The brains business A survey of higher education September 10th 2005
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The brains business Also in this section
Secrets of success America’s system of higher education is the best in the world. That is because there is no system. Page 6
Head in the clouds Europe hopes to become the world’s pre- eminent knowledge-based economy. Not likely. Page 9
A world of opportunity Developing countries see the point of universities. Page 14
Wandering scholars For students, higher education is becoming a borderless world. Page 16 Mass higher education is forcing universities to become more diverse, Higher Ed Inc more global and much more competitive, says Adrian Wooldridge Universities have become much more businesslike, but they are still doing the same OR those of a certain age and educa- The second reason is the rise of the old things. Page 19 Ftional background, it is hard to think of knowledge economy. The world is in the higher education without thinking of an- grips of a soft revolution in which cient institutions. Some universities are of knowledge is replacing physical resources The best is yet to come a venerable age the University of Bolo- as the main driver of economic growth. A more market-oriented system of higher gna was founded in 1088, the University of The OECD calculates that between 1985 education can do much better than the state- Oxford in 1096 and many of them have a and 1997 the contribution of knowledge- dominated model. Page 20 strong sense of tradition. The truly old based industries to total value added in- ones make the most of their pedigrees, and creased from 51% to 59% in Germany and those of a more recent vintage work hard from 45% to 51% in Britain. The best compa- to create an aura of antiquity. nies are now devoting at least a third of And yet these tradition-loving (or -cre- their investment to knowledge-intensive ating) institutions are currently enduring a intangibles such as R&D, licensing and thunderstorm of changes so fundamental marketing. Universities are among the that some say the very idea of the univer- most important engines of the knowledge sity is being challenged. Universities are economy. Not only do they produce the experimenting with new ways of funding brain workers who man it, they also pro- (most notably through student fees), forg- vide much of its backbone, from labora- ing partnerships with private companies tories to libraries to computer networks. and engaging in mergers and acquisitions. The third factor is globalisation. The Acknowledgments Such changes are tugging at the ivy’s roots. death of distance is transforming acade- Particular thanks are due to Philip Altbach, the director of the Centre for International Higher Education at Boston This is happening for four reasons. The mia just as radically as it is transforming College, for sharing his unrivalled knowledge of higher rst is the democratisation of higher edu- business. The number of people from education around the world. cation massi cation , in the language of OECD countries studying abroad has dou- The author is also grateful to the following institutions for their help and advice: the Organisation for Economic Co- the educational profession. In the rich bled over the past 20 years, to 1.9m; univer- operation and Development; the World Bank; the Ford world, massi cation has been going on for sities are opening campuses all around the Foundation International Fellowship Programme; and the some time. The proportion of adults with world; and a growing number of countries Institute of International Education. higher educational quali cations in the are trying to turn higher education into an OECD A list of sources can be found online countries almost doubled between export industry. 1975 and 2000, from 22% to 41%. But most The fourth is competition. Traditional www.economist.com/surveys of the rich countries are still struggling to universities are being forced to compete Past articles on higher education are at digest this huge growth in numbers. And for students and research grants, and priv- www.economist.com/highereducation now massi cation is spreading to the de- ate companies are trying to break into a veloping world. China doubled its student sector which they regard as the new An audio interview with the author is at population in the late 1990s, and India is health care . The World Bank calculates www.economist.com/audio trying to follow suit. that global spending on higher education1 2 A survey of higher education The Economist September 10th 2005
2 amounts to $300 billion a year, or 1% of American research university of the past potential to reach a huge market of stu- global economic output. There are more 40 years to be a failure. Fortunately, in his dents. That is nonsense. The human than 80m students worldwide, and 3.5m view, help is on the way in the form of in- touch is much more vital to higher educa- people are employed to teach them or look ternet tuition and for-pro t universities. tion than is high technology. Education is after them. Cultural conservatives, on the other not just about transmitting a body of facts, hand, believe that the best way forward is which the internet does pretty well. It is Enemies of promise backward. The two ruling principles of about learning to argue and reason, which All this sounds as though a golden age for modern higher-education policy democ- is best done in a community of scholars. universities has arrived. But inside acade- racy and utility are degradations of the This survey will argue that the most sig- mia, particularly in Europe, it does not feel academic dogma , to borrow a phrase ni cant development in higher education like it. Academics complain about the de- from the late Robert Nisbet, another sociol- is the emergence of a super-league of cline of the donnish dominion (the title of ogist. They think it is foolish to waste global universities. This is revolutionary in a book by A.H. Halsey, a sociologist), and higher education on people who would the sense that these institutions regard the administrators are locked in bad-tempered rather study Seinfeld than Socrates, and whole world as their stage, but also evolu- exchanges with the politicians who fund disingenuous to confuse the pursuit of tionary in that they are still wedded to the them. What has gone wrong? truth with the pursuit of pro t. ideal of a community of scholars who The biggest problem is the role of the The conservative argument falls at the combine teaching with research. state. If more and more governments are rst hurdle: practicality. Higher education The problem for policymakers is how embracing massi cation, few of them are is rapidly going the way of secondary edu- to create a system of higher education that willing to draw the appropriate conclusion cation: it is becoming a universal aspira- balances the twin demands of excellence from their enthusiasm: that they should ei- tion. The techno-utopian position is super- and mass access, that makes room for ther provide the requisite funds (as the cially more attractive. The internet will global elite universities while also catering Scandinavian countries do) or allow uni- surely in uence teaching, and for-pro t for large numbers of average students, that versities to charge realistic fees. Many gov- companies are bound to shake up a mori- exploits the opportunities provided by ernments have tried to square the circle bund marketplace. But there are limits. new technology while also recognising through tighter management, but manage- A few years ago a report by Coopers & that education requires a human touch. ment cannot make up for lack of resources. Lybrand crowed that online education As it happens, we already possess a So in all too much of the academic could eliminate the two biggest costs from successful model of how to organise world, the writer Kingsley Amis’s famous higher education: The rst is the need for higher education: America’s. That country dictum that more means worse is coming bricks and mortar; traditional campuses has almost a monopoly on the world’s to pass. Academic salaries are declining are not necessary. The second is full-time best universities (see table 1), but also pro- when measured against similar jobs else- faculty. [Online] learning involves only a vides access to higher education for the where, and buildings and libraries are de- small number of professors, but has the bulk of those who deserve it. The success teriorating. In mega-institutions such as of American higher education is not just a the University of Rome (180,000 stu- result of money (though that helps); it is dents), the National University of Mexico America rules 1 the result of organisation. American uni- (200,000-plus), and Turkey’s Anadolu The world’s top universities* versities are much less dependent on the University (530,000), individual attention state than are their competitors abroad. 1 Harvard University America to students is bound to take a back seat. They derive their income from a wide va- 2 Stanford University America The innate conservatism of the aca- riety of sources, from fee-paying students demic profession does not help. The mod- 3 University of Cambridge Britain to nostalgic alumni, from hard-headed ern university was born in a very di erent 4 University of California (Berkeley) America businessmen to generous philanthropists. world from the current one, a world where 5 Massachusetts Institute of Technology America And they come in a wide variety of shapes only a tiny minority of the population 6 California Institute of Technology America and sizes, from Princeton and Yale to Kala- went into higher education, yet many aca- 7 Princeton University America mazoo community college. demics have been reluctant to make any 8 University of Oxford Britain This survey will o er two pieces of ad- allowances for massi cation. Italian uni- 9 Columbia University America vice for countries that are trying to create versities, for instance, still insist that all stu- 10 University of Chicago America successful higher-education systems, be dents undergo a viva voce examination by 11 Yale University America they newcomers such as India and China a full professor, lasting an average of about 12 Cornell University America or failed old hands such as Germany and ve minutes. Italy. First: diversify your sources of in- 13 University of California (San Diego) America What, if anything, can be done? come. The bargain with the state has 14 Tokyo University Japan Techno-utopians believe that higher edu- turned out to be a pact with the devil. Sec- cation is ripe for revolution. The univer- 15 University of Pennsylvania America ond: let a thousand academic owers sity, they say, is a hopelessly antiquated 16 University of California (Los Angeles) America bloom. Universities, including for-pro t institution, wedded to outdated practices 17 University of California (San Francisco) America ones, should have to compete for custom- such as tenure and lectures, and incapable 18 University of Wisconsin (Madison) America ers. A sophisticated economy needs a of serving a new world of mass audiences 19 University of Michigan (Ann Arbor) America wide variety of universities pursuing a and just-in-time information. Thirty 20 University of Washington (Seattle) America wide variety of missions. These two prin- years from now the big university cam- *Ranked by a mixture of indicators of academic and research ciples reinforce each other: the more that puses will be relics, says Peter Drucker, a performance, including Nobel prizes and articles in the state’s role contracts, the more educa- Source: Jiao Tong University, Shanghai respected publications veteran management guru. I consider the tional variety will ourish. 7 The Economist September 10th 2005 A survey of higher education 3
Secrets of success
America’s system of higher education is the best in the world. That is because there is no system
T IS all too easy to mock American acade- Limited government does not mean in- Imia. Every week produces a mind-bog- di erent government. The federal govern- gling example of intolerance or wackiness. ment has repeatedly stepped in to turbo- Consider the twin stories of Lawrence charge higher education. The Morrill Land Summers, one of the world’s most distin- Grant Act of 1862 created land-grant uni- guished economists, and Ward Churchill, versities across the country. The states an obscure professor of ethnic studies, poured money into community colleges. which unfolded in parallel earlier this The GI Bill of 1946 brought universities year. Mr Summers was almost forced to re- within the reach of everyone. The federal sign as president of Harvard University be- government continues to pour billions of cause he had dared to engage in intellec- dollars into science and research. tual speculation by arguing, in an informal The second principle is competition. seminar, that discrimination might not be Universities compete for everything, from the only reason why women are under- students to professors to basketball stars. represented in the higher reaches of sci- Professors compete for federal research ence and mathematics. Mr Churchill man- grants. Students compete for college bursa- aged to keep his job at the University of ries or research fellowships. This means Boulder, Colorado, despite a charge sheet that successful institutions cannot rest on including plagiarism, physical intimida- their laurels. tion and lying about his ethnicity. The third principle is that it is all right to With such colourful headlines, it is easy Larry Summers committed heresy be useful. Bertrand Russell once expressed to lose sight of the real story: that America astonishment at the worldly concerns he has the best system of higher education in clearly has something to do with it. Amer- encountered at the University of Wiscon- the world. The Institute of Higher Educa- ica spends more than twice as much per sin: When any farmer’s turnips go wrong, tion at Shanghai’s Jiao Tong University student as the OECD average (about they send a professor to investigate the fail- ranks the world’s universities on a series of $22,000 versus $10,000 in 2001), and ure scienti cally. America has always re- objective criteria such as the number of alumni and philanthropists routinely garded universities as more than ivory Nobel prizes and articles in prestigious shower universities with gold. History towers. Henry Steele Commager, a 20th- journals. Seventeen of the top 20 universi- also plays a part. Americans have always century American historian, noted of the ties in that list are American (see table 1, had a passion for higher education. The average 19th-century American that edu- previous page); indeed, so are 35 of the top Puritans established Harvard College in cation was his religion provided that it 50. American universities currently em- 1636, just two decades after they rst ar- be practical and pay dividends . ploy 70% of the world’s Nobel prize-win- rived in New England. This emphasis on paying dividends ners. They produce about 30% of the The main reason for America’s success, remains a prominent feature of academic world’s output of articles on science and however, lies in organisation. This is some- culture. America has pioneered the art of engineering, according to a survey con- thing other countries can copy. But they forging links between academia and in- ducted in 2001, and 44% of the most fre- will not nd it easy particularly if they are dustry. American universities earn more quently cited articles. developing countries that are bent on than $1 billion a year in royalties and li- At the same time, a larger proportion of state-driven modernisation. cence fees. More than 170 universities have the population goes on to higher educa- The rst principle is that the federal business incubators of some sort, and tion in America than almost anywhere government plays a limited part. America dozens operate their own venture funds. else, with about a third of college-aged does not have a central plan for its univer- people getting rst degrees and about a sities. It does not treat its academics as civil Nothing quite like it third of those continuing to get advanced servants, as do France and Germany. In- There is no shortage of things to marvel at degrees. Non-traditional students also do stead, universities have a wide range of pa- in America’s higher-education system, better than in most other countries. The trons, from state governments to religious from its robustness in the face of external majority of undergraduates are female; a bodies, from fee-paying students to gener- shocks to its overall excellence. No country third come from racial minorities; and ous philanthropists. The academic land- but America explores such a wide range of more than 40% are aged 25 or over. About scape has been shaped by rich benefactors subjects (including some dubious ones 20% come from families with incomes at or such as Ezra Cornell, Cornelius Vanderbilt, such as GBLT gay, lesbian, bisexual and below the poverty line. Half attend part- Johns Hopkins and John D. Rockefeller. transgender studies). However, what par- time, and 80% of students work to help And the tradition of philanthropy sur- ticularly stands out is the system’s exibil- support themselves. vives to this day: in scal 2004, private do- ity and its sheer diversity. Why is America so successful? Wealth nors gave $24.4 billion to universities. For a demonstration of its exibility,1 4 A survey of higher education The Economist September 10th 2005
2 consider New York University. NYU used universities such as Harvard, but Mr American universities. The rst is that uni- to be a commuter school with little money Douthat, who graduated from there only versities are no longer as devoted to free in- and even less prestige. In the mid-1970s, it three years ago, argues that they are sel- quiry as they ought to be. The persecution was so close to bankruptcy that it had to dom stretched when they arrive. A few of Mr Summers for the sin of intellectual sell o its largest campus, in the Bronx. But professors try to provide overviews of big rumination is symptomatic of a wider pro- today it is ush with money from fund- subjects, but many stick with their pet sub- blem. At a time when America’s big politi- raising, hot with would-be undergradu- jects regardless of what undergraduates cal parties are deeply divided over pro- ates across the country, and famous for re- need to learn. Mr Douthat wanted to pick a found questions, from the meaning of cruiting academic superstars. The Shang- comprehensive list of classes in his chosen life to the ethics of pre-emptive war, uni- hai world ranking puts it at number 32. subjects, history and literature, but ended versity professors are overwhelmingly on The academic superstars certainly up with a weird mish-mash taught by un- the side of one political party. Only about helped, but two other things proved even engaged professors and overburdened 10% of tenured professors say they vote Re- more useful. The rst was NYU’s ability to teaching assistants . Looking back on his publican. The liberal majority has repeat- turn its location in downtown Manhattan experience, he feels cheated. edly shown that it is willing to crush dis- into an asset. Lots of universities have ne He is not alone. In many ways, under- sent on anything from speech codes to the economics departments, but having the graduates are the stepchildren of Ameri- choice of subjects worth studying. stock exchange nearby adds something ex- can higher education. Most academics pay There are signs that scientists, too, are tra. The second was the university’s ability more attention to research than to teach- turning against free and open inquiry, to spot market niches. ing, and most universities continue to ne- though for commercial rather than ideo- What made all this possible was the glect their core curriculums in the name of logical reasons. Corporate sponsors are at- fact that power is concentrated in the academic choice. taching strings to their donations in order hands of the central administration. Most From time to time, universities try to to prevent competitors from free-riding on universities in other countries distribute improve the lot of the undergraduate, as their research, such as forcing scientists to power among the professors; American Mr Summers is currently doing at Harvard: delay publication or even blank out cru- universities have established a counterbal- reforming the core curriculum, taming cial passages from published papers. ance to the power of the faculty in the per- grade in ation and asking professors to When Novartis, a Swiss pharmaceutical son of a president, which allows some of concentrate on teaching rather than self- giant, agreed to invest $25m in Berkeley’s them to act more like entrepreneurial rms promotion. But reformers are ghting in College of Natural Resources, for example, than lethargic academic bodies. hostile territory. The biggest rewards in ac- it stipulated that it should get a rst look at The American system’s diversity has al- ademic life are reserved for research rather much of the research carried out by the lowed it to combine excellence with access than teaching, not least because research is plant and microbial biology department. by providing a wide range of di erent easier to evaluate; and most students are The second criticism is that America’s types of institutions. Only about 100 of willing to put up with indi erent teaching universities are pricing themselves out of America’s 3,200 higher-education institu- so long as they get those vital diplomas. the range of ordinary Americans. Between tions are research universities. Many of the Complaints about the neglect of under- 1971-72 and 2002-03, annual tuition costs, rest are community colleges that produce graduate education are as old as the re- in constant 2002 dollars, rose from $840 to little research and o er only two-year search university, but the past few years $1,735 at public two-year colleges and from courses. But able students can progress have produced a host of new criticisms of $7,966 to $18,273 at private four-year col-1 from a humble two-year college to a presti- gious research university. To be fair, one reason why America’s best universities are so good is that they have borrowed liberally from abroad particularly from the British residential universities that grew up in Oxford and Cambridge in the Middle Ages, and from Wilhelm von Humboldt’s German re- search university in the early 19th century.
Serpents in paradise But America’s academic paradise har- bours plenty of serpents. The political cor- rectness that has plagued Mr Summers is just one example of a deeper problem: America’s growing inclination to abandon the very principles that have made it a world leader. Ross Douthat has recently created a stir with his exposé of Ivy League education, Privilege: Harvard and the Education of the Ruling Class . High-school students compete furiously to get into Ivy League New York University: from underdog to top dog The Economist September 10th 2005 A survey of higher education 5
2 leges. True, the federal government spends bility. From the 1930s onwards, America’s ever, comes not from within the universi- over $100 billion a year on student aid, great universities did much to realise the ties but from society at large. One conse- and elite universities make every e ort to American creed of equality of opportu- quence of the squeeze on funding for subsidise poorer students. One study of nity. James Bryant Conant, Harvard’s pres- public universities, created by Americans’ admissions to selective colleges shows ident from 1933 to 1953, opened up scholar- reluctance to pay taxes, has been an aca- that, in 2001-02, students with a median ships to academic merit, and the vast demic brain drain to the more socially ex- family income paid only 34% of the post-war expansion of higher education clusive private universities. In 1987, seven sticker price. extended Conant’s meritocratic principle of the 26 top-rated universities in the US Still, the sheer relentlessness of aca- to millions of students. Flagship public News & World Report rankings were public demic in ation is worrisome. Elite col- universities such as Michigan, Texas and institutions; by 2002, the number had leges have little incentive to compete on Berkeley, California, provided world-class fallen to just four. price; indeed, they tend to compete by education for next to nothing. The biggest risk to American higher adding expensive accoutrements, such as education is the erosion of the competitive star professors or state-of-the-art gyms, Meritocracy in retreat principle. The man often cited as the archi- thus pushing up the cost of education still But the march of academic meritocracy tect of American academia’s current suc- further. And the public universities that has now slowed to a crawl, and, on some cess is Vannevar Bush, who was director of played such a valiant role in providing fronts, has even turned into a retreat. Wil- the o ce of scienti c research and de- opportunities to underprivileged students liam Bowen of Princeton University and velopment during the second world war. are being forced to raise their prices, two colleagues, in a study of admissions to After the war he insisted that research thanks to the continual squeeze on public elite universities, found that in the 11 uni- grants be allocated to universities on the funding. The average cost of tuition at pub- versities for which they had the best data, basis of open competition and peer re- lic universities rose by 10.5% last year, four students from the top income quartile in- view. But in the 1980s universities began times the rate of in ation. creased their share of places from 39% in undermining this principle by lobbying The dramatic rise in the price of Ameri- 1976 to 50% in 1995. Students from the bot- their local congressmen for direct appro- can higher education puts a heavy burden tom income quartile also increased their priations. In 2003, the amount of money on middle-class families who are too rich share very slightly: the squeeze came in from the federal research budget awarded to qualify for special treatment. It also the middle. on a non-competitive basis topped $2 bil- sends negative signals to poorer parents Mr Summers points out that Harvard lion, up from $1 billion in 2000. who may be unaware of all the subsidies now o ers free tuition to students whose American academia’s merits still out- available. Deborah Wadsworth, an opin- families earn less than $40,000 a year, and weigh its faults. Many American under- ion pollster, points out that universities greatly reduced fees to students from fam- graduates are savvy enough to get a rst- may be courting a popular backlash. ilies earning $40,000-60,000. Other elite class education. Many academics resist the Americans increasingly regard universi- universities have followed suit. Yet at the temptation to censor ideological minor- ties as the gatekeepers to good jobs, but same time those universities give priority ities. The vast bulk of research grants are al- they also see them as prohibitively expen- to athletes, people applying early (who of- located on the basis of merit. Yet American sive. The result is a steady erosion of public ten come from privileged backgrounds) universities are acquiring a growing cata- admiration for these formerly much-es- and the children of alumni ( legacies ). logue of bad habits that could one day teemed institutions. Duke University encourages the o spring leave them vulnerable to competitors from This points to a third criticism: that uni- of wealthy parents to apply early and con- other parts of the world though probably versities are becoming bastions of privi- siders their applications sympathetically. not from Europe, which has overwhelm- lege rather than instruments of social mo- The real threat to meritocracy, how- ing academic problems of its own. 7 Head in the clouds
Europe hopes to become the world’s pre-eminent knowledge-based economy. Not likely
HERE are few things European leaders gan by a former student engraved in gold The list of Nobel prize-winners actually Tlike better than talking about their on the wall ( Philosophers have simply in- understates the university’s past glories. In plans for turning Europe into the world’s terpreted the world; the point is to change the 19th century, it not only nurtured such most competitive knowledge-based it ) and study the portraits of the Nobel world-class intellectuals as Hegel and economy by the end of this decade. The prize-winners that line the walls. There Fichte, it also pioneered a new sort of edu- aim was rst laid out at the EU’s summit in were eight in 1900-09, six in 1910-19, four cational institution the research univer- Lisbon in March 2000 and has been re- in 1920-29, six in 1930-39, one in 1940-49 sity. And the drying-up of Nobel prizes in peated with hypnotic fervour ever since. and four in 1950-56. The roll of honour in- 1956 is not the only indication of the uni- To grasp the full absurdity of this ambi- cludes luminaries such as Theodor versity’s current plight. It occupies 95th tion, it is worth visiting the Humboldt Uni- Mommsen, Max Planck, Albert Einstein place on the Shanghai list, next to the Uni- versity in Berlin. Walk into the main foyer, and Werner Heisenberg. But after 1956 the versity of Utah. The buildings are drab, lec- stroll up the steps to the rst oor past a slo- Nobel prizes suddenly stop. tures and classes are overcrowded, and1 6 A survey of higher education The Economist September 10th 2005
creating a German Ivy League. Further- there Britain o ers some useful pointers. A good investment 2 more, Germany’s Constitutional Court Britain is a marked exception to the Premium for higher education on earnings from has ruled against the federal government’s European pattern of complacency and de- employment, 25-64-year-olds, 2002 ban on tuition charges, opening the way cline. It has two universities in the top ten Upper secondary education=100 for universities to increase their revenues of the Shanghai rankings, Cambridge at Shorter vocational education (and prompting protests from tens of thou- number three and Oxford at number eight, Full-length university education and advanced research programmes sands of students). But these reforms are and four in the top 30, a far better showing only a beginning. German states con- than any other European country. It also Females Males trolled by the left are likely to continue to has one of the highest graduation rates in 200 175150125100 125 150 175 200 resist fees, and even the more conservative the OECD, with more than 30% of the rele- United States ones will charge only a nominal amount. vant age group completing university or Universities are a mess across Europe. college, up from only 14% in the mid-1980s. France European countries spend only 1.1% of GDP Britain their on higher education, compared Half right with 2.7% in the United States. American Britain’s academics were aghast when Germany universities have between two and ve Margaret Thatcher set about shaking up times as much to spend per student as the universities in the early 1980s. Oxford Italy European universities, which translates even denied an honorary degree to the South into smaller classes, better professors and country’s rst female prime minister, an Korea higher-quality research. The European old alumnus. But the long-term e ect of Source: OECD Commission estimates that 400,000 EU- her policies, which have been continued born scienti c researchers are now work- and in some ways intensi ed under La- 2 some of the best professors have left. ing in the United States. Most have no bour since 1997, has been to leave British Apologists might retort that Humboldt plans to return. Europe produces only a universities in a much better state than is still recovering from its time on the quarter of the American number of pat- their continental rivals. wrong side of the Berlin Wall. Yet Hum- ents per million people. It needs to ask it- British universities have won a mea- boldt’s problems are replicated across the self not whether it can overtake the United sure of freedom to charge tuition fees: the whole of Germany, west as well as east. States as the world’s top knowledge econ- amount they can charge is set to triple to The highest-placed German university in omy by 2010, but how it can avoid being £3,000 next year. They are also learning the Shanghai rankings is the Technical overtaken by China and other Asian tigers. how to raise money from both private University of Munich, at 45. The ratio of The basic problems with the universi- business and alumni. If the most conspicu- students to teachers at German universi- ties are the same across Europe: too much ous gure on British campuses in the 1960s ties is depressingly high. For some lectures, state control and too little freedom to man- was the radical sociologist, the most con- a thousand or more students pile into the age their own a airs. Governments have spicuous gure today is the academic en-1 hall. The only count on which German forced universities to educate huge armies universities still lead the world is the age of of students on the cheap, and have de- its students at graduation, 26 on average. prived them of the two freedoms that they Their biggest problem is the dead hand need to compete in the international mar- of the state. The German government ketplace: to select their students and to pay both regional and central tries to micro- their professors the market rate for the job. manage every aspect of academic life, Still, the Europeans are taking a couple from whom universities employ to whom of practical steps to improve their troubled they can teach. The state has progressively universities. The Bologna Declaration, starved universities of funds, not least be- signed in 1999, is intended to produce a cause it has forbidden them from charging single European higher educational fees. It has also snu ed out academic com- space by introducing a combination of petition. Universities have little power to comparable quali cations and transfera- pick their pupils and even less to attract ble credits. Various EU initiatives are also star professors. encouraging young people to study in Belatedly, the Germans are beginning other European countries: the Erasmus to recognise that their system is dysfunc- programme, for example, has already tional, not least because some of the bene ted more than one million students. brightest German students are voting with This combination of increased transpa- their feet and going abroad to study. The rency and enhanced mobility is bound to government is trying hard to encourage promote competition among universities. foreign students to come to Germany, But this is all too little, too late. There though its success may have more to do has been little or no progress on introduc- with the fact that higher education is free ing realistic fees, freeing universities from to both domestic and foreign students government control or concentrating re- than with the quality of the education pur- search in elite universities. To understand veyed. The government is also trying to how far most European countries still have make its universities more competitive by to go and how di cult it will be to get Have the Germans lost the knack? The Economist September 10th 2005 A survey of higher education 7
2 trepreneur. But Britain’s universities still the universities are being forced to eat into su er from two vexatious problems. Money talks 3 their capital. Oxford is currently running The rst is government meddling. The Total expenditure per student on higher an operating de cit of £20m a year and an government’s determination to improve education, excluding R&D, $PPP, ’000 accumulated de cit on teaching and re- academic productivity is creating a Stalin- 0 5 10 15 20 search of £95m. This is because the Trea- ist bureaucracy of academic auditors sury pays only about half of the estimated United States who cannot distinguish between make- average of £18,600 a year it costs to teach an work articles and genuine research, and its Denmark Oxford undergraduate, so the university desire to open up access to higher educa- Australia and its colleges have to make up the di er- tion is creating a second Stalinist bureauc- Britain ence from their own resources. The new racy in the O ce for Fair Access. top-up fees will help, but not enough to France The second problem is a relentless - solve the university’s problems. nancial squeeze. Successive governments Germany The British government has led conti- have trumpeted improvements in pro- Spain nental Europe in reforming its universities. ductivity, which is supposedly rising by 1% Mexico It has established a system of student a year. But too often this is just a synonym loans, and has crossed an important Source: OECD for the erosion of quality. In the 1990s, threshold in conceding the principle of spending per student fell by more than a variable fees . But the sort of managed third, and the student-teacher ratio dou- Half the universities are running de cits. market it has created, in which the govern- bled from 9:1 to 18:1. Academic salaries This is undermining the country’s abil- ment regulates what universities can sell have been falling by about 2% a year in real ity to support world-class universities. and how much they can charge for it, is an terms for two decades, and the army of Some of the nest scholars have been lost unsatisfactory half-way house. It should part-time lecturers has grown ever bigger. to foreign competitors. Just as damaging, now set the universities free. 7 A world of opportunity
Developing countries see the point of higher education
CROSS the developing world, higher meant that universities concentrated on bankruptcy, has increased its student Aeducation is coming in from the cold. producing a tiny group of elite adminis- numbers vefold and is investing in its in- Gone are the days when it was purely a trators, and anti-colonialism tightened frastructure. It has introduced fees for 80% luxury for the elite. Governments are rap- their bonds with government. of its students, and now generates a third idly expanding their higher-education sys- Public spending on universities in de- of its revenue from a variety of commer- tems, with China probably witnessing the veloping countries is highly regressive. In cial ventures such as a bakery and an in- biggest expansion of student numbers in Latin America the professional classes, house consultancy. history. They are trying to create centres of who account for 15% of the population, A third cause for cheer is the prolifera- excellence and throwing open the sector to take up nearly half of all university places. tion of di erent kinds of universities. A private entrepreneurs. In Rwanda, 15% of the total education bud- few years ago most universities in the de- The main reason for this urry of activ- get is spent on the 0.2% of students who at- veloping world were much the same: de- ity is the dramatic growth in the supply of tend universities. Most universities in the signed for the elite and dominated by the potential students. Secondary school en- developing world are also hopelessly state. Now there is more variety. The big- rolment rates have grown rapidly across badly managed. gest change is the emergence of a for-pro t the developing world. But there has also But there are a few bright spots on the sector that concentrates on subjects such been a revolution in economic thinking. horizon. Some universities in poorer coun- as accounting and computer skills, and of- Not so long ago the World Bank pooh- tries have been doing world-class re- ten pioneers educational innovation. poohed spending on higher education as search. The botany department of the Uni- What are the prospects that the good both economically ine cient and socially versity of Sao Paulo, for example, was rst news will outweigh the bad? To answer regressive. Now many development econ- to crack the genetic code of a bacterium this question, it is worth looking more omists are warming to higher education, called Xylella fastidiosa, which has been closely at the two countries that are cur- pointing to the demand for graduates as laying waste to vineyards in southern Cali- rently conducting the world’s biggest ex- demonstrated by their wage premium fornia. This work attracted global funding periments in the massi cation of higher and to the positive e ect of university- as well as attention from, among others, education: India and China. based research on the economy. America’s Department of Agriculture and India’s higher-education system has Nobody doubts the di culty of build- the American Vineyard Foundation. plenty of inherited handicaps. Some of ing decent universities in the developing A second bright spot is that good man- them are left over from colonialism and world. In most countries the legacy of agement can produce striking improve- some from anti-colonialism; some arise colonialism has been compounded by the ments. Uganda’s Makerere University, from poor management and political con- legacy of anti-colonialism. Colonialism which in the late 1980s was on the verge of fusion. B.S. Baswan, the country’s secre-1 8 A survey of higher education The Economist September 10th 2005
2 tary for secondary and higher education, education, and encouraging entrepreneurs partment to discover the most e ective notes that his sector lacks a clear political to pour millions into a sector that has teaching methods. One of its cleverest constituency. Yet the problem is deeper traditionally been starved of funds. ideas was to give illiterate children free ac- than that: the government does not have Vinay Rai, a telecoms and steel mag- cess to computers in order to see how eas- the resources to fund the expansion it nate, is just such an entrepreneur. Rai Uni- ily they could master them. It has also es- wants, but cannot summon up the politi- versity bills itself as India’s best private tablished links with Citibank to enable cal courage to start charging students re- university , with 16 campuses across the students to take out loans to pay fees. The alistic fees. The result is that India often country. Mr Rai wants the university to ll company has become such a brand name seems to take one step back for every two a gap in the market, and sees huge demand that some advertisements in the matrimo- steps forward. for education in practical subjects such as nial pages of the Times of India specify Undoubtedly, though, it is making ad- management, media, accounting and tou- graduates of NIIT. vances. The number of people attending rism. But he is interested in more than just universities almost doubled in the 1990s, tapping a booming market, pointing out China enrols the market from 4.9m to 9.4m. The price of this has that half his students are on scholarships. In higher education, as in so much else, been a decline in overall quality. That said, He wants to shift from training obedient China is visibly pulling ahead of India. India has two valuable things going for it. clerks towards training self-starting entre- The Chinese are engaged in the biggest uni- One is its collection of elite institutions. preneurs. He waxes lyrical about the versity expansion in history. In the 1980s, For decades, India has been pouring re- beautiful model of higher education he only 2-3% of school-leavers went to univer- sources into the All India Institute of Medi- encountered in America at the Massachu- sity. In 2003, the gure was 17%. The water- cal Sciences, the Indian Institute of Science setts Institute of Technology. shed year was 1999, when the number of in Bangalore and, above all, the Indian In- The contrast between Rai University’s students enrolled jumped by almost half. stitutes of Technology. These institutions main campus in Delhi and that of Jawa- The expansion at the doctoral level is even take their pick from an army of candidates harlal Nehru University, one of India’s faster than for undergraduates: in 1999- every year, with 180,000 hopefuls taking most distinguished public universities, is 2003, nearly 12 times as many doctorates the screening test for around 3,500 places striking. Rai University is spick and span were awarded as in 1982-89 (see chart 4, in the seven IITs. They provide a highly in- whereas JNU is sprawling and untidy. Rai next page). And there is more to come: the tensive education, with all students and is full of computers, whereas JNU is reso- number of new doctoral students jumped often professors too living on campus. lutely low-tech. Rai’s students are deter- from 14,500 in 1998 to 48,700 in 2003. And they produce a stream of highly edu- mined to take part in the global economy, The Chinese are determined to create a cated people who help to set professional whereas JNU is plastered with signs prot- super-league of universities to rival the standards. They are a class apart, like Ox- esting against the evils of capitalism. best in the world. The central government ford and Cambridge, says P.V. Indiresan, A growing band of successful private is investing heavily in chosen universities, an expert on universities. companies are pioneering the democrati- such as Peking, Tsinghua and Fudan, o er- These elite institutions help to keep In- sation of technical education. NIIT, a com- ing higher salaries and more research dia plugged into the global knowledge puter-training company, has 40 wholly funding. The state governments are doing economy. R.S. Sirohi, the former director owned centres and more than 1,000 fran- likewise. It is no accident that the most of IIT Delhi, explains that he used to give chised operations, and is expanding to widely used annual ranking of the world’s his sta long sabbaticals in western uni- America and Britain. It has also estab- research universities, the Shanghai index, versities, and that about a third of them lished a research-and-development de- is produced by a Chinese university. 1 spend time in America every summer. His institute receives sponsorship for research from multinationals such as Sun Microsys- tems, Cisco, Volvo and Ford. Granted, the elite institutions produce many people who get brain-drained away, but they also keep many bright people from emigrating, and may even attract émigrés back if In- dia’s economy keeps booming. It is ac- cepted wisdom in India that the brightest students go to the IITs and the second-best to American universities. India’s other big advantage is a more re- cent development: a booming private sec- tor. This being India, the sector is plagued by scandal. In February, India’s Supreme Court ordered the closure of nearly 100 private universities because of quality concerns. Still, the best private colleges are doing admirable work, responding to un- met demand for technical and managerial education, often in highly creative ways, correcting India’s bias towards theoretical Peking pulls them in The Economist September 10th 2005 A survey of higher education 9
partments of the University of Peking, a which attract the brightest students: engi- Passport to success 4 third of the faculty members have Ameri- neering (38% of the total), natural sciences Doctoral degrees awarded in China, ’000 can doctorates. They are using joint ven- (22%) and medicine (15%). tures with foreign universities in much the But will China achieve its academic 20 same way as Chinese companies use joint ambitions? The trouble is that investment ventures with foreign companies. will not do the trick without broader cul- 15 The Chinese have no qualms about us- tural changes. Rui Yang, a professor at Aus- ing market mechanisms to achieve this tralia’s Monash University, points out that 10 technology transfer. Tuition charges now academic corruption is rife. The powerful make up 26% of the earnings of public uni- academies that distribute much of the re- versities, nearly twice the level in 1998; search funding are prey to both political 5 many professors are paid according to the favouritism and lobbying. Plagiarism is
nil number of students they attract; and commonplace. Many academics use a 0 China is creating a parallel system of priv- good part of their research funding for per- 1982 85 89 91 93 95 97 99 2001 03 ate universities alongside the public ones. sonal rather than academic ends. Source: OECD For example, the University of Peking has The country’s authoritarianism will more applicants than places, so it has also prove a limiting factor, a ecting not 2 What lies behind all this is a gigantic ex- created a parallel university that charges only the humanities but the sciences as ercise in technology transfer. The Chinese higher fees and accepts slightly less able well. For example, Chinese scientists sup- are trying to recreate the best western uni- students. Links between universities and pressed information on SARS because it versities at home in order to compete in industry are commonplace. The majority contradicted the o cial line. A world-class more sophisticated industries. They have of doctorates earned in China between university without freedom of thought is stocked up with foreign PhDs: in some de- 1992 and 2003 were in practical subjects, still a contradiction in terms. 7 Wandering scholars
For students, higher education is becoming a borderless world
ILL CLINTON tells a nice story about world’s best universities. Half the world’s to universities, spend money on things like B the rst time he set eyes on Oxford Uni- students live in developing countries food and lodging, and may even end up versity. He was dropped o at his college where the supply of university places can- staying on permanently. What better way at 11pm on a rainy October night, together not keep up with the demand. Two of the to shift your economy from its traditional with three other Rhodes scholars. One of biggest exporters of students in absolute reliance on primary production? them was Robert Reich, his future labour numbers are China (with 10% of all those For the past 50 years America has ef- secretary, who is exceedingly short. The studying abroad) and India (with 4%). fortlessly dominated the market for inter-1 four Americans walked into the college’s In recent years several other things main quadrangle, a splendid 17th-century have speeded this growth even further. edi ce, and marvelled about the wealth of One is competition for talent. A growing Academic honeypots 5 history facing them. But they were imme- number of rich countries are rejigging Foreign students in tertiary education by country diately brought down to earth by the head both their education and their immigra- of study, 2002, % of total porter, Douglas Millin, who complained tion policies in order to attract highly qual- 0 5 10 15 20 25 30 that he had been promised four Yanks, but i ed workers. A second is competition for had been sent only three and a half. the tuition fees that foreign students have United States In Mr Clinton’s student days, interna- to pay, which is particularly erce from Britain tional education was still the preserve of a countries that will not allow their univer- Germany small elite of potential superstars. Today it sities to charge realistic fees to home- Australia is undergoing the same process of massi- grown students. Oxford has recently dou- cation that has reshaped domestic bled the proportion of its overseas stu- France higher-education policy. The number of dents, to 15%; at the London School of Japan foreign students in the OECD (see chart 5) Economics, 75% of graduate students are Belgium has doubled over the past 20 years, to 1.5m. from abroad. A third factor is the EU’s pol- Italy What is driving this solid growth? The icy of sponsoring student mobility within two most obvious things are the magnetic the Union so as to create a European iden- Spain power of the world’s top universities and tity among the young. Switzerland the under-supply of university places in Several countries most notably Aus- Other OECD the developing world. The world’s bright- tralia and New Zealand are trying to turn Total: Non-OECD 1.9m est students and particularly its brightest education into an export industry. Foreign graduate students want to study at the students are triply valuable. They pay fees Source: OECD 10 A survey of higher education The Economist September 10th 2005
2 national students, who have brought both direct and indirect bene ts. Not only are they contributing some $13 billion a year to America’s GDP, they are also supplying brainpower for its research machine and energy for its entrepreneurial economy. But now America’s leadership is under challenge. The Institute of International Education reports that the number of for- eign students on American campuses de- clined by 2.4% in 2003-04, the rst time the number has gone down in 30 years. For- eign applications to American graduate schools fell by 28% last year, and actual en- rolment dropped by 6%. Thoroughly international Berkeley Coming after decades of steady growth, these gures sent shock waves the market is likely to continue to grow rap- abroad to take advantage of the hot labour through the academic system. Many idly as Asia produces its own mass middle markets in Shanghai or Mumbai. And a American universities initially blamed the class. For another, American universities growing number of expatriate business- tightening of visa rules after September are well placed to operate in the global men invest back home. 11th 2001 and lobbied furiously for reform. market for student talent. In the past, Increasingly, developing countries en- Visa policy clearly played a part, but in fact American universities have been at their courage foreign universities to come to America has been losing market share best when competing for faculty or do- them, rather than sending their students among international students since 1997. mestic students. Why should foreign stu- abroad. Singapore has established close re- The biggest reason for that is foreign com- dents be any di erent? lations with 15 partners, including such petition. In 2002-04 the number of foreign elite institutions as Stanford, Cornell and students increased by 21% in Britain, 23% in Brain circulation Duke Medical School. Dubai has estab- Germany and 28% in France. A growing The spectacle of so many bright people lished a knowledge village with 13 for- number of European countries are o ering from poor countries upping sticks for the eign universities, and Qatar an educa- American-style degree programmes rich world raises questions of social jus- tional city with four, largely for the taught in English. Germany has the added tice, in part because they contribute both bene t of Middle Easterners who want a attraction of dispensing university educa- money and brainpower to their host coun- western education but think they may no tion free to foreigners as well as to domes- try while they are studying and in part be- longer be welcome in America. tic students. Universities in the developing cause so many of them end up staying per- Some developing countries are even world, too, are expanding rapidly, and of- manently. Some people see the develop- establishing themselves as educational ten a booming domestic job market stands ment as a kind of neo-colonialism of the middlemen: importers as well as export- ready to absorb the resulting graduates. mind. But there is no guarantee that all ers of talent. China not only sends the Yet it would be a mistake to equate these bright people would have prospered most students abroad but is also one of the America’s loss of its quasi-monopoly in if they had stayed at home. The combined leading hosts in the Asian region. Between the supply of higher education to foreign- net worth of Indian IIT graduates in Amer- 1998 and 2002 the number of interna- ers with long-term decline. For one thing, ica is reportedly $30 billion. But would all tional students in the country doubled, those brilliant Indians have become so from 43,000 to 86,000. Malaysia sends lots rich if they had stayed in India? Better of its own students abroad in an e ort at Brain gain 6 brain drain than brain in the drain, was capacity-building , but is also actively re- Stock of highly skilled immigrants, m the much-quoted verdict of the late Rajiv cruiting students from China and Indone- Gandhi, an Indian prime minister. sia, and increasingly from Pakistan and 00.5 1.0 1.5 2.0 Perhaps what is going on is not so much other Islamic countries. United States 8.2 a brain drain as brain circulation . The The problem with equity arises not so Canada governments of many developing coun- much between the rich and the poor world tries encourage bright students to go but within the developing world. As a rule, Australia abroad, often using scholarships as in- only the developing world’s elites attend Britain ducements, as part of a general policy of foreign universities. The Ford Foundation Germany capacity-building so they can plug them- is devoting huge resources to putting this selves into the latest thinking in the West. injustice right: in 2000 it provided $280m France Few highly skilled migrants cut their over 12 years its biggest-ever grant for a Spain links with their home countries com- scholarship programme to send disad- pletely. Most keep in touch, sending remit- vantaged people from poor countries to Switzerland tances (and, if they are successful, venture leading universities abroad. Douglas Mil- Netherlands capital), circulating ideas and connections, lin is, alas, no longer with us. But if the Ford Sweden and even returning home as successful en- Foundation has its way, his successors will trepreneurs. A growing number of Indian have to deal with people from consider- Source: OECD and Chinese students go home after a spell ably farther a eld than Hope, Arkansas. 7 The Economist September 10th 2005 A survey of higher education 11
Higher Ed Inc
Universities have become much more businesslike, but they are still doing the same old things
HE University of Phoenix’s Hohokam rst was to concentrate power in the orga- mid-1980s to more than 2,000 today. Tcampus looks more like a corporate nisation. In traditional universities aca- Some of these institutions, such as the Mc- headquarters than a regular university. demics are semi-independent contractors Donald’s Hamburger University, do not There is none of the cheerful mess that you who devote as much time as possible to deserve the name, but others, such as associate with student life. The windows their own research. In Phoenix they are those set up by Microsoft and Schwab, are are made from black re ecting glass, the simply employees. It is the university, not more serious. A growing number of cor- corridors are neat and hushed, the grass the teachers, that owns the curriculum. porate universities are awarding degrees in has been recently cut, there is plenty of Todd Nelson, the company’s boss, claims conjunction with traditional universities. parking space for everybody, and security that this has allowed the university to be- For-pro t universities are only the most guards in golf carts make sure all the cars come a learning organisation : it is con- dramatic example of a more general trend: are on legitimate business. The university stantly improving its ability to teach by the changing balance of power between is conveniently close to a couple of motor- measuring performance and disseminat- the state and the market. For much of the ways, and ten minutes from the airport. ing successful techniques. The only re- 20th century the state steadily tightened its But the campus does not just look like a search it cares about is the sort that im- grip on universities. Now the market is be- corporate headquarters; it is one. The Uni- proves teaching. ginning to get its own back. versity of Phoenix is America’s largest for- The second innovation is to turn higher The old-fashioned public universities pro t university (and indeed America’s education into a business. The cost of a are becoming ever more promiscuous in largest university, full stop), with 280,000 year’s education at Phoenix, at $9,000, is their pursuit of income. In America, pub- students, 239 campuses and various o - not particularly high for a private univer- lic university is fast becoming a gure of shoots around the world, including some sity, but the business ethos is unusually speech. At the University of Virginia, the in China and India. The Hohokam campus pervasive. Mr Nelson cheerfully talks share of the operating budget coming from houses the corporate headquarters of the about the education industry , and the state declined from about 28% in 1985 Apollo Group, the company that owns the boasts that enrolment is currently growing to 8% in 2004. As one university president university, along with the group’s cor- at 25% a year. The Apollo Group spent a put it, his university has evolved from be- porate university. staggering $383m on marketing last year. ing a state institution to being state-sup- The University of Phoenix was the ported , then state-assisted , next state- brainchild of John Sperling, a Cambridge- Dollars and degrees located and now state-annoyed . educated economist turned entrepreneur. It is hard to imagine what von Humboldt, In other countries too, public universi- When he was teaching in San Jose State with his belief in research for its own sake, ties are becoming more entrepreneurial. University in the early 1970s, Mr Sperling would make of the University of Phoenix. Increasingly they are starting to charge noticed that adult students got scant atten- But for many people it is a vision of the fu- fees, usually in combination with student tion from universities designed to teach ture. Milton Friedman, a Nobel prize-win- loans. They are also transforming them- people aged 18-22. That, he felt, was not ning economist, regards the triumph of the selves into competitive commercial opera- only unfair but also unwise: in the new for-pro t sector as inevitable, because uni- tions when it comes to attracting fee-pay- economy, workers might have to keep go- versities are run by faculty, and the fac- ing foreign students or winning contracts ing back to university to update or im- ulty is interested in its own welfare. with business. At the same time, new non- prove their skills. For-pro t universities are nding a pro t private universities are springing up. The University of Phoenix is designed growing number of market niches, par- These have long been common in Amer- to cater for the needs of working adults, ticularly in America. Strayer University, ica, Japan and South Korea, but used to be who make up 95% of its students. The em- one of the University of Phoenix’s biggest rare elsewhere. In Portugal, private univer- phasis is on practical subjects, such as competitors, concentrates on telecom- sities and colleges have grown from al- business and technology, that will help munications and business administration. most nothing two decades ago to account them with their careers, and on tting in Concord Law School, owned by Kaplan, for two-thirds of all higher-education insti- with busy schedules. One of the univer- which in turn is owned by the Washington tutions and 40% of all students. All in all, sity’s golden rules is that there should be Post, boasts one of the largest law-school private funding has grown faster than pub- plenty of parking, and that students enrolments in the country. All of its teach- lic funding in seven of the eight OECD should be able to get from their cars to their ing is online. Cardean University, the countries for which data are available. classrooms in ve minutes. In the early brainchild of Michael Milken, o ers on- Another eye-catching change is the rise 1990s it became the rst university to o er line business education, including MBAs. of the internet as a way of delivering tu- degrees online, and the internet is now in- The Apollo Group’s corporate univer- ition. The internet has all sorts of advan- tegral to all its teaching. sity marks another big educational tages, from lowering costs to opening up But in designing a university for work- change. The number of corporate universi- markets. MIT has struck up an innovative ing adults, Mr Sperling also introduced ties, which provide education for their par- alliance with two Singaporean universi- two other far-reaching innovations. The ent companies, has grown from 400 in the ties that allows Singaporean students to1 12 A survey of higher education The Economist September 10th 2005
Temple University abandoned Virtual Temple without o ering a single course. NYU Online has also pulled the plug. New technologies generally prompt heady predictions that they will revolu- tionise higher education. Thomas Edison forecast that motion pictures would re- place campus lectures; others have made even grander claims for radio or television. David Noble, a historian, compares the in- ternet craze with the fashion for corre- spondence schools that bubbled up in the early 20th century. By 1919, more than 70 The way we learn now? American universities had launched cor- respondence courses, competing against 2 take part virtually in MIT lectures. The tion, but their position in the academic hi- some 300 private correspondence schools. Virtual University of Monterrey, Mexico, erarchy remains humble. But the bubble eventually burst, partly be- uses a combination of teleconferencing The internet is producing equally mod- cause of poor teaching and high drop-out and the internet to reach more than 70,000 est results. However good it is for transmit- rates but mainly because the human di- students all over Latin America. ting information or reinforcing learning, e- mension was missing. But for all the new technology and the learning is no substitute for bricks-and- None of this is to say that the idea of the marketisation of higher education, it is mortar universities. The e-learning bubble university is carved in gothic stone. It is in- striking how little has changed. Traditional of the late 1990s burst with shocking deed changing, but by evolution rather universities are raising money not so that speed. Fathom, a joint venture established than revolution. And the most important they can do radically new things but so by Columbia and 13 other universities, li- recent development in the world of higher that they can continue to do the same old braries and museums, closed down after education has been the creation of a super- things. For-pro t universities are undoubt- raising revenues of only $700,000 in two league of global universities that are now edly doing an excellent job in lling market and a half years. Caliber, the Wharton engaged in a battle for intellectual talent niches, particularly for technical educa- School’s e-partner, led for bankruptcy. and academic prestige. 7 The best is yet to come
A more market-oriented system of higher education can do much better than the state-dominated model
ILLIAM JAMES had good reason to tion: from a national to a global university. countries. But for a long time many aca- Wbe nervous when he turned up, back This is not to say that Harvard is losing demics felt that their principal loyalty was in 1869, to be examined for his Harvard its American roots entirely. America is, to their university or college rather than to medical degree: he had spent most of the after all, the world’s greatest marketplace their discipline. Universities were mainly previous three years abroad. But as luck for higher education, and Harvard’s very schools for national bureaucrats and semi- would have it, his examiner turned out to Americanness is part of its attraction. All naries for nationalist ideas. be Oliver Wendell Holmes, an old family the same, the university is increasingly op- Today there are fewer restraints on uni- friend. Dr Holmes asked the candidate a erating in a global labour market. Faculty versities’ natural inclination towards inter- single question and, when young William searches are always worldwide; in some nationalism. The top universities are citi- answered it correctly, drew the event to a departments 40% of PhD students come zens of an international academic close: That’s enough! If you know that, from abroad; and the graduate and profes- marketplace with one global academic you must know everything. Now tell me, sional schools are truly multinational. currency, one global labour force and, how is your dear old father? Harvard is not alone. The great univer- increasingly, one global language, English. For at least its rst 200 years, Harvard sities of the 19th century were shaped by They are also increasingly citizens of a was a nishing school for Boston’s or at nationalism; the great universities of today global economy, sending their best gradu- most New England’s elite. Eliots and are being shaped by globalisation. The ates to work for multinational companies. Lowells held leadership positions continu- world’s higher-education system is The creation of global universities was ously for more than two centuries, and increasingly dominated by a superleague spearheaded by the Americans; now Cabots and Lodges kept appearing on the of world-class universities competing everybody else is trying to get in on the act. school rolls in various permutations. But with each other for talent and prestige. The current vice-chancellor of Oxford, starting in the late 19th century, Harvard There is nothing new about globalism John Hood, hails from New Zealand, and gradually transformed itself into a na- in higher education, of course. Medieval his counterpart at Cambridge, Alison Rich- tional university. Now the university is un- scholars communicated in Latin and often ard, spent 30 years teaching at Yale. dergoing another dramatic transforma- studied at several universities in di erent Global universities do not have to have1 The Economist September 10th 2005 A survey of higher education 13
2 a physical presence abroad to be worthy of ducing Ivy Leagues . The British are intro- still the children of the century-old mar- the name. Some of the world’s best univer- ducing fees in part because they want their riage between the German research uni- sities have been reluctant to set up cam- best universities to be able to compete versity and the British residential univer- puses abroad, and some of the most en- with the best American ones. The German sity. Most of them still try to combine thusiastic o shorers, such as Webster Social Democratic Party traditionally a teaching with research. University, which runs seven overseas bastion of egalitarianism has produced a Over the past century, there have been campuses from its headquarters in Mis- plan to create German equivalents of Har- various attempts to unbundle the two. The souri, are hardly global in the sense of hav- vard, Princeton and Stanford. And the Chi- Chinese and Russians created pure re- ing world-class faculty and the pick of the nese are hard at work trying to build search institutes. The French trained their world’s graduate students. However, a world-class universities. Today excel- elites in grandes écoles professional growing number of the world’s top univer- lence is taking over from expansion as schools that did not emphasise research. sities are getting more enthusiastic about the mantra of higher education. But for the most part these alternatives o shoring. But this academic revolution has only have failed. just begun, particularly in continental Eu- A striking number of research universi- It pays to be world-class rope. How can you create world-class uni- ties have also preserved the idea of the ac- The most obvious reason for the rise of the versities if your academics are civil ser- ademic village. A handful of hermits global university is science’s appetite for vants trapped in a national labour market? apart, most scholars prefer to live in a com- money and manpower. MIT’s Lincoln Lab- Only 2% of French academics are foreign- munity of scholars in which academic and oratory, for example, employs nearly born. The comparable gure in Switzer- social life are melded together, preferably 2,400 people and spends $450m a year on land, which is much more successful at in beautiful surroundings. James Watson’s research. Access to global labour markets producing top universities, is 25%. Only 7% account of a walk in Cambridge after he is needed to put together rst-rate teams of of newly hired professors in major Ameri- and Francis Crick discovered the double researchers. But policymakers have also can universities are alumni of the institu- helix of DNA makes the point perfectly: begun to realise that world-class universi- tions where they teach. In France the gure I slowly walked toward the Clare Bridge, ties produce a disproportionately large is 50% and in Spain 95%. And how can you staring up at the gothic pinnacles of the share of cutting-edge ideas and research. have world-class universities without King’s College Chapel that stood out sharply Look at the University of Chicago’s impact proper resources? Hardly any continental against the spring sky. I brie y stopped and on economics, and hence on economic European universities employ profes- looked over the perfect Georgian features of policy. Of the 55 economists who have sional fund-raisers. Most do not even keep the recently cleaned Gibbs Building, think- won the Nobel prize since 1969, when eco- in touch with their alumni. ing that much of our success was due to the nomics was added to the roster, nine were The new global universities are shaking long, uneventful periods when we walked teaching at the University of Chicago up everything from academic funding to among the colleges or unobtrusively read the new books that came into He er’s Book- when they were awarded their prizes, and immigration laws. But they also manage to store. another 14 either trained at Chicago or had mix a large measure of conservatism with previously taught there. their radicalism. For the most part, they are European universities these days are World-class universities can also pro- given to nostalgia. Professors reminisce duce outsize economic bene ts. The best- about an age when public money was known example of this is Stanford, which plentiful, governments left them alone helped to incubate Google, Yahoo!, Cisco, and academics were part of the ruling Sun Microsystems and many other world- class. Students remember when the gov- changing rms. But there are plenty of oth- ernment picked up the tab for tuition and ers. The University of Texas at Austin has living costs. And almost everybody com- helped to create a high-technology cluster plains that quality has declined. that employs around 100,000 people in In reality, though, that golden age was some 1,700 companies. In 2000, the eight never quite as wonderful as it is now made research universities in Boston provided a out to be. The public universities were $7.4 billion boost to the region’s economy, never as democratic or egalitarian as they generated 264 new patents and granted seemed. The justi cation of o ering free 280 licences to private enterprises. higher education is that nobody should be Top universities are a valuable asset in denied it on cost grounds. But in practice the global war for talent too. America’s the children of the privileged have long great research universities enable it to re- been much more likely to get into univer- cruit more foreign PhD students than the sity than the children of the poor. The re- rest of the OECD put together. And a strik- sult was perverse: in the name of equality, ing number of these people stay put: in all taxpayers were forced to subsidise the 1998-2001, about two-thirds of foreigners privileged. who earned American doctorates in sci- These public universities often spiced ence and engineering said they had rm de-facto elitism with anti-business snob- plans to stay, up from 57% in 1994-97. bery. Many universities were not just re- The bene ts of having global universi- luctant to be knowledge factories ; they ties are now so clear that governments were antagonistic to the capitalist econ- around the world are obsessed with pro- The way they used to learn omy. Oxford and Cambridge long resisted1 14 A survey of higher education The Economist September 10th 2005
2 the study of practical subjects such as busi- such as selling degrees? These are serious ness or engineering; instead, they special- problems. But they pose far less of a threat ised in turning the sons of businessmen to universities than the slow starvation into educated gentlemen. This anti-busi- that accompanies public funding. ness bias reached its apogee in the 1960s, when many of the current generation of Empires of the mind dons got their jobs. There are two other big reasons to be op- In the long run, the universities’ deal timistic about universities. The rst is the with the state proved to be a bargain with way they are increasingly regarded as the the devil. In the days when universities engines of the knowledge economy. This were restricted to elites, the bargain means that all sorts of people from gov- worked well enough for the few; hence the ernments to companies to students have nostalgia. But the moment that academia a big incentive to keep investing in them. embarked on massi cation, this gentle- The second is that universities particu- manly bargain broke down. Universities larly global research universities have were forced to do more with less because achieved such striking successes in ad- the government faced lots of competing vancing knowledge. To be sure, their re- demands for funds. And academics were cent record in the humanities has been de- Wanted: 21st-century Humboldts increasingly treated like other public ser- cidedly mixed; but the sciences have never vants and held accountable for their use been healthier. For the people who are sweeping through higher education, most of public money. mapping the genome or looking for a cure notably in the United States. It is giving stu- The more market-oriented model of for cancer, arguably the golden age of the dents more control over where they get higher education that has been pioneered university is now. educated. It is giving millions of young- in the United States, and is gradually Noel Annan, the very embodiment of sters a chance to spend their formative spreading to much of the rest of the world, the British academic establishment, once years abroad. It is throwing up colleges has four big advantages over the public said that universities exist to cultivate the that can teach managerial and technical model. First, it is better at combining equ- intellect. Everything else is secondary. skills. It is reconnecting academics with ity with excellence. America sends a The most precious gift that universities can the wider knowledge economy. But the higher proportion of poor school-leavers o er is to live and work among books and most important justi cation of all is that it to college than, say, Germany, which justi- laboratories, he argued; and the most im- is freeing resources for intellectual activity. es its free universities by claiming they of- portant lesson they can teach is how to use It is lling libraries with books. It is stock- fer universal access. Second, it is better at the intellect: ing laboratories with equipment. And it is producing a diverse system that stretches giving more researchers than ever before a from the Ivy League to community col- A university is dead if the dons cannot in chance to produce order out of chaos. leges. Governments can engineer di eren- some way communicate to the students the Von Humboldt’s university with its struggle and the disappointments as well tiation in higher education, but state-spon- as the triumphs of that struggle to produce emphasis on research was one of the trans- sored di erentiation tends to degenerate out of the chaos of human experience some formative institutions of the 19th century. into academic apartheid. Third, the market grain of order won by the intellect. The emerging global university is set to be model is much more sustainable than the one of the transformative institutions of public-sector model. Putting all your eggs Three cheers to that. There are plenty of the current era. All it needs is to be allowed in one basket is never very sensible; it is justi cations for the revolution that is to ourish. 7 particularly silly if you belong to an elitist institution that comes low in the pecking Future surveys order for public resources. Fourth, serving O er to readers Reprints of this survey are available at a price of many masters gives universities much £2.50 plus postage and packing. Countries and regions more control over their own destiny than A minimum order of ve copies is required. Japan October 8th being beholden to a single patron. Send orders to: Canada November 19th That is not to say that the transition to a The Economist Shop Italy November 26th more market-oriented system will be easy. 15 Regent Street, London SW1Y 4LR Saudi Arabia December 17th Countries will have to solve the problem Tel +44 (0)20 7839 1937 Business, nance and economics and ideas of social justice by allowing students to Fax +44 (0)20 7839 1921 The world economy September 24th borrow against their future incomes. They e-mail: [email protected] IT October 22nd will also have to cope with a host of new Micro nance November 5th problems that come along with newly lib- Corporate o er The evolution of man December 24th erated markets. 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