International Institutefor Educational Planning

N.V. Varghese

Globalization, economic

crisis and national

strategies for higher

education development

Research papers IIEP

Globalization, economic crisis and national strategies for higher education development

Globalization, economic crisis and national strategies for higher education development

N.V. Varghese

International Institutefor Educational Planning

The views and opinions expressed in this book are those of the authors and do not necessarily represent the views of UNESCO or IIEP. The designations employed and the presentation of material throughout this review do not imply the expression of any opinion whatsoever on the part of UNESCO or IIEP concerning the legal status of any country, territory, city or area or its authorities, or concerning its frontiers or boundaries.

The publication costs of this study have been covered through a grant-in-aid offered by UNESCO and by voluntary contributions made by several Member States of UNESCO, the list of which will be found at the end of the volume.

Published by: International Institute for Educational Planning7-9 rue Eugène Delacroix, 75116 Paris, Franceinfo@iiep.unesco.orgwww.iiep.unesco.org

Cover design: IIEPTypesetting: Linéale ProductionPrinted in IIEP’s printshopiiep/web/doc/2009/08© UNESCO 2009

5

Abstract

Higher education has undergone tremendous expansion in the recent past. The growing employment opportunities and the increased skills needed to compete in the global labour market are important reasons for the expansion of the sector. This paper argues that higher education in the context of globalization has become a market-determined process, replacing the near monopoly enjoyed by the state. The growth of private and cross-border higher education refl ects this change. The paper discusses cross-border education through three different forms – through the mobility of institutions, of students, and of teachers. Cross-border student mobility is encouraged since it is a good source of getting future highly skilled workers in certain specialized areas. Institutional mobility is very often from the developed to less developed countries. Student mobility, on the other hand, is from the less developed to developed countries. The United States of America (USA) is the preferred destination for cross-border education and nearly three fourths of all cross-border students are hosted by 10 member countries of the Organisation for Economic Co-operation and Development (OECD).

The current economic crisis, although it started from the fi nancial systems of the developed countries, is global in its reach as it spreads to both middle- and low-income countries. The initial indications are that the crisis will result in heavy losses in employment and in household income levels. The crisis may lead to reduced funding for education from all sources – government, private sector and households. Many universities with investments in foreign banks have already lost their investments. Student support systems, scholarships and student loans will be severely affected. Some of the largest providers of student loans have lost heavily during the crisis, and some of them have fi led for bankruptcy protection in 2008. The fi nancial crisis may lead to a freeze on recruitment and a cut in programmes. The crisis may also lead to reduced aid fl ows.

This paper points out that leaving the education sector to markets may not be a good option. It argues for active state intervention in higher education. There is a need to redefi ne the role of the state in the changed circumstances. The ideal situation would have been full state funding but it has to be recognized that the state has an important role to play, even when it does not have adequate resources to fi nance the higher education sector. The state needs to take responsibility for developing rules for establishing private and cross-border institutions, for putting in place mechanisms to ensure quality and regulations to ensure equity. Given the limited resources at its disposal, the state may better target its limited resources to disadvantaged groups to improve overall equity in higher education.

6

Contents

Abstract 5

Contents 6

List of abbreviations 7

1. Introduction 8

2. Globalization and demand for skilled labour 11

3. Globalization and market orientation in higher education 14

4. Globalization of higher education and cross-border mobility 164.1 Cross-border institutional mobility 164.2 Cross-border teacher mobility 174.3 Cross-border student mobility 18

5. The economic crisis and its implications for higher education and employment 22

6. National strategies for the development of higher education 25

7. Concluding observations 28

References 30

7

List of abbreviations

AICTE All India Council for Technical Education

DFID Department for International Development

EFA Education for All

FDI foreign direct investment

GATS General Agreement on Trade in Services

GDP gross domestic product

GER gross enrolment ratio

IBE International Bureau of Education

IBM GBS IBM Global Business Services

ICT information and communication technologies

IIEP International Institute for Educational Planning

IIM Indian Institute of Management

IIT Indian Institute of Technology

ILO International Labour Offi ce

IMF International Monetary Fund

IT Information technology

JSE Johannesburg Stock Exchange

MNC multinational corporation

NUEPA National University of Educational Planning and Administration, New Delhi

OECD Organisation for Economic Co-operation and Development

R&D research and development

RIHED Regional Centre for Higher Education and Development

SNU Seoul National University

TERI The Education Resources Institute

TOI Times of India

UGC University Grants Commission

UIS UNESCO Institute for Statistics

UNESCO United Nations Educational, Scientifi c and Cultural Organization

UK United Kingdom of Great Britain and Northern Ireland

USA United States of America

USDC United States Department of Commerce

8

1 Introduction

The education system has been expanding globally. More people are investing more of their time and money in education now than in the past. Although all levels of education have experienced expansion, the rate of growth has, perhaps, been greatest at the higher education level. Between 1991 and 2005, the number of students enrolled in institutions of higher education worldwide more than doubled from 68 to 137.9 million students (UNESCO Institute for Statistics – UIS, 2007). Gross enrolment ratio (GER) increased from 13.8 to 24 per cent in the same period. The GER varies between 5 per cent in the African region to 70 per cent in North America and Western Europe. While the target of the member countries of the Organisation for Economic Co-operation and Development (OECD) is to achieve the goal of universalizing tertiary education (OECD, 1998), many countries, especially in sub-Saharan Africa, still remain at a higher education enrolment level of less than 5 per cent and are concentrating their efforts in the struggle to universalize primary education.

While all regions are benefi ciaries of the expansion of higher education, expansion has been uneven as shown in Table 1.1. Between 1990 and 2005, GER almost doubled in the Arab region, increasing from 11 to 21 per cent, and in South and West Asia from 6 to 11 per cent; in East Asia and the Pacifi c, GER tripled from 7 to 24 per cent. In Latin America, the increase from 17 to 29 per cent was moderate. However, expansion of higher education in Africa was slow – an increase from only 3 to 5 per cent. Since higher education grew more quickly in other regions, inter-regional disparities increased.

Table 1.1 Higher education enrolment in 2005

Regions Enrolment in millions

Enrolment share GER 1990 GER 1999 GER 2005

Arab States 6.8 4.9 11.0 19.0 21.0

Central and Eastern Europe 19.4 14.1 --- 39.0 57.0

Central Asia 2.1 1.5 --- 19.0 27.0

East Asia and the Pacifi c 41.6 30.2 5.9 13.0 24.0

Latin America and Caribbean 15.3 11.1 17.0 21.0 29.0

North America and Western Europe 33.4 24.2 35.6 61.0 70.0

South and West Asia 15.8 11.5 6.0 --- 11.0

Sub-Saharan Africa 3.5 2.5 3.0 4.0 5.0

Total 137.9 100.0 13.8 18.0 24.0

--- No data available.Source: UIS (2007) and UNESCO (1998).

Introduction

9

Expansion of the system is due to several factors. First, there is the pressure resulting from expansion at the lower levels of education. While part of this expansion is in response to the voluntary demand for education, another part of it is in response to public action. The promulgation of laws governing compulsory primary education has increased national commitment and international support to achieve the Education for All (EFA) goals. These initiatives have generated demand for primary education, even from the most disadvantaged groups and from those living in remote areas. As a result of the expansion of the lower levels of the education system, demand for education at the secondary and post-secondary levels has in turn increased. The move, in many countries, towards the universalization of secondary education has increased the number of candidates eligible to enrol in higher education, thus putting additional social pressure to expand the higher education sector.

Second, the rapid expansion of higher education in the recent past is also a refl ection of increasing employment opportunities for university graduates. The public sector used to be the largest employer of university graduates in developing countries. Employment in the public sector has declined and many countries, in the context of globalization, have promoted the private sector of their economies. The slowdown in employment generation in the public sector has, very often, been offset by employment creation in the private sector. Furthermore, recognizing the changing skill requirements in the context of globalization, many countries not only universalized school education but also ‘massifi ed’ their higher education systems. Now it is globally recognized that an expanded higher education sector has become a necessary condition for a country’s growth in the present environment; it is important in promoting faster technological catch-up and in improving a country’s ability to maximize economic output (World Bank, 2002). As noted earlier, the OECD countries are moving towards the universalization of tertiary education (OECD, 1998) while countries in Africa are taking steps to expand higher education to ‘accelerate catch-up’ (World Bank, 2009).

Third, recent trends in expansion also indicate the fast growth of private and cross-border education. The number of students pursuing studies in domestic and private institutions has increased and, in cross-border institutions, it has almost doubled to 2.7 million in the last decade. Although better job opportunities and higher salary expectations can be important reasons, the growth also refl ects changes in the provision of higher education facilities.

This paper addresses issues related to the globalization of higher education, focussing on cross-border education – the cross-border mobility of students, of teachers and of institutions. The expansion of cross-border education refl ects the increasing demand for domestic degrees in the employment market in the developed world, and for foreign degrees for migrant workers in the employment market in the developing world. The cross-border education market seems to have the propensity to attract good brains from the developing world to meet the requirements of the global labour market, both domestic and foreign. Private individuals are willing to pay a higher price for cross-border education since the returns from their investment are high. Private agencies are also willing to invest in cross-border education since such an investment is profi table. This paper argues that higher education in the context of globalization has become a market-determined process, replacing the near monopoly position previously enjoyed by the state. Therefore, there is a need to review and revise public policies for promoting higher education. The state needs to redefi ne its role in facilitating expansion with equity and in ensuring quality. The current fi nancial crisis has underlined the need for public intervention to regulate market processes. National strategies for the development of higher education need to focus on developing regulatory measures to promote equity and quality as the system expands. These regulations are equally or even more needed in the cross-border segment of higher education.

10

Introduction

The paper is organized as follows: Section 2 discusses the increasing demand for higher skills in the global labour market. Section 3 analyses the way in which market principles have permeated the process of globalization of higher education. Section 4 deals with the cross-border mobility of institutions, students and teachers in higher education. Section 5 discusses the implications of the current economic crisis for the globalization and the development of higher education. Section 6 deals with national strategies to develop higher education, and the fi nal section draws some conclusions from the analysis carried out in the paper.

11

2 Globalization and demand for skilled labour

The knowledge economy is at the centre of development in the current context. Knowledge economies have grown faster and many of them have sustained a momentum of growth over the past decades. Employment opportunities, too, have expanded globally on two fronts. First, there has been an increase in employment in the developed countries where production is more knowledge-based. Skill requirements are high and have attracted highly skilled workers from other countries. In fact, the migration of highly skilled workers has been encouraged to meet the skill requirements of the expanding knowledge economies of the developed countries, led by the USA. Second, there has been an increase in domestic employment opportunities in developing countries due to the increase in foreign direct investment (FDI) and the growth of private enterprises, including fi rms focussing on outsourcing.

Let us examine the effect of the increase in employment opportunities in the developed world. The skill requirements in the knowledge economy are not only different from that of the traditional manufacturing sector, but also the level of skills required and the qualifi cations demanded for job entry are also high and continuing to rise. Studies show that, in countries such as Canada, nearly 70 per cent of all new jobs will require a post-secondary level of education (International Labour Offi ce – ILO, 2004).

Many of the knowledge economies have not been in a position to produce the skills required. Even countries with the largest network of higher education institutions, such as China, India, and the USA, could not produce highly skilled workers in suffi cient quantity to meet their domestic demand and the global market demand, especially in the knowledge-intensive segments of the economy. This has resulted in competition among the developed countries to attract the best brains from other countries, notably from developing countries. This in effect led to a ‘battle for brains’ (Chanda, 2000) or a ‘global hunt’ for talent (Kapur and McHale, 2005) to maintain the technological edge and the economic competitiveness of the host countries.

Many developed countries changed their visa rules to accommodate skilled and information and communication technology (ICT) workers from other countries. For example, the introduction of the H-1B visa in the USA has helped attract skilled workers from other countries, and helped the infl ow of highly educated Asians. Nearly one million highly skilled workers entered the USA under the H-1B visa scheme between 2000 and 2003. The European Union is introducing the ‘Blue Card’ visa to attract skilled workers from developing countries. It is also noted that the average qualifi cation level of the migrant population is higher than that of the indigenous population. For example, while 9 per cent of all Americans born in the USA possess a university degree (Master’s level), 38 per cent of Indians born in the USA possess the same. This shows how the visa rules and immigration policies are biased in favour of the highly skilled (Kapur and McHale, 2005). Countries such as Australia, New Zealand and the United Kingdom (UK) have introduced point-based emigration policies which give preferential treatment to candidates with higher level qualifi cations.

The second aspect, namely domestic employment opportunities in developing countries, has also increased in the context of globalization. Liberalization policies, introduced during the structural adjustment period, have helped attract foreign direct investment (FDI) and multinational corporations (MNC) to developing countries. Outsourcing became an attractive strategy for large

12

Globalization, economic crisis and national strategies for higher education development

fi rms in developed countries and it became an avenue for lucrative jobs in some developing countries. One of the reasons for the expansion of FDI and outsourcing activities is the intellectual environment created by the network of universities and the highly skilled labour pool in benefi ciary countries. A very good example of this phenomenon is the emergence and rapid expansion of outsourcing fi rms in countries such as China or India.

As can be seen from Table 2.1, FDI approached the trillion US dollar (US$) mark and generated a total of 2.87 million jobs in 2007. The largest benefi ciaries of FDI have been in the Asia-Pacifi c region, followed by North America and Europe. The Middle East remained the region with the least FDI infl ow which may partly be due to the availability of domestic resources in the region.

Table 2.1 Foreign direct investment and jobs in 2007

Region Investment(in billion* US$)

New jobs created(in millions)

Asia and the Pacifi c 395.2 1.20

Europe and North America 345.1 1.16

Latin America 58.3 0.27

Middle-East 55.9 0.09

Africa 92.0 0.15

Total 946.8 2.87

* Equivalent to one thousand million.Source: The Earth Times, 4 March 2008.

The USA was the largest recipient of FDI; in 2007, the country received US$237 billion in FDI, accounting for 13.6 per cent of gross domestic product (GDP), and employing fi ve million workers in the USA, accounting for 4.5 per cent of private sector employment (Table 2.2). Nearly 80 per cent of the FDI to the USA came from Europe and Japan in 2006 (United States Department of Commerce – USDC, 2008). Among the countries, the UK had the highest FDI in the USA. “China and India cemented their key roles as sources of investment (FDI) in 2007, with the two countries now accounting for almost 6 per cent of global jobs created from foreign investment, compared to 4 per cent in 2006” (IBM GBS, 2008).

Table 2.2 FDI and employment generation in selected countries in 2007

Countries Investment in billion US$ Jobs in millions

USA 237.0 5.00

China 90.4 0.37

India 52.5 0.25

Russian Federation 45.1 0.16

Vietnam 40.2 0.19

Source: For USA, USDC, 2008. Other countries: The Earth Times, 4 March 2008.

The development of the software sector is a clear indication of the benefi ts of globalization in India. The share of software in India’s exports increased from 4.9 per cent in 1997 to 20.4 per cent in 2002-2003 and software accounted for US$28.5 billion of export earnings in 2004-2005. The sector is expected to create another four million jobs in the future. Countries such as China, India, the Russian Federation and Vietnam are the largest benefi ciaries of FDI infl ows and subsequent

Globalization and demand for skilled labour

13

employment generation. Although the jobs generated by FDI or by outsourcing may not form a large share of total national employment, these jobs are associated with high-level skills, high salaries, and attracting university graduates.

With liberalization policies, multinational corporations (MNCs) increased their presence in developing countries through the expansion of existing fi rms and the entry of new fi rms. These fi rms look for highly skilled workers though, initially, the MNCs were generally engaged in activities which required less skilled workers than their parent companies. This trend is changing and these companies, located in many countries such as China, India, the Republic of Korea, Malaysia, Singapore, and Taiwan, have entered into activities that require highly skilled personnel. They welcome talents from national universities, graduates with foreign degrees or degrees awarded by foreign universities in the countries hosting these companies.

The domestic private sector – outsourcing and others – also grew appreciably in the last two decades or so. Many of them adopted new technologies, aligned with knowledge-based production and the globalization process. Public policy, too, was conducive in promoting these initiatives. These technology-intensive fi rms have generated employment which also demanded high-level skills and higher education qualifi cations. The skill requirements in many of the knowledge-intensive domestic enterprises have been similar to the MNCs operating in the country or similar fi rms operating abroad. This was also a process of economic integration of the less developed countries to global transactions and networks.

One of the important contributory factors in attracting FDI is an easily available pool of highly skilled workers. The attraction of FDI to the USA is because “the American workforce ranks as one of the best educated, most productive and most innovative in the world”, and the “USA higher education system is unparalleled” (USDC, 2008: 4). This is also the case with regard to the fl ow of FDI to other countries. For example, the credit for attracting FDI and for the fast expansion of the software sector in India goes to ‘technical young people and English-speaking scientifi c professionals’ (Business and Economy, Indian Business Industries, 2008).

Over a period of time, many developing economies have been increasingly integrated into the global production process. There has been a felt need to develop a workforce which meets the requirements of global demand. This has been essential to meet international standards and quality in production. Many countries, especially the benefi ciaries of the globalization process, started re-orienting their education system, particularly higher education, to meet not only national requirements, but also those of the global labour market. One indicator of this process is a shift in emphasis in university study programmes, from traditional subject areas to engineering, management and IT-related areas. Another indicator is the introduction of English language courses. Countries have realized the importance of the English language in the globalization context and recognize the premium enjoyed by the English language in cross-national transactions. As one of the recent OECD reports notes, “English is the premier language of business and professions and the only global language of science, research and academic publication” (OECD, 2008: 20). One may notice as an indicator of reorienting higher education systems that countries such as China, India, Indonesia, the Republic of Korea, Malaysia and many African countries have moved, on the one hand, towards expanding higher education and, on the other, towards diversifying the providers and programmes of study and towards promoting or introducing English language teaching; this is also the case in Francophone African countries. All of these factors have contributed to reorienting higher education to meet the skill requirements of the global market, whether located in the same country or abroad, and to the globalization of education.

14

3 Globalization and market orientation in higher education

Globalization has changed the purpose and orientation of education in many countries. While universities were associated with and seen as an integral part of the national development efforts in the past, they are increasingly becoming an integral part of the production of skills for the global market. Higher education is becoming an attractive area of investment and the trade in higher education brings more profi t than that in other sectors. As a result, competition has increased between providers of education. In the past, competition was, in many countries, between public universities, but today the competition is between public and private universities on the one hand, and national and trans-national institutions on the other hand. Knowledge and the production of knowledge are becoming a contested terrain left open to the market process.

Knowledge is universal, although the institutions producing knowledge, namely universities, are very often national. Universities maintain a dual characteristic – international in content and discourse, and national in ownership and operation. Internationalization implies the imparting of knowledge, skills and values that have universal application. It can imply either cross-border activities or changes in the orientation of courses offered in domestic universities, referred to as ‘internationalization at home’ or ‘campus-based internationalization’ (Knight, 2008). Globalization, on the other hand, assumes a blurring of borders and national systems of education (Teichler, 2004).

Economic and educational activities have traditionally been dominated by the public sector. The expansion of the private sector in economic activities led to the criticism that public-funded education did not address the needs of industry and the economy, the argument being that the corporate world knows what the market needs are and, therefore, can be a reliable provider of education. This provided an opportunity for the corporate sector to operate in education and apply market principles to the management of education institutions.

The provision and promotion of education activities under the market framework of operation are based on the demand for and supply of educational services. While the demand for education refl ects the paying capacity of households, the supply of educational services refl ects the capacity and willingness of public or private agencies to invest in education. Globalization actively promotes market ideology as a unifying force, linking economic activities at the national and cross-national levels. With globalization, market operations are extended to social sectors and across borders. Consequently, education in the context of globalization becomes yet another profi table venture, cultural activities become commercial products, the public is defi ned as a customer, the university becomes a provider, and the learner becomes a customer or purchaser of services (Yang, 2005).

Within the education sector, higher education becomes an eligible candidate for incorporation into the market framework. Given the role of research and development (R&D), activities in the knowledge economy investing in knowledge production (research) became rewarding economic activities. Studies (OECD, 2008; Hanson, 2007) show a close association between ‘investment in knowledge’ and innovations which improve domestic innovations and economic competitiveness. Research and universities became valuable entities to the corporate sector and important agents of the globalization of higher education. The research universities of the USA and their doctoral

Globalization and market orientation

15

programmes have become a powerful engine for the globalization of higher education (OECD, 2008).

The academic prestige and standing of a university are closely linked to its research capacity and its credibility. Many students seeking a foreign degree, especially a doctoral degree, would take into account these factors when choosing the country and institution where they wish to study. This is also a contributory factor in attracting a large number of cross-border students to countries such as the USA, which has six of the top ten universities in the world (USDC, 2008).

16

4 Globalization of higher education and cross-border mobility

The high demand for highly skilled persons in the developed world has promoted the migration of skilled workers from the developing world. When it was found that study programmes were a better source for future recruitment of skilled personnel, many countries opted to promote cross-border education. The fast growth of cross-border student mobility is an indication of this trend. Studies show that a majority of those who enter the USA as students would like to stay on after completing their studies, and this is an attractive source of skilled personnel. Information on the return plans of doctoral graduates in USA universities indicates that nearly 90 per cent of Chinese and Indian doctorate students would like to stay in the USA after their studies. The percentage is higher among science and technology graduates, given the better employment prospects (Kapur and McHale, 2005). This shows that cross-border education is fertile ground for recruiting future highly skilled workers in many developed countries (Tremblay, 2002).

Higher education, in the context of globalization, has become a market-driven activity, and education has become a tradable commodity and part of the trade negotiations under the General Agreement on Trade in Services (GATS) (Knight, 2002). GATS covers all internationally traded services and overall covers 12 different service sectors including education. Within the education sector, GATS covers fi ve categories of education services: primary, secondary, higher, adult, and others.

Cross-border trade in education under the GATS framework takes place in four modes. They are:

1. Cross-border supply of the service where consumers remain in their country. E-learning-based distance education programmes are good examples of this type of cross-border education.

2. Consumption abroad where the consumers (students) cross the border. This includes full-time study for a degree, part of the study at home and the remaining part in a foreign country, and exchange and joint degree programmes.

3. The commercial presence of the provider in another country in the form of branch campuses or twinning and franchising arrangements between universities from the developed and developing world, but also between universities of the developed world as a whole.

4. The presence of persons in another country to provide the service. The most visible form of this mode is the mobility of professors from one country to another as an employee of a foreign university, as part of an academic partnership, or to teach in a branch campus.

This paper will discuss cross-border education manifested through the mobility of institutions, teachers and students (modes 2, 3 and 4) since reliable information on mode 1 is not easily available.

4.1 Cross-border institutional mobility Institutional mobility takes place in different forms – through branch campuses, franchising or twinning arrangements. A branch campus denotes the delivery of the programme entirely by the foreign institution; franchising denotes the in-country delivery by an authorized domestic institution; and twinning denotes joint ownership and delivery by institutions in the home country and the host country. Although franchising and twinning are less visible than branch campuses, they constitute, quantitatively, larger segments of institutional mobility (Martin, 2007).

Globalization and cross-border mobility

17

Universities from Australia, the UK and the USA are more commonly found in other countries. Malaysia has, for example, branch campuses from Nottingham University of the UK, and Monash University and Curtin University of Australia (Sirat, 2006). As of 2004, China had more than 700 approved educational institutions having joint programmes with foreign institutions. Many of these are from Australia such as the Universities of Queensland and Victoria which run joint programmes with Chinese universities (Garrett, 2004).

Cross-border providers from different countries have branch campuses in Singapore. These include Johns Hopkins University (USA) University of Chicago (USA), INSEAD (France), and Jiao Tong University (China). Bond University and Monash University, both from Australia, and the Business School of the Netherlands have branch campuses in several countries of Africa.

India has several foreign institutions in operation, mainly from the UK and the USA. A study of 131 foreign-affi liated institutions in India (Bhushan, 2005) showed that 59 were partnered with universities in the UK and 66 partnered with universities in the US. In some cases, the same institution has tie-ups with more than one foreign institution. For example, the Indian School of Business has tie-ups with Kellogg, Wharton and the London School of Business. Several high-level delegations have visited India to establish branch campuses or collaboration with Indian institutions. For example, Professor Rick, President of Universities UK, led a delegation of UK Vice-Chancellors to India in 2008 to discuss institutional collaboration and student and teacher mobility between premier institutions in India and the UK (UK universities to support expansion of India’s HE sector, media release from Universities UK, 29 April 2008).

Private higher education institutions offer an easy entry point for foreign institutions. In fact, in many countries, transnational providers operate through private institutions and offer courses in limited subject areas. They offer market-friendly courses, catering to private businesses, both foreign and national. Courses in business administration, computer science, accounting, marketing, economics and communication are very common in such institutions and nearly 80 per cent of the courses offered by foreign institutions are either in business or hotel management (Bhushan, 2005). Collaboration with foreign universities and institutions helps local private universities since, in some cases, it allows them to obtain academic credibility, quality appeal, and also enables them to levy high fees, at times in hard currency.

4.2 Cross-border teacher mobility Teacher mobility can be seen as an example of the impact of globalization on education. The movement of teachers across borders, especially at the school level, shows how a less attractive profession in the developed world becomes a very attractive position for migrant teachers from the developing world. The cross-border mobility of teachers is primarily due to two reasons: (a) to meet quantitative shortages; and (b) to enhance the prestige of the institution and the quality of instruction. Teacher shortages can be due either to the non-availability of qualifi ed persons or to the unattractiveness of the profession (Varghese, 2009b). The former is the case in many African countries, while the latter seems to be the case in some developed countries. Another reason for cross-border teacher mobility, in the context of globalization, may be to attract foreign students.

The globalization process has provided new employment opportunities, especially in the private sector. These jobs offer higher salaries. Teaching jobs have traditionally not been fi nancially very attractive and, with new avenues of employment opening up, the appeal of the teaching profession has been further eroded. A study on teacher shortages in the UK has shown that salaries and working conditions for teachers have not kept pace with those of other sectors (Robinson and Smithers, 1998). To overcome teacher shortages, the UK and USA governments (New York) have engaged

18

Globalization, economic crisis and national strategies for higher education development

in the large-scale recruitment of teachers from Caribbean countries such as Jamaica, and from African countries such as South Africa. This has led to teacher shortages in the sending countries, which have accused the host countries of ‘raiding their resources’ (Appleton, Morgan and Sives, 2006) and have demanded compensation from the recruiting countries. Bilateral discussions have resulted in the development of a strategy of ‘managed migration’ (Morgan, Sives and Appleton, 2006) and a Commonwealth protocol on teacher recruitment following the discussions at the Commonwealth Education Ministers’ Conference held in Edinburgh in 2003. It needs to be noted that teacher migration is not always from developing to developed countries. Teachers also move within developed countries and among developing countries. Teachers from Australia, Canada and New Zealand are found in the UK. Teachers from India, Kenya, Zambia and Zimbabwe are found in Botswana. However, large-scale migration still continues to be from developing to developed countries.

Teacher mobility in higher education takes different forms. Some universities have departments specializing in regional studies and these departments attract teachers from those respective regions. For example, the Center for Latin American Studies of Chicago University attracts at least three visiting professors every year, and more than 30 professors from Latin America have visited and taught in the university this decade (Tinker visiting professors). At times, teacher migration is in selected subject areas. This is more often the case in those areas where there is high demand from the corporate sector. As mentioned earlier, very often students, on completion of their doctoral studies, would like to stay in the host country and take up a teaching job. It is estimated that more than 8,000 Indian teachers work in universities in the USA. Indian professors, including some Nobel laureates, are engaged in research and teaching activities, predominantly in science, engineering and social science subject areas (Melwani, 2009). Under the Erasmus Mundus programme, more than 1,000 university teachers from developing counties came to Europe between 2004 and 2008. Under the same programme, efforts have been made to establish collaborative arrangements to promote student and staff mobility between 12 European and 8 Indian universities (EurAsia News, 09.06.2008 ).

Some universities appoint foreign professors to improve their image and international competitiveness in order to promote research, improve the quality of teaching, and to attract foreign students. For example, the Ministry of Human Resource Development of the Republic of Korea plans to recruit 300 foreign professors in the coming years. The proposal indicates that “It is part of our efforts to enhance the quality of education at national universities to meet the global standard” (Tee-Jong, 2008). Seoul National University (SNU), a state-funded university, is planning to recruit 150 professors to promote its international competitiveness. Further, language profi ciency to lecture in English is an important consideration when recruiting domestic (Korean) teachers to SNU (Korean Times, 22 January 2001 ). The Japanese Government has initiated steps to change the faculty composition to attract more foreign students. Between 1983 and 1995, the number of faculty members from foreign countries in Japan increased from 1,168 to 3,558 (Koshi, 1997).

4.3 Cross-border student mobilityCross-border student mobility is increasing rather fast. In 2005, nearly 2.7 million students pursued cross-border education (UIS, 2007). The market for cross-border students is expanding; the profi ts remain very attractive and hence the competition among higher education institutions to attract foreign students continues. The most familiar pattern of cross-border student fl ow used to be from developing to developed countries. According to data from the UNESCO Institute for Statistics (UIS, 2007), North America and Western Europe continue to be the favourite destinations for most

Globalization and cross-border mobility

19

students from any region, except for students from Central Asia who tend to go to the Russian Federation or to other Eastern European countries. Nearly three fourths of mobile students from all regions, except Central and East Asia and the Pacifi c, seek higher education in OECD countries. Nearly 90 per cent of mobile students from North America and Europe cross the border to study in another country of the same region; 80 per cent of students from Latin America travel to North America and Western Europe for their studies.

The USA attracts the single-largest share of foreign students (Table 4.1) followed by the UK, Germany, France, Australia, and Japan. There has been a decline in the relative share of the USA from 25 per cent in 2000 to 21.9 per cent in 2005. Australia, France and Japan have improved their relative position while the share of others has declined. The nine countries shown in Table 4.1, together, receive 72 per cent of all students studying outside their home country. Australia experienced a rapid expansion in foreign student numbers in the 1990s and New Zealand in the present decade. There was a dip in the share of foreign students in New Zealand between 2004 and 2005, but the government changed its immigration policy to attract more foreign students. Accordingly, students who have completed their studies can prolong their stay by one year to search for a job and, if they secure a job, as is very often the case, they can eventually apply for nationality or residence permits.

Table 4.1 Distribution of foreign students by host countries (per cent)

Host country 2000 2004 2005

USA 25.0 22.0 21.9

UK 12.0 11.0 11.8

Germany 10.0 10.0 9.6

France 7.0 9.0 8.7

Australia 6.0 6.0 7.7

Canada 6.0 5.0 4.9

Japan 4.0 4.0 4.7

New Zealand 0.0 3.0 1.5

Russian Federation 3.0 3.0 3.3

Others 27.0 27.0 27.4

Total number of foreign student (millions) 1.9 2.7 2.73

Source: UIS (2007)

Table 4.2 shows the fl ow pattern of students among countries. The seven OECD countries hosted 68.8 per cent of cross-border students in 2005, while the 12 sending countries accounted for more than one third of all cross-border students. This shows the concentration of host countries and the spread of sending countries. Asian countries top the list of sending countries. China alone accounts for 14.6 per cent of cross-border students, followed by India, which accounts for 5.2 per cent. When compared with past trends (Varghese, 2008), China has reduced its reliance on the USA; the shift was initially to Australia but later on the shift was towards Japan. India and the Republic of Korea continue their reliance on the USA for cross-border studies. Germany attracts a good number of students from Turkey and the Russian Federation. Hong Kong relies on Australia, the UK and the USA in that order. Malaysia has increased its reliance on Australia.

20

Globalization, economic crisis and national strategies for higher education development

Table 4.2 Inter-country fl ow pattern of cross-border students (2005)

Destination

Sending country

USA UK GER FRA AUS CAN JAP Total*%

Total (000)

China 23.3 13.2 -- -- 10.2 -- 21.1 67.8 394.7

India 60.3 12.0 3.1 -- 15.8 -- -- 90.9 139.4

Republic of Korea 57.7 5.2 -- 5.1 -- 22.7 90.7 97.4

Germany 14.3 19.8 -- -- -- -- -- 34.1 63.3

France 13.1 22.5 12.5 -- -- 11.7 -- 59.8 52.2

Morocco -- -- 16.2 58.9 -- -- -- 75.1 50.6

Turkey 25.8 -- 50.4 -- -- -- -- 76.2 50.4

USA 31.1 7.1 5.2 8.5 15.6 67.5 46.3

Malaysia 14.2 25.3 -- -- 41.1 -- 4.2 80.6 45.1

Russian Federation 13.5 -- 30.1 -- -- -- -- 43.6 39.4

Hong Kong 21.6 30.9 -- -- 39.0 -- -- 91.5 34.7

Iran 12.2 9.1 22.9 7.7 -- -- -- 51.7 19.3

Total number of students (000) 590.1 318.4 259.8 236.5 207.3 133.0 125.9 849.1

Notes:* The percentages in the rows do not add up to 100 because all host countries are not included in the table.--- indicates that the number is insignifi cant Source: UIS (2007).

Asia dominates among the sending countries and a majority of Asians study in three English-speaking countries – Australia, the UK and the USA. These countries generate income from hosting cross-border students. For example in 2005, the USA, which hosts the largest number of cross-border students, earned US$14.1 billion; the UK earned US$6.1 billion and Australia earned US$5.6 billion (Bashir, 2007).

Cross-border education is not a very signifi cant component of higher education in the Central Asian Republics. Of these countries, Kazakhstan sends the largest number of students abroad (29,071), followed by Uzbekistan (23,170). Students from these countries travel to the Russian Federation or other countries in the region. For example, in 2005, 71.5 per cent of the cross-border students from Kazakhstan and 41.8 per cent from Tajikistan went to the Russian Federation, while 68.9 per cent of cross-border students from Uzbekistan and 29.2 per cent from Tajikistan went to Kyrgyzstan. Turkey and Germany are also other countries hosting students from the Central Asian republics.

Why do people seek cross-border education?

One of the important motivations for seeking cross-border education is its capacity to enhance employment opportunities and obtain higher returns to investment. Foreign degree holders enjoy a premium in the labour market in developing countries. They are also preferred in their countries of study. Therefore, during periods of skill shortages, students are a reliable way of recruiting migrant labour. It is found that students who came from China and India to seek education in the USA remain in the country (Tilak, 2007) and constitute a large share of the professionals in some of the IT sectors in the USA. The incentive to employ cross-border students is also refl ected in the visa rules of some countries, as mentioned earlier. Degrees from foreign universities also enjoy a premium in the labour market in the country of origin. This is the case even when the institution

Globalization and cross-border mobility

21

is a branch campus of a foreign university. MNCs are more willing to recruit people who have certifi cation from the universities of their parent countries. The liberalization policies followed by developing countries in the 1990s have attracted high levels of foreign direct investment as well as the migration of fi rms and jobs. The demand for foreign degree holders in these sending countries has increased. This has been an incentive to invest in cross-border higher education.

Another motivation for seeking cross-border education is for a better quality of education. A degree from a good university is an attractive proposition to students. The continuing fl ow of students from developing countries to developed countries is also due to the belief that the quality and standards of higher education studies offered in universities in the OECD countries are superior to those offered in the country of origin. One can fi nd a positive association between the global ranking of universities and the preferred destination of students for their studies abroad. Universities in the USA occupy the top positions in the global ranking, which encourages many students to apply to universities in the USA. Students in Arab countries migrate to Egypt and Jordan to pursue their higher education studies. A large number of students from Bangladesh and Nepal travel to India to pursue their higher education studies. Similarly, students from mainland China seek higher education in Hong Kong (Li and Bray, 2007).

There are exceptions to this pattern. For example, it is found that only a small share of students sitting for competitive examinations in India actually gain admission to some of the prestigious institutions, such as the Indian Institute of Technology (IIT) or the Indian Institute of Management (IIM). Those who do not get admitted to these institutions seek cross-border education as their next best option.

22

5 The economic crisis and its implications for higher education and employment

Many countries affected by the economic crisis are struggling to develop strategies to arrest the adverse effects of job and income loss on their citizens. How does the crisis affect the development of higher education in general, and that of cross-border education in particular? Many crises in the past emanated from public sector investment/savings defi cits, leading to large-scale budget defi cits and borrowing. The East Asian economic crisis was different from the earlier crises. Private sector borrowing and fi nancial companies and their lending were responsible for the East Asian economic crisis of 1998-1999 (Stiglitz, 1998). The current crisis has many similarities with the East Asian economic crisis: It started from the fi nancial system and it has affected fi rst professional and white collar jobs. However, it is different from the past crisis in that the fi nancial systems of the developed countries are responsible for the crisis, which is global in its reach, as it spreads to both middle- and low-income countries (World Bank, 2008). Some of the manifestations of the crisis give scope for speculation, which is attempted below.

The leading economies of the world are experiencing the most severe crisis since the great depressions of the 1930s and the crisis is changing the economic and employment outlook. According to the International Monetary Fund (IMF), global growth has come to a virtual halt, with the developed economies expected to shrink by 2 per cent in 2009. The World Bank President and IMF Managing Director said that “the crisis has become global and no country could escape it” (Education International, 18 January 2009).

The crisis, although felt more severely in the USA in the initial stages, is slowly but steadily spreading to all countries. Income and job losses have been the visible forms of the crisis directly affecting people. Many companies have declared losses and bankruptcy, and their employees are out on the street. Those companies struggling to survive do so by downsizing and job cuts. A recent report has shown that jobs are drying up around the world as the global economy enters the downturn. “From lawyers in Paris to factory workers in China and bodyguards in Columbia, the ranks of the jobless are swelling rapidly” (Schwartz, N. 2009: 1).

Employers are preparing for what many fear will be a long and painful recession, moving to aggressively cut jobs and reduce costs to face the economic crisis. In one week in October 2008, companies that announced their plans to cut jobs included the Internet company Yahoo (1,500 positions), the pharmaceutical company Merck (7,200), National City Bank (4,000) and the cable company Comcast (Irwin and Rosewald, 2009). “At least 85,000 new job cuts were announced in a single day Monday as the rampant fi nancial crisis hit more workers across the globe and brought down Iceland’s government” (European stocks mainly drop, 26 January 2009).

The crisis has already claimed 3.6 million jobs in the USA and millions elsewhere. “The business research group on Monday estimated the economy (USA) could lose two million more jobs this year on top of the roughly 2.6 million erased in 2008. That would be about 60 per cent higher than the average job losses over the past fi ve recessions (roughly two per cent)” (The Wall Street Journal, January 2009 ). As of February 2009, British companies confi rmed the loss of 91,698 jobs over the previous four months, (Telegraph, London, 17.02.2009). Further, it is estimated that, globally,

The economic crisis and its implications for higher education

23

joblessness may reach 50 million by the end of 2009. The unemployment rate has increased and is expected to reach close to double digits by 2010 in many of the developed countries including Germany, the UK and the USA.

Job losses have not been confi ned to developed countries. The job loss between October and December 2008 was estimated to be around 0.5 million in India. A recent report indicated that job cuts by Microsoft have affected 5,000 Indian employees; nearly 100,000 Indians holding H-1B visas are to lose their jobs. The USA stimulus plan contains a conditionality not to extend employment opportunities to H-1B visa holders at the cost of workers born in the USA. This will affect workers from several developing countries, notably India, who have been the single-largest benefi ciaries of the H-1B visa programme over the past several years. A total of 23,485 Filipinos in the country and abroad have lost their jobs as a direct result of the global fi nancial crisis – 19,443 workers have lost jobs in the Philippines and 4,042 overseas (Trabaho Philippine, 28 January.2009 ). The job loss in Laos is around 85,000. In China, too, job creation resulting from FDI is drying up. More importantly, a large number of migrant workers are seeking jobs since the companies where they were working have closed down.

There is a silver lining for India: some of the outsourcing fi rms are fi nding alternative measures to counter the job losses. B.G. Srinivas, Senior Vice-President and member of Infosys’ Executive Council, told the Times of India (TOI) that although there was a 5 per cent budget cut by European companies, more European companies were outsourcing jobs to lower-cost countries such as India to beat the recession, though the contracts were not large. Infosys and other Indian outsourcers are expanding to Africa, Europe, the Middle East, and elsewhere to lower their dependence on the United States, their biggest market (Srinivas, 2009 ). This may perhaps help arrest the job losses, at least partly.

Some of the measures taken to counter the crisis at times reverse some of the aspects considered to be promoting globalization, namely the cross-border movement of capital and people. For example, job losses led to street protests in many countries and some of the protesters in the UK re-invented the slogan of ‘British jobs for British workers’. Some of the responses by national governments took the form of protectionist policies to protect local workers from foreign workers. The USA stimulus plan, too, has shown protectionist trends when it stipulates that fi rms receiving an amount of the stimulus plan should not recruit foreign workers under the H-1B visa, replacing USA citizens. These policies go against the very concept of globalization that was based on opening up markets and encouraging the liberalization policies, strongly propagated by those very same countries.

The crisis has affected education in several ways. First, the crisis has affected the job prospects of graduates. A survey of 250 companies in the UK shows that vacancies are expected to decline by 5.4 per cent and salaries by 8 per cent. Consequently, many employers are suggesting that students take a year off (Spencer, 2009). This may have a negative effect on the demand for higher education.

Second, the fi nancial crisis will lead to reduced funding for education. Governments may fi nd it diffi cult to extend the same level of funding in real terms. The private corporations which used to invest and contribute to education funds may not be able to do so. The capacity of households to invest in the education of their children will be reduced in the context of job losses and reduced income levels.

Third, many universities have lost their investments. For example, many universities had invested their savings in banks which have become bankrupt. Universities, such as Oxford and Cambridge,

24

Globalization, economic crisis and national strategies for higher education development

lost millions of pounds. Between July 2007 and June 2008, the Ohio State University endowment fell by 11 per cent to US$2.03 billion. Other universities are similarly affected (Okoben, 2009).

Fourth, student support systems will be severely affected. Sallie Mae, the largest provider of student loans in the US, lost US$1.6 billion during the crisis and the company is shying away from extending student loans (Schwartzmann, 2008). The Education Resources Institute (TERI) the largest insurer of student loans in the USA fi led for bankruptcy protection in 2008. The diffi culties in obtaining loans may affect enrolment in those universities where fees are high.

Fifth, there may be a freeze on programmes and staff recruitment. There has already been a freeze on recruitment in many universities since 2008. The University of Arizona is planning to amalgamate certain departments and close down certain programmes. This means that students may have to extend their stay in the universities and they have thus gone on strike (Richard, 2009).

Sixth, aid to education by bilateral and multi-lateral agencies may decline. The International Conference on Education in 2008 noted that there is a collective failure to deliver on aid commitments by donor countries (UNESCO/International Bureau of Education, 2008). The economic crisis may further worsen the situation and the impact of the global fi nancial crisis on aid, especially for developing countries, is threatening development, particularly when it comes to advances in education (Elliott, L. 2008)

On an optimistic note, the World Bank President and IMF Managing Director have argued for the inclusion of health and education in the fi scal stimulus plans introduced in developing and developed countries (Education International, 18 January 2009 ). Further, an online education survey conducted in Berlin in 2008 among education and training professionals indicated that the economic crisis boosts e-learning, informal learning, and blended learning, and that the crisis, with a shrinking education sector budget, is enlarging the use of technology (On-line Educa Berlin, 2008).

Among higher education segments, private and cross-border education may be more severely affected by the crisis. Scholarship facilities for students will be on the decline, part-time jobs to support their education in the host countries may disappear, student loans for cross-border education may dry up, and reduced household income levels may not be able to support the full cost of studies abroad. The crisis has affected higher income groups more severely than lower income groups; the urban population more than the rural; and fi rm-based more than farm-based workers. Therefore, it can be argued that the impact of the crisis will be more severe on higher education, especially in the initial stages, and, within higher education, the private and cross-border education segment will be more severely affected by the crisis.

Lack of regulation and inadequate state action are cited as reasons for the crisis. This gives us an opportunity to think and review the impact of unregulated markets on economic growth and educational progress. Deregulation was considered a virtue and a panacea during the height of market-friendly reforms and the globalization process. It has become one of the unacceptable policies in the present context.

25

6 National strategies for the development of higher education

Universities and institutions of higher education traditionally were public institutions. The state invested resources to set up universities and was responsible for funding and controlling their activities. When governments were in fi nancial diffi culty in the 1980s, the state could not extend adequate funding to cope with the increasing demand for higher education. This was an era of low state funding and slow expansion of higher education. This encouraged market operations in higher education that helped the process of globalization of higher education.

The options open to governments in the context of globalization were: (a) to continue the policy of providing higher education through public institutions only, leading to limited access; (b) to expand access to higher education through public and private domestic providers only; or, (c) to expand access through domestic public and private providers as well as cross-border providers. Given the fi scal state of the economies of the developing world, it was not possible to expand access through public institutions. Therefore, most countries opted for option (b), and this encouraged market operations in higher education and multiple providers. The choice of this option promoted the private sector in higher education. With the expansion of the private sector and market operations in higher education, cross-border higher education became a new and viable option (option c). Many countries reformed their rules and regulations to encourage transnational providers. All of these providers are operating simultaneously in many of the developing countries. Government, which enjoyed a monopoly in the sector, needs to play more of a facilitative role than simply a fi nancing and controlling one. This is where the role of the state becomes important.

There is a need to develop regulatory frameworks at the national, regional and international levels for the operation of private and transnational providers. The Code of Good Practice in the Provision of Transnational Education, which was established by the Council of Europe in cooperation with UNESCO and adopted by the Lisbon Convention, is an example of regional regulations for Europe. The code protects students from fraudulent degrees and qualifi cations and helps national authorities devise regulations for transnational education (Verbik and Jokivirta, 2005). UNESCO and OECD have also developed a set of guidelines for quality provision in cross-border higher education (UNESCO/OECD, 2005). Other guidelines produced jointly by UNESCO and the Commonwealth of Learning (Knight, 2006) provide more detailed guidelines for countries entering GATS negotiations.

Regulations are needed more at the national level to monitor the growth of institutions, both private and cross-border. In some countries, regulating private universities is a three-staged process – letters of interim authority which give temporary recognition followed by registration which recognizes the existence of the university, and fi nally full accreditation. This seems to be a good process and procedure. Therefore, it is important to review the process of granting permission to open and operate private and transnational institutions. There have been instances of fraudulent practices by some of these institutions and public authorities did not act strongly and promptly. Governments in some countries insist that only accredited institutions in the home country will be permitted to open branch campuses in the host country. Therefore, accreditation in the home country becomes a necessary condition for cross-border collaboration or for the starting of a foreign branch in another country.

26

Globalization in higher education: moving across borders

Many a time, cross-border institutions operate through private higher education institutions. In fact, domestic private higher education institutions were a way to establish cross-border institutions in many countries. There are countries where regulations regarding the operation of private institutions are vague and are not strictly adhered to. This has allowed cross-border institutions to collaborate with private institutions. This collaboration with a foreign university has given credibility to the new private institutions and their courses. It has helped them to offer market-friendly courses, improve the employment prospects of graduates, and levy high fees from students. It also allows some universities to levy fees in foreign currencies (Varghese, 2007) and some of these initiatives have assisted in arresting the outfl ow of students to universities abroad. The role of the ministries of education/higher education and the process of granting permission need to be clearly identifi ed, taking into account the benefi ts and costs of enlarging the cross-border education sector.

In some countries, such as China, cross-border institutions can operate only in collaboration with national institutions. The country permits only collaborative arrangements and joint programmes; foreign institutions have to act in collaboration with national/domestic institutions (Garrett, 2004). This ensures that national policy and regulations are followed by all institutions. In addition, it also helps in controlling fraudulent practices and protects students.

Another issue is the recognition of degrees offered by cross-border institutions in the host countries. In India, the regulations are rather strict and do not permit the proliferation of foreign institutions. For example, according to the rules, educational institutions in India can be set up only by trusts, societies, and charitable companies. Profi ts, if any, cannot be taken out of the institution, even when the higher education institution is registered under the Companies’ Act. Furthermore, higher education institutions registered under the Companies’ Act are not recognized by the University Grants Commission (UGC) or by the All India Council for Technical Education (AICTE) (Sharma, 2008). It is, thus, important to ensure that accreditation of foreign institutions and their programmes are done by appropriate agencies in the host country. This is to ensure quality in provisions and also in the products on the one hand, and to ensure the recognition of degrees on the other hand.

Transnational institutions, in general, levy high fees which cover full costs plus a profi t. There are instances where these institutions increase fees frequently and the students are forced to pay additional fees every year. Some national authorities attempt to stipulate regulations regarding fees. In countries such as China, the cross-border providers are not permitted to raise tuition fees without the approval of the national authorities. Since China does not permit independent cross-border institutions, implementation of this provision is easy.

Another example is that of South Africa. The government of South Africa does not regulate fees the way China does. The country insists that for-profi t cross-border universities register under the Companies’ Act and not under the Universities’ Act. In 1999, there were fi ve education companies owning 43 institutions in South Africa and listed in the Johannesburg Stock Exchange (JSE). By 2004, only two companies – Advtech and Nasper – were listed in the JSE, accounting for more than 70 per cent of private higher education enrolment in South Africa (Mabizela, 2006).

As discussed in this paper, private and cross-border providers offer courses and programmes of study only in limited areas. Many transnational institutions offer market-friendly courses to cater to the needs of private enterprises – foreign or national. Courses in business administration, computer sciences, accounting, marketing, economics and communication are very common in such institutions (Varghese, 2009a). These courses have also helped meet the skill requirements of the evolving production sectors. Such a narrow orientation of cross-border education may lead to

National strategies for the development of higher education

27

the lopsided development of higher education, which implies that there is also a need for regulation of the contents of the courses on offer.

The existence of cross-border institutions on a large scale may lead to competition between domestic and foreign institutions. The better students who opt for employment-friendly subject areas may be absorbed by the cross-border sector. This may weaken national institutions because they may become reserves of students who cannot get admission or cannot afford admission to cross-border institutions and are forced to follow instruction in the domestic institutions and in subject areas which may be less attractive.

Some private and cross-border institutions may have a religious orientation. In many countries, the rules regarding such institutions are not always very clear. Public institutions are secular and the promotion of religion-based institutions and sectarian viewpoints and values may not be conducive to national integration.

Cross-border education becomes a source of brain drain. Many cross-border students are lost to the national system since, as noted in the paper, a good many of them do not return to their home countries. Many countries have revised their visa rules to encourage students to stay and work in the country of study and we have discussed earlier the H-1B visa which attracts a large number of foreigners to the USA and the similar ‘Blue Card’ visa introduced in Europe, which is expected to attract a large number of highly skilled workers from developing countries, many of them holding degrees from universities abroad. It is feared that these schemes may lead to large enough migration to damage the domestic economy of many countries.

28

7 Concluding observations

The paper shows that there is a general argument in favour of increasing investment and expanding access to good quality higher education. There is lesser agreement on how funding for expansion will be organized and shared between public and private sectors, between domestic and external agencies, and between households and government. The market orientation in higher education helps to mobilize resources for the expansion of higher education. To what extent market operations are going to be extended needs to be carefully examined.

The government needs to redefi ne its role to suit the changed circumstances. The ideal situation would have been full state funding. The state needs to assume other roles that are equally important, even when it is not in a position to fi nance all higher education activities. It needs to be more active in developing the rules for establishing institutions, the mechanisms to ensure quality, and the regulations to ensure equity. The state should assume more of a regulatory and facilitative role rather than simply a funding one.

The paper has attempted to analyse the infl uence of globalization on the demand for higher education and the trends in the globalization of higher education as refl ected through the cross-border mobility of institutions, students and teachers. Private and cross-border education are the fastest growing segments of higher education. The general argument of the paper is that there is a need for well laid-out regulations and framework to permit multiple providers to operate. The unregulated growth of institutions, whether private or cross-border, is not helpful for the long-term development of countries.

Leaving the education sector to markets may imply that the long-term development contributions of education to nation building might be lost. Markets can be relied on to enhance effi ciency. However, their role in promoting equity is yet to be proven. Since education is one of the important determinants of earning differentials, it can become a source of intergenerational economic and social inequality, unless well planned. Furthermore, leaving the sector to international markets could lead to a decline in national infl uence on deciding and designing content and curriculum that could have a long-standing adverse effect on national concerns and development.

The unplanned and unregulated expansion of higher education may lead to the creation of new inequalities and the accentuation of existing ones. This is all the more so when there are multiple private and cross-border providers. There is a risk of stratifi cation of students based on their fee-paying capacity. Given the high fee structures, only those from a better economic background will be able to enrol in cross-border and private institutions. This may lead to two types of imbalances in the growth of higher education. First, there are increasing inequalities of access to education and later to employment. Second, there are regional imbalances. Many of the private and cross-border education institutions are located in urban areas. Contrary to the general belief that these institutions are absorbing excess demand, they may in fact be increasing the access options of those who already have access to higher education.

The impact of the economic crisis on the development of higher education needs to be analysed more closely. The possibilities for private sector investment in higher education may stagnate or decline. The household response to the crisis is very important. An analysis of the impact of the

Concluding observations

29

East Asian economic crisis on higher education (Varghese, 2001) clearly showed two patterns: (a) households tend to consume less of everything during a crisis period and this may imply a decline in the demand for higher education; and (b) households re-adjust their budget to keep education investments intact. This happened in many of the crisis-affected countries of East Asia.

Universities may be affected by the crisis. In the past, there have been instances of private universities becoming debt-ridden. The debt of private universities in the Republic of Korea, for example, reached a staggering amount of Won 76 trillion. Many of the private universities faced an insolvency situation during the East Asian crisis (Varghese, 2001). Some of the policies adopted by the governments of these Asian countries, such as increased support to students to allow them pursue their studies irrespective of whether they are enrolled in public or private institutions, may still be relevant today.

Finally, the paper argues for state intervention in higher education rather than leaving the sector mainly to the markets. State intervention with funding support is the ideal situation. In the absence of the possibility of full public funding for higher education development, the state may better target its limited resources to disadvantaged groups and to specifi c subject areas to improve overall equity in higher education. However, the lack of resources at the disposal of the government should not be a reason for it to be absent from the sector. Even when the state cannot provide funding support, it still has an important role in planning and regulating the system.

30

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The book

As a result of globalization, the level of skills demanded in the global labor market has increased and competition has grown among countries to attract the highly-skilled. The preference for a foreign degree in the labour markets in developing countries and for a domestic degree in developed countries encourages the expansion of cross-border higher education, and the mobility of institutions, students and teachers. Institutions move from developed to less developed countries, while students move from less developed to developed countries. Australia, the UK and the USA are important players in the cross-border mobility of institutions and students, and they receive billions of dollars from cross-border education.

The current economic crisis may adversely affect expansion prospects of higher education in general, and that of cross-border education in particular. The initial indications are that the crisis will result in the heavy loss of employment and income levels in households and their capacity to invest in education. Many universities that have invested their money in foreign banks have already lost their investments. The student support systems, scholarships, and student loans are drying up. Public fi nancial support may become necessary to revive the education system. This paper argues for active state intervention in higher education to fi nance wherever possible and to develop regulatory systems to protect national and students’ interests, ensure equity, and assure quality while encouraging multiple providers in education.

The author

N.V. Varghese, Professor and former Head of the Educational Planning Unit at NUEPA (New Delhi), is currently Head of Governance and Management in Education at IIEP. He has published widely in the areas of educational planning, fi nancing and quality. His most recent publications concern the areas of institutional restructuring of higher education and private higher education.