What is CAGR?
CAGR stands for Compound Annual Growth Rate.
In very simple terms, CAGR tells us:
“On average, how fast did something grow each year over a period of time?”
Instead of looking at lots of yearly changes, CAGR summarises growth into one clear, easy-to-compare number.
You can think of it as the smooth, long-term growth speed of a metric.
Imagine an occupation had:
1,000 employees five years ago
1,500 employees today
CAGR answers the question:
“What steady yearly growth rate would explain going from 1,000 to 1,500 employees over five years?”
It does not mean growth happened evenly every year. It simply gives a clear summary of the overall trend.
Why CAGR is used in QS HolonIQ datasets?
Datasets focus on long-term performance and trends, not just single-year results.
CAGR is useful because it:
1. Shows long-term progress
CAGR highlights:
sustained improvement
consistent strategic growth
long-term direction
2. Allows fair comparison
Markets differ greatly in size and context.
CAGR helps compare:
large and small regions
mature and emerging markets
fast-growing and stable markets
Because CAGR is a percentage, it focuses on rate of growth, not raw size.
3. Why not just use year-over-year (YoY) growth?
Year-over-year growth can be misleading because:
one exceptional year can distort results
data can fluctuate due to reporting changes
external events (e.g. COVID, funding cycles) can cause temporary spikes or drops
CAGR solves this by:
smoothing short-term ups and downs
reducing the impact of one-off events
reflecting the overall trend, not noise
This leads to more stable, fair, and meaningful comparisons.
Common QS HolonIQ datasets where CAGR may be applied
You will find CAGR:
-In the Labour Data & Reports from the Labour Market Intelligence Dataset
-In the Flows Data & Reports from the Global Student Flows Dataset
Key takeaway
CAGR helps analysis by:
summarising growth in a simple way
focusing on long-term performance
avoiding over-reaction to short-term changes
In short, CAGR helps ensure rankings reward consistent progress, not just temporary success.