat Chee Avenue
Kowloon
Hong Kong
China

World Bank - Development Research Group

1818 H Street NW
Washington, DC DC 20433
United States

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI 48109
United States

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