A Chance for European Universities: Or: Avoiding the Looming University Crisis in Europe 9089642293, 9789089642295

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jo ritzen A Chance for European Universities  amsterdam university press

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A Chance for European Universities

A Chance for European Universities Or: Avoiding the Looming University Crisis in Europe Jo Ritzen

This publication is called a 'pre-publication' as it is not final. It is published online in order to review and discuss its contents and raise awareness about the chances for European universities to contribute to a more vibrant Europe, to sustainable economic growth and social cohesion. Following the online discussion, the author will revise the manuscript, resulting in a final publication. ISBN 9789089642295 E-ISBN 9789048512386 NUR 828 Cover: Studio Jan de Boer Design: Amsterdam University Press © Jo Ritzen / Amsterdam University Press, Amsterdam, 2009 All rights reserved. Without limiting the rights under copyright reserved above, no part of this book may be reproduced, stored in or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the written permission of both the copyright owner and the author of the book.

Preface

However much I dislike the ideas, I love the frankness and honesty of the second opening sentence of Friedrich Hayek’s Road to Serfdom (1944), namely “This is a political book. I do not wish to disguise it by describing it […] by the more elegant and ambitious name of an essay in social philosophy”. This book is also a plea, as best documented as can be, namely to commit European universities to the best use of talents for social, cultural and economic progress. The evidence that European universities can do better is overwhelming – yet the plea is subjective and derived from the conviction that it is a duty of the European to build further on the European temple of liberties and their embedding in a society which is rich in all those aspects, which count for the quality of life. It is not a temple on forbidden fenced off territory but rather it is open and part of a globalized world. What I hope to achieve with this book is to inform university staff, politicians, employers, employees, the educated community on the brakes we have put on our universities and on the alternative before us. Of course, communal actions to release the brakes? That would be splendid. This book is based on or includes parts of papers that I have presented before. Among these are the papers found on www.maastrichtuniversity.nl: Korea, Seoul, Presentation for Global HR Forum 2008: The Financial Context for Innovating Universities to Prepare for Global Leadership, The Netherlands, Maastricht, GRE Board Meeting, 2008: EU Master Admission under Bologna, Setting the Stage. Japan, Tokyo, Presentation for UNU/UNESCO Conference, 2007: Higher Education’s Perfect Storm,

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A CHANCE FOR EUROPEAN UNIVERSITIES

Ireland, Dublin, Presentation to the Royal Irish Academy, 2007: Why European Higher Education Fails or How It Could Fly By Its Tails, Greece, Athens, Keynote Address at OECD Ministerial Meeting, 2006: Scenarios for Higher Education, 2020 or When Will China Invade Iran?

Acknowledgments

This book has greatly benefitted from my long march through the universities dating back to my first encounter with the economics of education in 1968 through Louis Emmery. The longer the march, the more I realize the impact of my professors, Kees Verhagen and Huibert Kwakernaak in Delft and the wise, brilliant pedagogue Jan Tinbergen in Rotterdam in my bachelor and master education. In Berkeley I taught, but I learned more – with Charles Benson as my mentor. The marine – like training in the political economy of education – under the soft guidance of Wim Kok has also an incredible impact. My colleague ministers Gudrund Hermes and Eduardo Grilo enlarged my mental frame of mind. And in this passage through university education and research there were many, many other people who have inspired me and nourished me with concepts and ideas. When the moment came to pull this together – as inevitability so it seems – my friends and colleagues of Maastricht University were of great help – but so were many others of whom I mention Debra Stewart, Yehuda Elkana, Jean-Robert Pitte, Philippe Aghion and Sijbolt Norda. I am most grateful to all of them but maybe mostly for the joy (Americans would say: the fun) of learning from them.

Executive summary

European universities are underexploited – economically, culturally and socially - for a stronger Europe. There is an urgent need to alter the context for European universities so that they can strengthen the European competitive position through economic innovation, increased social cohesion and a more vibrant cultural dynamism. The present position of Europe’s universities is something like a bronze Olympic medal: very well represented among the world’s top 200 universities, but almost absent in the top 50. Society’s feelings about universities are likewise lukewarm, sometimes ecstatic but also often critical on the ivory tower image. Europe has to choose to go for gold in a world competition with a strong US system of Higher Education and newly emerging runner ups like China and India. The unbalanced demographics in the world – with a virtually constant supply of graduates in the developed West and a potentially fast increase in the number of graduates in developing countries – pose both new threats and new opportunities for European universities. Europe can cash in on the opportunities by innovating its higher education, taking into account the lesson learned on effective education for an international labour market, on the valorisation of knowledge but also on the matching and selection of students. The context needs to be changed to make European universities more successful: – The Bologna process has to be denationalized with European-wide accreditation and quality control. – The organization of universities should be moved on from bureaucratic to innovative. – The finance needs to be rebalanced so that the public budget cuts of the past decades can be met by private sources. The 2008/2009 economic crisis (never waste a good crisis) is an excellent opportunity for a paradigm shift all over Europe to promote excellence together with emancipation of the new Europeans in universities. European universities: yes, they can do so much more for Europe.

Table of contents

0 Table of contents

11

List of Figures

15

List of Tables

15

List of Abbreviations

15

List of Country Abbreviations

15

1 1.1 1.2 1.3

Introduction A Chance Europe or European Countries European Universities

25 25 30 33

2 2.1 2.2 2.3 2.4 2.5 2.6

The Looming Crisis Europe in the Rankings What makes universities better? European Universities used to be top Innovation and Competitiveness Uneasiness Conclusion and summary Appendix 2.1 Research expenditures by sector (US, EU15)

39 39 52 56 59 67 69 71

3 3.1 3.2 3.3 3.4 3.5 3.6

Challenges Which Europe? European Leadership The globalized labour market Equality of Opportunity as an Economic Requirement Universities are underexploited for economic growth Conclusions

75 75 76 80 83 84 89

4

The Battle for Talent: Europe has a Chance

91

12

A CHANCE FOR EUROPEAN UNIVERSITIES

4.1 4.2 4.2.1 4.2.2 4.3 4.3.1 4.3.2 4.3.3 4.4 4.4.1 4.4.2

Introduction Europe’s Chance Europe’s Demand and Supply of Graduates The World-Wide Asymmetry in Demography On Talent Migration Deciding to Study Abroad Intra-European Mobility Europe and the World Conclusions and Policy Proposals Intra-European Mobility revisited Europe and the World revisited

5 5.1 5.2 5.3 5.4

Stop the Financial Strangling of European universities The Erosion of Public Finance Equality of Opportunity and Beware of Too High Tuition Fees Effective Finance and other income Summary and conclusion

150 152 155

6 6.1 6.2 6.2.1 6.2.2 6.2.3 6.2.4 6.3 6.4 6.5 6.6

Give Innovation a Chance: the context The Context of a University The Caterpillar and the Butterfly The Oligarchic University The Democratised University The Bureaucratic University The Professional University The Bologna Process Differentiation, Selection and Equity Reward Learning about Learning Summary and conclusion

159 159 160 163 164 167 168 171 177 182 187

7 7.1 7.2

The Future of European Universities A Coherent View is Needed Building Blocks of a Coherent View

189 189 191

8

Appendix A

197

9

Appendix B

199

10

Appendix C

201

11

Bibliography

207

Appendix 4.1 Foreign students within the EU

91 92 92 98 105 105 109 117 128 128 129 131 137 137

TABLE OF CONTENTS

Notes

13

223

List of Figures

Figure 2.1 Times Higher Education Ranking 2007 - 41 Figure 2.2 Europe’s Top Universities 2007 (in the Times Higher Education Ranking 2007) - 42 Figure 2.3 Brain Drain: Migration Balance of Citizens and Immigrants with Higher Education (2001) - 59 Figure 2.4 Figure 2.4 Trends in Citation Impact Scores (1993-1996 versus 2003-2006) - 61 Figure 2.5 The 2007 Summary Innovation Index - 64 Figure 2.6 From Ranking to Competitiveness - 65 Appendix 2.7.1 Total R&D Expenditure by Sectors of Performance in the EU15 - 72 Appendix 2.8.2 Total R&D Expenditure by Sectors of Performance in the United States - 72 Figure 3.1 The Production Frontier - 85 Figure 4.1 Expected Minimum of Students and the Supply of Graduates in the EU27 - 94 Figure 4.2 Supply of and Demand for Graduates in the EU27 (in millions) - 98 Figure 4.3 Relevant Age Group (20 – 24 years) for University Education 1990 - 2005 - 99 Figure 4.4 Total Relevant Age Group (20 – 24 years) for University Education 1950 – 2050 - 100 Figure 4.5 Total Relevant Age Group for University Education in Europe 1950 – 2050 Males and Females aged 20-24 Years - 101 Figure 4.6 Average Participation Rates in Rich and Poor Countries Participation = Students / Age Group 20-24 - 102 Figure 4.7 Mobility is on the Rise in the EU-27 - 114 Figure 4.8 Student Mobility Flows: Europe and the World, 2005 - 118 Figure 4.9 The Proportion of Foreign Students Among All Tertiary students and the Regional Distribution of Foreign Students’ Nationalities 2002/2003 - 119 Figure 4.10 Student Mobility Flows: The United States and the World, 2003 - 126 Figure 4.11 Migration of University Students: Japan 2005 - 128

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Figure 5.1 Decrease in Expenditure per student in the Netherlands, 1950-2005 - 138 Figure 5.2 Expenditures on higher education per student in the US, 1960, 1969-2007 (Current and adjusted by Higher Education Price Index 1982=100) - 139 Figure 5.3 Taxation rates (Public Expenditures to GDP) over time - 142 Figure 5.4 Public and Private Expenditure on Higher Education as a Percentage of Total Expenditure on Higher Education in OECD countries, 2005 (top) and 1995 (bottom) - 144 Figure 5.5 Total Expenditures per Student against Private Expenditure per Student, both relative to GDP per Capita, 2005 - 147 Figure 5.6 Expenditure for Higher Education as a Percentage of GDP (2002) - 148 Figure 5.7 Change in Expenditures per Student on Educational Institutions (Tertiary) for all Services in Constant Prices, 1995, 2000 and 2005 (Index 2000 = 100) - 149 Figure 5.8 Intergenerational Mobility and Income Inequality - 152 Figure 6.1 Forces Influencing Universities with the Dutch Experience 161 Figure 6.2 The Position of University systems of Different Countries in the Triangle, 2005 - 162 Figure 6.3 The Development in Student Numbers in the Netherlands 165 Figure 6.4 The academic achievement curve (selected countries) - 179 Figure 7.1 Building Blocks of a View on European Universities - 192

List of Tables

Table 1.1 Change in Age Group 20 – 24 in the EU, India, Brazil, China and Turkey by Country (Potential Student Population) - 28 Table 1.2 Diversity Within Europe - 32 Table 1.3 Participation in universities in the EU (as Percentage of the Age Group 20-24) - 34 Table 2.1 Ranking by Region, 2008 - 41 Table 2.2 Country and Regional Performance in the Rankings in 2008 44 Table 2.3 Ratio higher education/ other public research - 46 Table 2.4 R&D expenditure going to HE sector, EU and selected countries, 2005 - 47 Table 2.5 Ranking of the Individual Researchers in the Sciences - 48 Table 2.6 Top 20 European Universities – Part I (Shanghai Jiao Tong Ranking, 2006) - 50 Table 2.7 Top 20 European Universities1) – Part II (THES Ranking, 2008) - 51 Table 2.8 THES top 200 rank in 2006 “explained by” background. - 53 Table 2.9 Correlation between budget and university governance, and research performance - 55 Table 2.10 Effect of budget and autonomy on research performance - 55 Table 2.11 How European Universities scored in the THES rankings of 2004 and 2007 - 58 Table 2.12 Patents Across Different Nations in 2005 - 62 Table 2.13 Global Competitiveness Index 2008-2009, Selected Countries - 67 Table 3.1 Percentage of students living abroad for work after study - 81 Table 3.2 International activities of graduates in their job. - 81 Table 3.3 Public internal rates of return for an individual obtaining higher education as part of initial education - 87 Table 3.4 Higher education attainment rates, 2005 (% of population aged 25-64 with completed tertiary education) - 88 Table 4.1 Index of the Population 15–19 and 20–29 in 2015 for OECD and WEI countries (2000=100) - 103 Table 4.2 Total enrolment rich (Western European and North American) and poor (all the other) countries over time (1970 – 2005) - 105

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Table 4.3 Impact of International Orientation of Studies for the Netherlands - 109 Table 4.4 Erasmus student mobility in 2006/2007 - 110 Table 4.5 Foreign Students within the EU in 1998: Top Ten Host and Home countries - 114 Table 4.6 Foreign Students within the EU in 2006: Top Ten Host and Home countries - 115 Table 4.7 Net Inflow and Outflow of Students in the EU27, 2006 - 116 Table 4.8 Foreign Students in HE Worldwide (in Millions) - 118 Table 4.9 Foreign Students as a Percentage of Total Students in the country (selected countries/regions) 1998 & 2003 - 120 Table 4.10 Foreign Students in 2006: Top Ten Host and Home countries - 121 Table 4.11 Foreign-born Share of US Degrees and Enrolments - 125 Table 4.12 Percentage of Foreign Born American Nobel Prize Laureates (of All American Nobel Prize Laureates) Per Discipline Per Year - 126 Table 4.13 Foreign Students within the EU in 1998: all EU27 countries 132 Table 4.14 Foreign Students within the EU in 2006: all EU27 countries - 133 Table 5.1 Expenditure and Income Sides of (Effective) Finance - 153

List of Abbreviations

AASCB accreditation - School accreditation by the Association to Advance Collegiate Schools of Business International ACA - Academic Cooperation Association ACO - Adviescommissie Onderwijsaanbod (Advisory Committee on Course Provision) ACT - American College Testing AHELO - Assessment of Higher Education Learning Outcomes AIO - Assistent in opleiding (Assistant in Teaching, research assistant) AMBA accreditation - Program accreditation BaföG - Bundesausbildungsförderungsgesetz (Federal Educational Aid Act) Big Four (also Big 4) - The big four Western European countries: Germany, France, Italy and Spain BRIC countries - Refer to the combination of Brazil, Russia, India, and China BSA - Binding Study Advice CEO(s) - Chief executive officer(s) CER - Centre for European Reform CGS - Council of Graduate Schools CHE - Centre for Higher Education Development CHEERS - Careers after Higher Education: a European Research Study CHEPS - Centre for Higher Education Policy Studies CPB - Central Planning Bureau (Netherlands Bureau for Economic Policy Analysis) CROHO - Centraal Register Opleidingen Hoger Onderwijs (Central Register for Degree Courses in Higher Education) DAAD - Deutscher Akademischer Austauschdienst (German Academic Exchange Service) EC - European Commission ECT - Treaty establishing the European Community ECTS - Europeaan Credit Transfer System EHEA - European Higher Education Area EQUIS - European Quality Improvement System EQUIS accreditation - School accreditation by the Management Development Network (EFMD)

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A CHANCE FOR EUROPEAN UNIVERSITIES

Erasmus Programme - European Region Action Scheme for the Mobility of University Students Programme ETS - Educational Testing Service EU - European Union EU15 - Comprises the following countries of the European Union: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom EU25 - Comprises the countries of the EU15 plus the 2004 accession countries: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia EU27 - Comprises the countries of the EU25 plus the 2007 accession countries Bulgaria and Romania GATT - General Agreement on Tariffs and Trade GDP - Gross domestic product GPA - Grade Point Average GRE - Graduate Record Examination HE - Higher Education HOAK - Hoger Onderwijs, Autonomie en Kwaliteit (Higher Education, Autonomy and Quality) i.e. - that is ICIS - International Centre for Integrated assessment and Sustainable development ICT - Information and Communication Technology IHEP - Institute for Higher Education Policy JT - (Shanghai) Jiao Tong (Ranking) KNAW - Koninklijke Nederlandse Academie van Wetenschappen (Royal Netherlands Academy of Arts and Sciences) LCU - Local currency unit MIT - Massachusetts Institute of Technology NACUBO - National Association of College and University Business Offices NAO - Netherlands Accreditation Organisation NGO(s) - Non-governmental Organisation(s) Nuffic - Netherlands Organisation for International Cooperation in Higher Education NWO - Nederlandse Organisatie voor Wetenschappelijk Onderzoek, the Netherlands Organisation for Scientific Research OECD - Organisation for Economic Co-operation and Development PhD - Doctor of Philosophy (degree of study programme) PISA - Project International Student Achievement PPI - Personal Power Index R&D - Research and development ROA - Researchcentrum voor Onderwijs en Arbeidsmarkt (Research Centre for Education and the Labour Market) SAT - Standardised Achievement Test

LIST OF ABBREVIATIONS

21

SCI - Science Citation Index SES - socio-economic status SII - Summary Innovation Index Small Seven (also S7) - Austria, Belgium, Denmark, Finland, the Netherlands, Norway and Sweden Sr. - Senior SSCI - Social Science Citation Index STEM - Science, Technology, Engineering or Mathematics STW - Technologiestichting STW (Foundation for the Technical Sciences) THES - Times Higher Education Supplement TVC - Taakverdeling en Concentratie (Division and Concentration of Tasks) UNESCO - United Nations Educational, Scientific and Cultural Organization UNU - United Nations University USPTO - United States Patent and Trademark Office VAWO - Vakbond voor de wetenschap – Voor personeel van universiteiten, onderzoekinstellingen en universitair medische centra (Association of Personnel at Universities and Research Institutions) VSNU - Vereniging van Universiteiten (Association of the Universities in the Netherlands) WEI countries - Countries participating in the World Education Indicators (WEI) programme WHW - Wet op het hoger onderwijs en wetenschappelijk onderzoek (Law on Higher Education and Research) WUB - Wet Universitaire Bestuurshervorming (University Government Reorganisation Act) ZWO - Nederlandse Organisatie voor Zuiver Wetenschappelijk Onderzoek (Netherlands Organisation for the Advancement of Pure Research)

List of Country Abbreviations

AT - Austria AUS - Australia BE - Belgium BG - Bulgaria CAN - Canada CH - Switzerland CY - Cyprus CZ - Czech Republic DE - Germany DK - Denmark EE - Estonia ES - Spain FI - Finland FR - France GR - Greece HU - Hungary IE - Ireland IS - Iceland IT - Italy JP - Japan KOR - South Korea LI - Liechtenstein LT - Lithuania LU - Luxembourg LV - Latvia MT - Malta NL - Netherlands NW - Norway PL - Poland PT - Portugal RO - Romania SE - Sweden SI - Slovenia SK - Slovak Republic TU - Turkey

24

UK - United Kingdom US - United States of America * Indicated if Chile instead

A CHANCE FOR EUROPEAN UNIVERSITIES

1

1.1

Introduction

A Chance

“The empires of the future will be empires of the mind”, said the European Churchill in 1943 at the American top university Harvard. Did he say so at that place because he believed that Europe had lost its initiative to the US? It is not that Europe should seek new empires. But also Europe does not want to be overrun by the forces of globalisation and to become marginalized in the process. Indeed, more than a century later, at Lisbon in 2000, European Heads of State solemnly attested that they would get their countries to make Europe that most competitive region in the world by 2010 by means of an extensive knowledge infrastructure – an empire of the mind. For that purpose they formulated quantitative goals. One of them was that research expenditures per year would be raised in each country to 3% of gross domestic product (GDP) (of which 2% private and 1% public). Universities themselves did not get much attention at this Lisbon meeting, except for the somewhat mythical second quantitative goal of an increase in participation in higher education (HE) to 50% of the age group. I use the term ‘mythical’ as there was no clue offered as to the source of the hidden talent or the required action (and finance) to uncover it. But overall the Lisbon declaration showed how strongly universities and research had been recognized as sources of socio-economic development in Europe. “Most competitive” was the way the Heads described a vibrant Europe, a Europe where young people with ambition, creativity and talent, feel welcome, where there is openness to new knowledge, to creativity, in the arts, in the science and in the economy, in a sustainable way so that the star Earth can provide hospitality to the nine billion plus people who inhabit her by 2050 and to the billions beyond. Almost a decade and one deep economic crisis later, the then European leaders should be called to accountability. In most of the European Union (EU) the Lisbon declaration has turned out to be no more than words. To be specific about European universities: European universities had and still have a chance to contribute to a vibrant Europe, full of en-

26

A CHANCE FOR EUROPEAN UNIVERSITIES

ergy, with a thriving, sustainable economy. Yet, it is not self-evident that this chance is realized with or without the Lisbon declaration. The least one can say is that European universities are not (yet) in the position of being the most competitive in attracting talent. As Lambert and Butler (2006, p. 1) put it: “Europe’s universities, taken as a group, are failing to provide the intellectual and creative energy that is required to improve the continent’s poor economic performance. Too few of them are international centres of research excellence, attracting the best talent from around the world”. European universities, however, are also not (yet) in a crisis as the quote might suggest. Unfortunately, my public policy instinct tells me that this could be a problem in itself because a crisis would propel immediate action and change. As a group, European universities do ‘alright’ or slightly less than ‘alright’ – leading to a political conclusion of not always so benign neglect and to indifference or sometimes a clear antiuniversity attitude among the population. The need to cut Government budgets as a result of the mounting deficits – the effect of the 2008/2009 crisis – may actually be such a crisis-related opportunity for radical change. How can it be that European universities are not placed – by politicians and population alike – on the shield, are not adored while the staff works so tirelessly, while salaries outside of universities – even in the public sector – are higher for the same talents, where students (and their parents) are by and large happy, where research output per person working in research universities is among the highest in the world? The complaints are voiced alike by opinion leaders, politicians, employees: – There are too few peaks in the European university landscape (as the quote above takes a point of departure). Therefore, we stand to lose top talent to other parts of the world. – Successful enrolment (admission plus graduation) of students from socially disadvantaged (often minority) groups is too low. – Overall drop-out is too high while drop-outs have wasted time – so it seems. – University research contributes too little to innovation. – University education is not sufficiently related to the demands from the labour market and in many EU countries the search period for the first job is exceedingly long. – While at least 50% of the students are female, the percentage of female full professors is often no more than 10 to 20%. – The attention to efficient and effective learning of students is virtually absent and innovations in learning methods occur too rarely. The uneasiness is also visible in the clear underfinancing of university education – the result of a tremendous growth in publicly financed uni-

INTRODUCTION

27

versity education which could not be met by increasing tax income or reallocation of budgets in a time in which budget deficits and taxation levels were reduced. At the same time Lambert and Butler (2006) see the underfinancing as the main cause for concern for European universities to spread their wings. In one view it is - besides financing – also a matter of governance and organization. Let it be clear that – as far as one can assess these complaints – this feeling of uneasiness of society about its universities is – as anti-intellectualism – maybe not restricted to Europe, but is stronger in Europe than in other countries or regions (like the US and East Asia). It can also be observed that it is not a new uneasiness: early 20th century European visitors to the US observe time and again that US universities are more highly respected by the population at large than they are used to in Europe, see e.g. Berkel (1990) for a description of observations of Dutch scholars visiting the US. Presumably in other parts of the world, universities are better ‘tuned in’ to society (a point to be further explored in Section 2.4). A vibrant Europe is a Europe with vibrant universities which have a better place and a better recognition and appreciation then they have at the moment – Chapter 3 explores more at length the possibilities of universities and (university) research for providing intellectual, economic and social leadership. The time ahead is one with divergence in demography which is unparalleled in recent history. The share of the EU population in the world declines between 2008 and 2050 according to UN projections by almost one third (from 7.5% to 5.2%) with the world population increasing from 6.5 billion to 9.1 billion (while the EU population decreases from 490 million to 470 million). The decades ahead will show decreasing cohorts of the traditional age group of 18 to 24 year olds seeking university education as is illustrated by Table 1.1. More of these youngsters come from backgrounds from which university education is traditionally unlikely (Ritzen, 2007a).

28

Table 1.1

A CHANCE FOR EUROPEAN UNIVERSITIES

Change in Age Group 20 – 24 in the EU, India, Brazil, China and Turkey by Country (Potential Student Population)

Country/Region (alphabetically) Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom EU27 Brazil China India Turkey

Age Group 20-24 Change 2050/2005 -15.6% -9.0% -60.5% -1.5% -43.5% 16.0% -44.1% -9.9% -3.0% -22.7% -33.6% -36.2% -3.8% -19.0% -52.6% -50.8% 66.7% -32.3% 7.1% -60.3% -33.8% -55.3% -52.8% -48.2% -29.9% 13.7% 2.3% -23.3% -11.5% -21.2% 3.0% -12.7%

Country/Region (by rate of change) Luxembourg Denmark Sweden Netherlands India United Kingdom Cyprus France Ireland Belgium Finland Brazil Turkey Austria Italy China Germany EU27 Spain Malta Greece Portugal Hungary Czech Republic Estonia Slovenia Lithuania Latvia Slovakia Romania Poland Bulgaria

Age Group 20-24 Change 2050/2005 66.7% 16.0% 13.7% 7.1% 3.0% 2.3% -1.5% -3.0% -3.8% -9.0% -9.9% -11.5% -12.7% -15.6% -19.0% -21.2% -22.7% -23.3% -29.9% -32.3% -33.6% -33.8% -36.2% -43.5% -44.1% -48.2% -50.8% -52.6% -52.8% -55.3% -60.3% -60.5%

Source: United Nations Population Division (2008a)

The number of European youngsters participating in university education is as a result likely to decline despite the Lisbon goal of reaching 50% participation. This goal is derived from participation realized in some European (see Table 1.3) and non-European countries like Japan and Korea, ignoring the difference in homogeneity – which may well affect participation – between those countries and most of the European nations. Unless major shifts occur, European universities are going to lose students and as a result many will get into a downward spiral. Such a spiral can be observed in countries with a demography which is a bit ahead of Europe (like Japan where participation is already so high that further increases are unlikely) or at a demographic hiccup (a minus 1.1%

INTRODUCTION

29

in total students enrolled in higher education and a minus 1.4% in new entrants to universities in Spain in 2006). The formula financing of universities based on student numbers forces cutbacks in university expenditure when student numbers drop. Cutbacks can affect the working climate, the attractiveness for university staff, student satisfaction, and as a result, the reputation, making that place less likely to be chosen by prospective students, leading to the next round of cutbacks. Depending on the willingness of governments to come to the rescue, some 5–10% might go broke, be closed and disappear. A shift is unlikely to occur in Europe in the participation of older students even though in the US now the majority of the master students does not belong to the traditional age cohort of 18–24 year olds (in 2002 only half of the graduate students were between 25 and 34). The promise of a substantial role of universities in life-long learning is no more likely in the future than it is now. It is equally unlikely that more students might come from outside Europe unless major changes in European universities take place (as Chapter 4 argues). The very brightest of the European students are equally likely to continue to be ‘drained’ to the US, in the future as they are now, unless Europe provides a clear alternative. Ahead of us we can clearly see the crisis coming. A downward spiral due to demographics – very much in line with the general role demographics has played in the past as unsettling the routines and structures of society as Baumann (2003) has argued. This crisis might be spurred by the relocation of the talent intensive parts of private industry, like laboratories, financial services and ICT services to those areas of the world which are still increasing in the abundance of talent, like India and China. Gándara (2005) considered this scenario for the US as a perfect storm, even while demographic conditions and the excellence of US universities compare favourably to those of Europe. Let it be clear that it is not demographics which cause the crisis: demographics are the catalyst for the crisis. The obvious and increasing underfinancing (Lambert and Butler, 2006) and the substantial institutional and organizational handicaps are likely to be the too short roots of the tree. When the demographic storm blows the tree is likely too fall. The Lisbon agreement of 2000 was an excellent step to choose for a more favourable destiny, mitigating or avoiding the pending demographic storm. Yet, as Odile Quintin (2006), Director General for Education and Culture of the European Commission, noted: Europe has not seriously attempted to implement this agreement. This book pleads for new steps, reviving ‘Lisbon’ and taking it further into creating a truly attractive European university system for students from all over the world as a proxy for a Europe of imagination, creativity, knowledge and social cohesion. Not as part of a zero sum game of competition world-wide but to contribute to a positive sum game of world development. The steps should include ways to end the underfinancing

30

A CHANCE FOR EUROPEAN UNIVERSITIES

(Chapter 5) while further developing the ‘innovative university’ as part of the further organizational and institutional development of universities (Chapter 6). 1.2

Europe or European Countries

We speak in this book about Europe in the way Europe has been defined by Ulrich Beck (2006) as a loosely knit combination of nation states which have in the past 50 years been able to turn a century long lasting rivalry between states into a peaceful cooperation driven by a common market, common economic policies, common citizenship and – since the Maastricht Treaty – a common currency (albeit not yet shared by all nations). The reason to take Europe as the unit of concern is that there is more world-wide ‘between’-difference (between Europe and other parts of the world) than ‘within’-difference (between the European nations) in attitudes and values, but also in university systems and lastly, where the looming crisis catalysed by demographic development is concerned (even though Japan and the US are in this element together with Europe). The differences between university systems of the nation states of Europe are large (as the next section will argue). Yet, the differences compared to other countries (North America, Asia, South America, Africa, and Australia) are far more pronounced in the following terms. – The diversity within the European systems is generally much smaller than elsewhere. – The history of European systems goes back to the 11th century while that of most other countries is more recent. – The enrolment history is also quite different with the US leading in mass university enrolment in the fifties, Europe following in the seventies and subsequently countries like Japan and Korea even exceeding the 45% and European enrolment rates in the nineties. Europe has a common deeply rooted anti-elitist attitude which has translated into a disregard for diversity and a dislike for top talent. Virtually every European language has expressions for – Swimming with the tide or going with the tide, and – Acting out of character or being the odd one out. Still, the within-diversity is substantial as Table 1.2 shows: The population size differs substantially between the countries of the EU with Germany being the ‘giant’ but also with ‘dwarfs’ as Luxembourg, Malta and Cyprus. Demographics also differ substantially among European countries over the period 2005-2050.

INTRODUCTION

31

Per capita incomes differ also substantially with Luxembourg in the lead while the newly accessed countries Bulgaria and Romania are the laggards with a per capita income of no more than 5% of that of Luxembourg. The degree of inclusion of European countries in the global economy differs tremendously, with smaller countries like Belgium, Austria, Sweden and Denmark as frontrunners whereas the new EU members Bulgaria, Latvia, Lithuania and Romania rank low on the globalization index. This has not changed since 2000. However, the UK and export-champion Germany rank surprisingly low, in a similar league as the Southern European countries and Slovenia and Slovakia. A general tendency between 2000 and 2006 is an increase degree of globalization in the newer EU countries and a decrease in the older Member States (ETH Zurich, 2008). The table also shows overwhelming differences in the attachment which the different nations feel to Europe, the Europhile index, led by Ireland (the famous ‘no’-voter in 2007!), the Netherlands, Luxembourg and Spain. The Euro-sceptics are Austria, Finland and Latvia. The four leaders are the same as in 2000, only in different rank order (in 2000: Luxembourg with 79%, Ireland with 75%, Netherlands with 71%, and Spain with 63%). Austria and Finland were already quite Euro-sceptic in 2000 with only 38% and 39%, respectively, of the population saying that membership in the European Union is a good thing. Still, the extreme Euro-sceptic was the UK with 29% in 2000, followed by Sweden with 34%. The percentage of the population who say that membership in the EU is a good thing has increased in most old EU Member States between 2000 and 2006; only in the Southern European countries (Italy, Greece, Portugal) and Austria, it has decreased and in Finland remained the same (European Commission, 2001).

32

Table 1.2

A CHANCE FOR EUROPEAN UNIVERSITIES

Diversity Within Europe

Country

Austria Belgium Bulgaria Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom EU-27

Population in 20051)

Income per capita in 20052)

Globalization Rank 20053)

8.24 10.48 7.74 0.76 10.24 5.42 1.35 5.25 62.82 82.47 11.10 10.09 4.16 58.61 2.30 3.41 0.47 0.40 16.32 38.17 10.55 21.63 5.39 2.00 43.40 9.03 60.23 492.00

29,700 28,800 2,800 18,000 9,800 38,300 8,200 30,000 27,500 27,200 17,800 8,800 39,100 24,400 5,700 6,100 65,000 11,900 31,500 6,400 14,100 3,700 7,100 14,400 20,900 32,600 30,400 22,500

2 1 40 18 10 5 15 11 14 22 32 12 7 27 38 31 8 24 4 30 17 42 23 19 16 6 26

Europhile Index (Rank) in 20064) 34% (26) 65% (5) 53% (14a) 49% (19) 52% (15) 65% (6) 51% (16) 39% (24) 49% (17) 57% (9) 53% (14b) 49% (20) 77% (1) 56% (10) 37% (25) 59% (8) 72% (4) 44% (22) 74% (2) 56% (11) 47% (21) 62% (7) 55% (12) 54% (13) 72% (3) 49% (18) 42% (23)

Notes: 1) Population in million at 1st January of each year; Source: Eurostat (2008b). 2) GDP per capita in Euro per inhabitant at current prices; Source: Eurostat (2008a). 3) The KOF Index of Globalization includes 158 countries in total (The ranks are based on the position of the respective country among all 158 countries in 2005); Source: ETH Zurich (2008). 4) The index represents the percentage of people who think that the country’s membership in the EU is a good thing; rank of country among EU countries in brackets; Source: European Commission (2007).

This is the picture of diversity. Yet, when European countries decide on their cultural heritage, they notice the common European identity, carried by “composers like Mozart, Bach, Beethoven, Chopin, Schumann, Debussy and Händel, and artists like Picasso, Michelangelo, Bernini, Matisse, Rembrandt and Da Vinci[, according to Bevers (2008). He] analysed the final secondary-school examinations in the subjects music and fine arts in ten European countries. ‘To me, it was not about the question of knowledge about education’, he found, ‘but about cultural exchange

INTRODUCTION

33

between the countries. Final examination assignments are a good indicator for that.’ Bevers considers the European content of the assignments one of the most striking results of his research. If there were questions about the culture outside Europe they almost always dealt with American culture. [He] states the existence of a ‘double loyalty’: in every country the cultural canon is comprised of the own cultural heritage, and that is filled up with a European canon, for which a broad and striking agreement exists.]” (translated from Oosterbaan, 2008). Let it be clear that I do not want to imply by taking Europe as the unit of analysis that European universities should be part of the competencies of the EU, that their ‘chance’ should be realized by action from ‘Brussels’. Such an implication would give rise to an ideological debate which is not likely to bring great prospects closer for European universities. So: where policy suggestions are made, they refer to suggestions for national policies on the assumption that national policies act in line with the principle of subsidiarity meaning that whatever can be accomplished by national policies should be left there assuming that national policies are attuned to those of other EU countries but without transferring decision making power to the EU.

1.3

European Universities

With very few exceptions (like the small College of Bruges) European universities are national universities in countries belonging to the EU. They overwhelmingly harbour national students and teach by and large in the national language. A ‘European Statute’ for a European university under which it could enrol (and be financed for) students based on supranational legislation or supra-national agreements is yet to be developed (analogous to the European Company Statute). As a result, when we speak of European universities we mean the universities of the individual EU countries. I use the term universities broadly to include all institutions of higher education in the definition of the OECD (2007c) as “ISCED” levels 5 (A and B) and 6. Most EU countries distinguish between research universities and other institutes of higher learning without research or with limited applied research. The university systems in the EU countries are in many of the Western European countries ‘mature’ in terms of participation of youngsters, while in particular in the new EU countries participation is still quite low. Table 1.3 indicates the participation rates. In the new EU countries participation may not be as high as those of the older EU countries or of Korea (almost 69% in 1997) and Japan (almost 43% in 1999 and 56% in 2006). The Heads of State of the EU decided in 2000 to formulate the Lisbon goal of an enrolment of 50% of the age group by 2010.

34

Table 1.3

A CHANCE FOR EUROPEAN UNIVERSITIES

Participation in universities in the EU (as Percentage of the Age Group 20-24)

Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece Spain France Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom EU27

1998

2002

2006

n.a. 41.2 23.6 51.2 47.0 45.4 47.8 44.7 52.7 52.8 46.1 n.a. 43.1 39.3 7.5 29.9 n.a. 46.8 50.6 39.1 42.8 20.5 45.9 24.3 78.7 51.1 55.0 45.5

57.1 40.2 35.1 61.8 45.4 62.7 54.1 64.3 58.1 52.3 54.6 26.0 68.3 62.6 11.4 45.3 24.4 53.3 46.4 60.6 51.6 32.8 65.7 32.5 87.2 74.2 62.0 52.9

61.9 45.4 48.3 78.6 47.2 65.6 54.1 89.3 61.9 54.0 64.2 32.1 73.4 76.7 9.6 65.0 30.4 60.1 47.9 64.7 52.3 52.0 82.5 44.2 92.5 80.2 58.5 58.5

Source: Eurostat (2008b)

The university systems of the EU share the history of the first universities established in Bologna (1088) and Paris (1150), followed by Oxford (1167), Cambridge (1209), Salamanca (1218), Montpellier (1220), Padua (1222), Naples (1224), Toulouse (1229), Prague (1348), Heidelberg (1386), and Louvain (1425; see Compayré, 1893). These were in the Middle Ages tiny institutions – even if one considers that the population in European countries was less than one fiftieth of the present population – with a participation rate of no more than 1.75% established as a corporation of teachers and students with broad support from the reigning royalty and the Pope (or one of the Popes or other Church dignitaries). The first students of the medieval universities were almost all clerics. Their social background differs, however. Those who came from the middle class were mainly found at the faculty of arts while the more prestigious students studied law or medicine. Students from a higher social back-

INTRODUCTION

35

ground like “knightly descent or membership of the urban ‘upper class’ of ‘upper middle class’” (Rüegg and Ridder-Symoens, 2003, p. 200) were mainly specialised students in their twenties or thirties who aimed at an examination or even doctorate degree, that often allowed them to become teachers themselves afterwards. The students were wealthy, the university was well endowed and catered for an ‘international’ student population (not only from the own region or country). An excellent and detailed account of the history of European universities is presented in the three volumes under the editorship of Walter Rüegg (2003, 2004) and Rüegg and Ridder-Symoens (2003). They show that equality of opportunity always has been part of the European legacy: “Poverty was no obstacle to admission, but in general no particular consideration was shown as far as the payment of fees was concerned. Those who set the fees in each case had to examine the ability or inability of the student to pay. The poor students were urged to meet as far as they could the financial obligations connected with their matriculation. Strictly speaking, deferment of the payment of fees was to be allowed only […] until the onset of a better fortune” (pp. 186-7). Basically there was already some sort of incomecontingent “loan” system, at least informally! As far as career prospects are concerned, the accounts differ. While according to Rüegg and Ridder-Symoens (2003), having attended or graduated from university did not count as much as the status by birth, according to Rudy (1984), graduates from the first European universities had good chances in the clergy, the government and as lawyers and doctors, it seems. Although usually little is known about them, of some students, more is reported due to “their later fame as ministers, civil servants, or leaders of their communities” (Maag, 2004, p. 102). Moreover, there was high demand for law students, for example, because “an education in Roman Law was the ordinary preparation for the career of the secular as well as of the ecclesiastical lawyer” (Rashdall, 1895, p. 112). The common history got a bifurcation in the 19th century with the writings of Cardinal Newman (1858) in Ireland (then part of the UK) and Wilhelm von Humboldt (1793) in Germany. Both became the godfathers of a new type of university. The Humboldtian research university was geared towards producing social leadership. It is more known for the means which von Humboldt had supported to produce social leadership: freedom of research and teaching for the individual professor instead of research and teaching directed by and to be accounted for to the principal of the university (King or Church). Cardinal Newman (1858) in the same vein argued for an independence of research and teaching from the principal, yet, considered the community of the college to be more important than the individual chair. But even while the ideas were so alike the university development in Germany and the UK went into different directions: Germany along a strict model

36

A CHANCE FOR EUROPEAN UNIVERSITIES

of ‘all universities are the same’ while the UK and Ireland allowed differentiation between universities including selectivity of students. When one compares the university systems in the EU one can distinguish: The UK and Ireland with a highly differentiated and selective system, allowing (in the UK) for substantial tuition fees. In Section 2.1 Europe in the Rankings the UK system comes out as a shining example – also in the sense of providing competition to the US in the top 20, although on the basis of universities among the top 200 divided by population the (non-selective) systems of the Netherlands and Norway are ‘superior’. The systems of the ‘Big Four’ of the old EU: Germany, France, Italy and Spain without differentiation or selectivity, and without tuition fees in research universities. Differentiation does exist in Germany between the Fachhochschulen (polytechnic institutes) and the research universities, while in France the Grandes Écoles are differentiated from the research universities. The Big Four are underperformers, as Section 2.1 Europe in the Rankings shows. The research universities of the small seven of the old EU (Austria, Belgium, Denmark, Finland, the Netherlands, Norway and Sweden) have generally enjoyed substantial reform in the past decades. Although the research universities are undifferentiated and tuition fees are low, these research universities are doing reasonably well. The university system in the newly accessed countries which generally have the serious handicap of the transition from the Soviet Era to the New Times including too limited resources. The OECD has provided a service to analyse the university systems of its member countries (and sometimes also non-member countries). OECD (2008c) provides an overview of the results of these studies for the 24 participating countries, including the following list of EU countries: Belgium (Flemish Community), the Czech Republic, Estonia, Finland, France, Greece, the Netherlands, Poland, Portugal, Spain, Sweden, and the United Kingdom. Generally, governments put more and more emphasis on tertiary education because it is recognised as benefitting the social and economic development. Of course, the countries differ with respect to their tertiary education policy but some common trends can be identified. In all countries, the higher education sector has grown and now includes different types of students. Increasingly, more females and also more mature people attend tertiary education institutions, and the student population is more mixed “in terms of socio-economic background, ethnicity and previous education” (OECD, 2008, p. 3). Along with this expansion came diversification and new funding arrangements. In all countries, the importance of accountability and performance, i.e. quality assurance, and of fostering international networks and collaboration, both for teaching and research, have been stressed.

INTRODUCTION

37

The best thing which has happened to European universities in the past decades is the Bologna agreement: EU nations (but not exclusively EU nations) will create a similar structure (the bachelor-master structure) for their universities. The potential impact of this move is, indeed, the creation of a European university space in which students can more easily study outside of the boarders of their own country. Such a space might create the kind of competition-tide between universities which lifts all boats. In Section 6.4 the present implementation of ‘Bologna’ is discussed as a half empty glass. In any case, Bologna is not a sufficient condition for realizing the chance for European universities to serve their societies in line with the demands of a vibrant nation.

38

A CHANCE FOR EUROPEAN UNIVERSITIES

Notes

1 2 3 4 5

6

Source: Eurostat (2008b) Source: Council of Graduate Schools (2008) Percentage of students in higher education of the total population aged 18 to 21, Source: Education Encyclopaedia - StateUniversity.com(2009). Percentage of Students in ISCED 5 and 6 of the total population aged 20 to 24, Source: Eurostat (2008b) The “Reichsfrequenz (matriculations within the Holy Roman Empire) between 1385 and 1505 reached a high point of 1.75 per cent yearly, despite a concurrent decline in the population growth” (Rüegg and Ridder-Symoens, 2003, p. 188). The Reichsfrequenz refers to the students matriculated at those universities that had registers listing the students. See Santiago et. al. (2008), Vol. 1-3, for the detailed reports.

2

2.1

The Looming Crisis

Europe in the Rankings

And then in 2003 came the first ranking of universities world-wide, brought out by the Academic Ranking of World Universities. It was produced by Shanghai Jiao Tong University originally to get an assessment of its own position world-wide, and therefore, referred to as the Jiao Tong ranking hereafter. Later, in 2004, it was followed by the Times Higher Education Supplement (THES) ranking. The rather dismal story of European universities in these international rankings has already repeatedly been brought to the attention of the public (e.g. Winckler, 2008 or Lambert and Butler, 2006): European universities are in general far below those of the US while being comparable in numbers of students (16.3 million students versus 15.9 in the US in 2003). The rankings substantiated suspicions of the clear dominance of the US for top-university education, which has attracted so many talented foreign youngsters – including Europeans – to study in the US and often to stay there for longer or even shorter periods of time. This is the picture which provides the challenge for Europe to do better and – in its turn – attract youngsters from all over the world to study and possibly to stay for a while in a manner of brain circulation, creating experiences of youngsters with other people and cultures which is essential for world peace and understanding. Of course top quality is not the same as average quality. Europeans are fond of defending their rather dismal attraction for top talent by pointing to a presumed high average performance of European universities. The weakness of this defence is first the implicit assumption that a high average excludes top performance while second, the assertion that on average, European universities do better than US ones is based on casual observations and not proven fact. High averages – of course – can be compatible with top performance by some, while others fall below the average, if societies are willing to allow for a (dynamic) differentiation. If falling below the average also means that universities do not reach a minimum quality, then the price for dif-

40

A CHANCE FOR EUROPEAN UNIVERSITIES

ferentiation is clearly too high. This price, however, can be avoided if universities would differentiate according to different elements of quality, so that universities which do not claim to be top in research or internationalization (important elements in THES and Jiao Tong) still can sustain strong standards in education and would serve emancipation, i.e. bringing new groups with little or no higher education experience in the social context into higher education. The rankings of THES and Jiao Tong are highly myopic, as educational quality is measured in a rather imprecise way. The OECD’s AMELO (Assessment of Higher Education Learning Outcomes, see www.oecd.org/edu/amelo) provides a perspective that means in the future better measures will be available. The THES ranking uses six indicators contributing with different weights to the overall score: – Peer review (40%) – Recruiter review (10%) – International faculty score (5%) – International students score (5%) – Ration faculty/students score (20%) – Citations/faculty score (20%) The Shanghai ranking is entirely based on research accomplishments in the sciences by universities (Institute of Higher Education, Shanghai Jiao Tong University, 2008a): – Number of alumni winning Nobel Prizes and Field Medals (10%) – Number of staff winning Nobel Prizes and Field Medals (20%) – Highly cited researchers (20%) – Articles indexed in the Social Science Citation Index (SSCI) and Science Citation Index (SCI) (20%) – Articles published in the journals Science and nature (20%) – Performance in respect to size of universities (10%) It is useful to make a distinction in the European presence among the Top 20, Top 21-100 and Top 101-200 between the UK and the rest of Europe (Table 2.1) for the rankings of 2008. The THES ranking of 2008 is depicted in Figure 2.1 (with for Europe only the distinction between the UK and the rest of Europe) and Figure 2.2 for Europe by groups of countries.

41

THE LOOMING CRISIS

Table 2.1

Ranking by Region, 2008

US EU {

UK Big Four Small Seven Other EU

Top 20 13

THES Top 21-100 24

Top 101-200 21

Top 20 17

Jiao Tong Top 21-100 37

Top 101-200 36

4 0 0 0

13 5 10 4

12 12 15 7

2 0 0 0

9 9 8 6

11 18 9 7

Asia

1

11

19

1

4

4

AUS, CAN

2

13

11

0

7

5

Other

0

0

4

0

0

10

Total

20

80

101

20

80

100

Sources: Institute of Higher Education, Shanghai Jiao Tong University (2009a), QS Ltd (2009).

Figure 2.1

Times Higher Education Ranking 2007

100% 90% 80% 70% UK Others AUS, CAN, NZ Asia Other Europe US

60% 50% 40% 30% 20% 10% 0% 1-20

21-100

Source: based on data from QS Ltd (2007).

101-200

42

A CHANCE FOR EUROPEAN UNIVERSITIES

Figure 2.2

Europe’s Top Universities 2007 (in the Times Higher Education Ranking 2007)

100% 90% 80% 70%

IE NL, BE SE, NO, DN, FI AT, CH FR DE E, I, GR UK

60% 50% 40% 30% 20% 10% 0% 1-20

21-100

101-200

Source: based on data from QS Ltd (2007).

The THES ranking shows the important position of the UK – definitively when one compares it to the population size. At the same time: the THES ranking is quite UK-biased (the first two scores come mainly from professors who are close to the Times – in the UK, Australia, Malaysia). However, also in the Jiao Tong the UK universities do really well! This makes us – in general – more interested in the relationship between top universities and the population size of a country. Table 2.2 compares the performance of all countries, which are represented in the THES ranking 2008 and the Jiao Tong ranking 2008. The ranking performance is defined as the ratio of the share of domestic universities in total universities in a given range of ranks to the share of domestic population in the world population. In addition to this, the ranking performance of each country or region is compared to that of the US, which gives a sort of index where the US is 1. In the top 20, the UK performs best in the THES ranking, followed by Australia, preceding the US. But when the focus is on research, as is the case for the Jiao Tong ranking, the US is clearly the No. 1, followed by the UK. Canada makes an appearance in the top 20 THES performance indicator but not in the Jiao Tong one, while Japan is represented in both.

THE LOOMING CRISIS

43

Moving on to the next range of ranks, the top 21 to 100 universities, other European countries than the UK appear. Switzerland is in Europe among the top performers relative to population size in both rankings followed by Denmark, the Netherlands, England (the UK) and Finland while Sweden is the No. 1 in terms of research followed by Switzerland and Denmark. Clearly, in this range of ranks, Europe does far better than the US in both rankings. In the THES, some universities in Asia and Oceania also outperform the US universities. For the top 101-200 ranks, a similar picture emerges with Switzerland on top, followed (in Europe) by the Netherlands and Belgium for the THES ranking, while in the Jiao Tong rankings the Netherlands, Switzerland and Belgium lead the pack in Europe. Of course, the Jiao Tong ranking shows a slightly different picture than the THES ranking. Compared to the per capita performance of the US, European universities are not well represented, especially in the top 20. This would also be the case for the range from rank 21 to 50, in which 19 universities are located in the US. Greek and Irish universities are not ranked among the top 200 in 2008 at all.

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 22.05

0.00 0.00 0.00 2.65 0.00 0.00 0.00 0.00

EU EU EU EU EU EU EU EU EU EU EU EU EU

Europe/EFTA Europe/EFTA

Africa

Asia Asia Asia Asia Asia Asia Asia

Austria Belgium Denmark Finland France Germany Greece Ireland Italy Netherlands Spain Sweden UK

Norway Switzerland

South Africa

China Hong Kong Japan Singapore South Korea Taiwan Thailand

0.00 0.00

Top 20

Region

0.13 36.25 1.99 36.57 3.50 0.00 0.00

0.00

0.00 33.57

0.00 7.97 30.92 16.76 2.72 3.07 0.00 19.02 0.00 20.42 0.00 18.33 17.91

Top 21-100

0.20 9.57 3.15 0.00 1.39 2.91 0.99

1.36

14.02 35.45

8.02 25.24 12.24 0.00 2.15 6.49 6.00 15.06 1.12 28.31 1.50 14.52 13.10

Top 101-200

Ranking performance

0.00 0.00 0.19 0.00 0.00 0.00 0.00

0.00

0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.57

0.02 5.58 0.31 5.63 0.54 0.00 0.00

0.00

0.00 5.17

0.00 1.23 4.76 2.58 0.42 0.47 0.00 2.93 0.00 3.14 0.00 2.82 2.76

0.05 2.13 0.70 0.00 0.31 0.65 0.22

0.30

3.11 7.87

1.78 5.61 2.72 0.00 0.48 1.44 1.33 3.34 0.25 6.29 0.33 3.22 2.91

Ranking performance relative to US Top Top Top 20 21-100 101-200

THES Ranking 2008

Country and Regional Performance in the Rankings in 2008

Country

Table 2.2

Top 21-100

17.70 33.57

not represented not represented 2.65 1.99 0.00 0.00 0.00 0.00 0.00 0.00 not represented

not represented

0.00 0.00

0.00 0.00 0.00 0.00 30.92 0.00 16.76 0.00 4.08 0.00 6.15 0.00 not represented not represented 0.00 0.00 10.21 0.00 0.00 0.00 36.67 0.00 12.40 11.02

Top 20

2.65 14.63 1.40 2.94

0.14 0.00 0.00 0.00

0.00 0.00

0.20 0.00 0.00 0.00

1.77 3.35

0.34 1.88 0.18 0.38

0.00 3.44

0.73 3.67 0.19 0.00 1.56 0.00 1.02 0.00 3.66 1.24 0.00 0.00 0.00 0.00 0.60 5.66 28.59 1.52 0.00 12.13 0.00 26.85

1.04 3.27 1.59 0.00 0.56 0.84 0.00 0.00 3.09 1.67 0.41 0.61

0.00 0.00 0.00 0.00 0.00 0.00

8.10 25.50 12.37 0.00 4.35 6.56

Top 101-200

Ranking performance relative to US Top Top Top 20 21-100 101-200

Jiao Tong Ranking 2008

Ranking performance

44 A CHANCE FOR EUROPEAN UNIVERSITIES

0.00 3.55 0.00 3.55 0.89

South America South America

Oceania Oceania

North America North America

Middle East

Argentina Mexico

Australia New Zealand

Canada US

Israel

EU countries EU (excl. UK) Europe (EU15, NOR and SWI) Asia (incl. India) 6.43 3.55 7.10 2.66

11.97

10.15 6.50

24.02 19.95

0.00 0.00

0.00 0.00 0.00

Top 21-100

7.20 5.09 8.08 2.81

18.96

14.07 4.50

6.34 31.60

1.68 0.62

0.11 0.47 0.35

Top 101-200

0.25 0.00 0.25 0.06

0.00

0.72 1.00

1.14 0.00

0.00 0.00

0.00 0.00 0.00

0.99 0.55 1.09 0.41

1.84

1.56 1.00

3.70 3.07

0.00 0.00

0.00 0.00 0.00

1.60 1.13 1.79 0.62

4.21

3.12 1.00

1.41 7.02

0.37 0.14

0.03 0.10 0.08

Ranking performance relative to US Top Top Top 20 21-100 101-200 Top 21-100

1.85 0.00 1.79 1.66

0.00 6.24 5.00 6.93 1.25

11.97

7.77 6.89 8.05 2.66

28.72

4.06 7.80

not represented 0.00 10.15 18.41 10.02

1.69 0.62 9.61

0.00 0.00

0.00 0.35

Top 101-200

12.01

0.00

0.00 0.00

not represented 0.00 0.60 0.00 0.00

Top 20

0.10 0.00 0.10 0.09

0.00

0.00 1.00

0.00

0.00 0.00

0.00 0.00

0.62 0.50 0.69 0.12

1.19

1.01 1.00

1.20

0.00 0.00

0.06 0.00

1.00 0.88 1.03 0.34

3.68

0.52 1.00

1.23

0.22 0.08

0.00 0.05

Ranking performance relative to US Top Top Top 20 21-100 101-200

Jiao Tong Ranking 2008

Ranking performance

Notes: A zero (0.00) means that a given country is not represented with any university in the given range of ranks. Sources: Own calculations based on data from Institute of Higher Education, Shanghai Jiao Tong University (2008a), QS Ltd (2008), United Nations Population Division (2008a).

10.15 14.08

16.02 0.00

0.00 0.00

0.00 0.00 0.00

BRIC/Asia BRIC BRIC/South America

India Russia Brazil

Top 20

Region

Ranking performance

THES Ranking 2008

Country and Regional Performance in the Rankings in 2008

Country

Table 2.2

THE LOOMING CRISIS

45

46

A CHANCE FOR EUROPEAN UNIVERSITIES

An excuse for the relatively weak position of European universities in this ranking is sometimes suggested to be that much of science research is carried out in Europe outside the universities, e.g. in Germany by institutes of the “Deutsche Forschungsgemeinschaft” (German Research Foundation) and by Max Planck institutes, or in France by the institutes of the “Centre national pour la recherche scientifique”. If – indeed – public research in the US would be more concentrated in universities, then the research achievements of that research would boost the performance of universities. Table 2.3, however, shows that this is not the case.

Table 2.3 US EU15

Ratio higher education/ other public research 1981

1991

2001

0.6 1.0

0.7 1.1

1.1 1.6

Sources: see appendix 2.1

Europe (the EU 15) actually holds a higher proportion of university/other public research expenditures, where both Europe and the US show a rapid growth in that ratio. In other words: it is not the structure of public research which favours US universities. But – as appendix 2.1 substantiates – research expenditures in the US are substantially higher and so – despite the fact that university expenditures as a percentage of the total of research expenditures are smaller in the US than in Europe – total university research expenditures are more or less the same (about €100 per capita in the EU15 as in the US). Let’s continue this analysis on the level of individual countries. Table 2.4 shows the R&D expenditure going to the higher education sector as a total and as a percentage of the total of R&D expenditure in the country. It is clear by juxtaposing this table to the Jiao Tong ranking and correcting for population size of table 2.2 that the relationship between the proportion of research expenditures of the university sector on the one hand and presence as a country in the top echelons of Jiao Tong is weak. While Germany could be used as a point to illustrate the hypothesis, the US attests to the contrary in terms of the relationship between the percentage of R&D expenditure going to the higher education sector and the representation in the Jiao Tong ranking. This implies that other factors are at play, like the size of R&D expenditure in the higher education sector, its distribution and concentration among universities, and the efficiency in generating research output.

47

THE LOOMING CRISIS

Table 2.4

R&D expenditure going to HE sector, EU and selected countries, 2005

Country/Region Lithuania Turkey Greece Estonia Latvia Cyprus Portugal Croatia Poland Norway Italy Spain Netherlands Malta Ireland United Kingdom Hungary Austria Denmark Belgium EU27 EU15 Iceland Sweden Slovakia Finland France Slovenia Germany (incl. ex-GDR from 1991) Czech Republic United States Romania Japan Bulgaria China (excl. Hong Kong) Russian Federation Luxembourg (Grand-Duché)

Mio € 85.757 1,248.994 547.720 43.096 29.494 21.508 425.187 108.083 437.559 1,135.731 4,711.700 2,959.928 2,457.000 7.843 550.000 8,160.427 210.626 1,483.778 1,254.442 1,238.842 44,452.848 43,213.554 79.846 2,333.499 39.690 1,042.100 6,820.731 69.149 9,221.100 231.934 36,838.679 44.682 16,330.413 11.159 2,376.579 379.045 7.100

% 54.6% 54.6% 47.5% 41.4% 40.6% 38.9% 35.4% 34.6% 31.6% 30.7% 30.2% 29.0% 27.8% 27.4% 27.1% 25.7% 25.1% 24.8% 24.6% 22.3% 22.1% 22.0% 22.0% 20.9% 20.4% 19.0% 18.8% 16.7% 16.5% 16.4% 14.1% 13.7% 13.4% 10.5% 9.9% 5.8% 1.5%

Source: Eurostat (2009)

The most widely used rankings Jiao Tong and THES were tested on their ‘robustness’ by Saisana and D’Hombres (2008) by juxtaposing the Jiao Tong Top 100 and THES Top 200 ranking for 88 universities for which both ranks were available. Only 0.5% of all the European universities (24 universities) are among the 88 universities of the world which appear in both rankings indeed were included in this group. The authors’ criterion for robustness is the correspondence between the two ranks. Of course, that correspondence is rather weak as Jiao Tong measures research per-

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A CHANCE FOR EUROPEAN UNIVERSITIES

formance in the sciences only, while THES includes education quality and is in many of the underlying variables highly biased towards British institutions. The relevance of the rankings as an indicator of value added achieved in university education in the different universities in different countries is limited. But that is not what they aim to achieve, contrary to what the vast number of critics of these rankings purport. The THES ranking is about certain indicators of the perception of quality as well as certain indicators of proxies of quality (attractiveness to international staff and students). The Jiao Tong ranking is about achievements in science research. No more and no less. Yet, the message of these rankings for Europe is clear: European universities can do better. They also should do better if Europe wants to be that thriving continent it purported to be in the Lisbon declaration. Winckler (2008, p. 69) supplements the Jiao Tong information with the ranking of individual researchers according to citations – presented in Table 2.5 5. The US and Europe dominate the world scene with Europe almost on par with the US in the Top 20 but with a much broader base for the US in the Top 200. Correcting for population size it is obvious that the US performs much better.

Table 2.5

Ranking of the Individual Researchers in the Sciences

US UK Other Europe Other Total

Mathematics Top Top Top 20 100 200 10 66 136 2 10 16 7 18 32 1 6 16 20

100

200

Top 20 8 1 6 5

Physics Top 100 50 10 32 8

Top 200 101 15 51 33

20

100

200

Molecular Biology Top Top Top 20 100 200 10 100 200 5 10 7 17 35 3 11 20

100

200

Source: Winckler (2008, p. 69)

Bonacconi (2005) shows that the first ten institutions at Master’s and PhD level were all in the US for the Top 1000 scientists in computer science. Europe also lags behind in economics. There are only five European departments in the World’s Top 50 (ranked by citations), and all but one (Copenhagen) are in the UK (Coupè, 2003). Drèze and Estevan (2006) argue that the US ‘output’ (Nobel Laureates, Fellows of the Econometric Society, publications, citations) amounts to between two and five times European output. He also draws attention to the huge differences in Europe between different countries on the scale of publications/authors and

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population size. The UK comes out on top, followed on a short distance by the Netherlands, Norway, and Sweden (Lubrano et. al., 2003, p. 1378, Table 4). The laggards are the Big Four with France on place 10, Spain on 11, Italy on 13 and Germany on 14. Drèze and Estevan make the point that the Small Seven (Austria, Belgium, Denmark, Finland, the Netherlands, Norway and Sweden) do very well, even when compared to the UK (with the same population as the S7) and definitively when compared to the Big 4 (with four times the population of the S7). In other areas of the social sciences, the humanities, the fundamentals of law (metajuridica) and the arts, no comparisons are available between European universities’ performance and that elsewhere, nor are they available among European universities. Yet, it would not come as a surprise if US universities dominated in particular in the top – whatever the field of research is – while within Europe, the universities of the UK and those of the S7 were far ahead of those of other countries – if population size is taken into account. The THES and Jiao Tong rankings will undoubtedly be improved. Several developments are recognized: – The OECD AHELO project (Nusche, 2008) attempts to measure learning outcomes of universities much along the same lines as the Project International Student Achievement (PISA) has done for 15 year olds now in more than 50 countries in 2006, after an earlier start with a more limited number of countries in 2000 and 2003. The AHELO project is likely to have a similar effect on university policy as PISA has had (see Hopkins et. al., 2007), i.e. it will create a public (and media) outcry in those countries which have been underperforming and thus stimulate improvement. – The Center for University Development (CHE)/Zentrum für Hochschulentwicklung has published rankings of undergraduate programmes for years for Germany. Among experts, there is a broad consensus that the ranking methodology of CHE is much better than those of the Shanghai Jiao Tong Ranking and the THES ranking. CHE does not rank institutions, but subject areas, taught in departments. Within Germany, Austria and Switzerland, the authority of these rankings is undisputed, and students use their results massively. In December 2007, CHE presented the first Excellence Ranking of European Graduate Programmes in Natural Sciences. – Most rankings up to now deal with (the top of) the European research universities, while non-research universities might also benefit from a cross-border comparison of accomplishments. It is likely that this will happen in the future, through the AHELO project. The EU is likely to promote a classification of higher education institutions much like the ‘Carnegie classification’ in the US in order to promote differentiation in European university education (Van Vught, 2009). It is also likely that the research intensiveness will be an important differ-

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A CHANCE FOR EUROPEAN UNIVERSITIES

entiating indicator as will be the percentage of staff with a PhD involved in (undergraduate) education. Such a classification would be most helpful for non-research universities and universities with few PhDs in undergraduate education to excel in their own league. The top 20 European universities of Jiao Tong [latest year, so far 2008, might be 2009 by the time closer to publication] and THES 2008 are listed in Tables 2.6 and 2.7.

Table 2.6 Regional Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Top 20 European Universities – Part I (Shanghai Jiao Tong Ranking, 2006) Institution Univ Cambridge Univ Oxford Imperial Coll London Univ Coll London Swiss Fed Inst Tech – Zurich Univ Utrecht Univ Paris 06 Karolinska Inst Stickholm Univ Manchester Univ Munich Univ Edinburgh Tech Univ Munich Univ Copenhagen Univ Zurich Univ Bristol Univ Paris 11 Uppsala Univ Univ Heidelberg Univ Oslo Univ Sheffield

World Rank 2 10 23 26 27 40 45 48 50 51 52 54 56 58 62 64 65 66 68 69

Country UK UK UK UK Switzerland Netherlands France Sweden UK Germany UK Germany Denmark Switzerland UK France Sweden Germany Norway UK

Source: Institute of Higher Education, Shanghai Jiao Tong University (2008a)

National Rank 1 2 3 4 1 1 1 1 5 1 6 2 1 2 7 2 2 3 1 8

3 4 6 7 22 23 24 28 29 32 342) 48 49 50 53 57 63 64 66 67

Regional Rank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Institution University of Cambridge University of Oxford Imperial College London University College London King’s College London University of Edinburgh ETH Zurich (Swiss Federal Institute of Technology) Ecole Normale Supérieur, Paris University of Manchester University of Bristol Ecole Polytechnique University of Copenhagen Trinity College Dublin Ecole Polytechnique Fédérale de Lausanne University of Amsterdam Heidelberg University Uppsala University Leiden University London School of Economics Utrecht University

Country UK UK UK UK UK UK Switzerland France UK UK France Denmark Ireland Switzerland Netherlands Germany Sweden Netherlands UK Netherlands

Peer Review 100 100 99 96 93 96 95 93 91 83 80 88 90 63 88 87 91 87 88 89 100 100 100 99 98 99 82 72 100 99 96 59 96 71 77 59 60 61 100 66

Employer Review

Notes: 1) Universities in EU and EFTA countries; 2) Place 34 is shared with University of British Columbia, Canada Source: QS Ltd (2008)

World Rank

Top 20 European Universities1) – Part II (THES Ranking, 2008)

Staff/Student 99 100 100 100 89 82 56 68 82 82 100 100 68 93 80 81 43 35 59 62

Scores

89 85 83 89 70 70 99 99 56 74 58 45 42 77 61 58 85 97 26 72

Citations/Staff

Table 2.7 International Staff 98 96 98 96 91 91 100 29 91 85 62 67 99 100 73 54 70 74 100 45

International Students 95 96 100 100 85 82 94 69 84 74 93 69 76 100 32 81 41 41 100 24

Overall 99.5 98.9 98.4 98.1 89.5 89.3 89.1 84.8 84.4 84.1 83.0 78.5 78.2 78.1 78.0 76.9 74.9 74.8 74.2 74.0

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52

A CHANCE FOR EUROPEAN UNIVERSITIES

The lists of Table 2.6 and 2.7 contain a disproportionately large group of “old” universities, established centuries ago. At the same time, being old and established in the (late) middle ages is not a sufficient nor a necessary condition; of the 500 or so universities established before 1650 most are not found on the list of top 200, while quite a few young universities (established after 1945) are among the sub top (20-100). But in the top of Table 2.6 and 2.7 only universities established before 1909 (Bristol) appear. 2.2

What makes universities better?

Universities are better (in terms of their ranking) if they are – better financed – more autonomous – better led (by superior academicians). This is the impression given by a diverse set of statistical analyses of the THES and Jiao Tong rankings. The suggestion that rankings are associated with the organization of public research in countries is not confirmed by the data. According to this suggestion, countries would do better in rankings if more of their public research is done within universities rather than in separate institutes. Finance has been analyzed for the purpose of this book (Marconi and Ritzen, 2009) as well as by Aghion et al. (2007). We analyzed the THES 2007 first 200 by collecting data on university expenditures, the number of students etc. The main conclusion is indeed that money matters when you want to be ranked high as a university. The more money (budget per student), the higher your rank. Other variables like the field of study included in the university, the number of PhD students and location “dummies” (mainly those indicating UK or Oceania as geographic region) are statistically significantly correlated to the rank order of the university as well. This is summarized in table 2.8. Fields of study or specialization are an expression of the higher costs of science and technology fields. If a university does well in the rankings and it has engaged in these fields then it should also have substantially higher expenditures per student – so says the data. Geography plays a substantial role as well. US universities are overwhelmingly present among top universities; yet, this is entirely due to their financial situation. When controlling for expenditure per student (logarithmically) UK or Australian universities do much better (statistically significant). This could be due to bias in the THES ranking. Universities in other parts of the world are not significantly different from the US universities in terms of their performance efficiency: everywhere it is straightforward, money correlates with rank.

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THE LOOMING CRISIS

Table 2.8

THES top 200 rank in 2006 “explained by” background

Logarithm of expenditure per student Indicator of specialization Owns university hospital1 Relative number of PhD’s Located in US1 Constant R2 Prob > F

Rank -43* (-4) 5* (3) 7 (1) -658 (-1) 22 (1) 239* (9) 0.32 0.00

1 Dummy variable, taking either 0 or 1 * significant at 1% level. Most statistics rounded off to full members. T-statistics as derived from heteroskedasticity-robust standard errors in brackets. Source: Marconi and Ritzen (2009)

The relative number of PhD’s is so highly correlated with expenditure that they can be used interchangeably. To own a hospital is not a statistically significant relevant factor. In our model it turns out that , for example, if Maastricht University (mainly focused on social sciences but including a medical faculty with an academic hospital attached) wanted to go in the THES ranking from the 2007 place 111 to 100 it would cost €5930 extra with a margin of €4600 to €8060 arising from different statistical models as extra expenditure per student. This is a relevant amount of money for a university which spent €26850 per student in 2007. Sensitivity analysis on subgroups in the ranking shows that these relations are stronger for the first 20 and 100 universities and weaker when excluding these – which may be caused by the transformation from score into a ranking. Sensitivity analysis based on the overall score and the subscores shows that universities can reach excellence through very different strategies with respect to the subscores. Decomposing the sample by region shows that in particular in AngloSaxon countries expenditures make a difference. The 32 continental European universities were tested on rough measures of autonomy, general academic quality in the country and the representation of the country top universities by population size. A first comment is that the explained variance still leaves substantial room for active university leadership, for university strategy to achieve positions of excellence in the world wide ranking of THES. Yet, the room to manoeuvre is limited by expenditures.

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A CHANCE FOR EUROPEAN UNIVERSITIES

The second observation is that the statistical relation does not imply causality. It might very well be that money has been generated by excellence, so that more research (and education?) funding was procured from outside sources, leading to a spiral upwards (or reverse: by a loss of excellence causing a loss of outside funding in a spiral downwards). However, the most overriding observation is that the US-Europe difference in the rankings is first and foremost due to one difference: money. At the same time, there is the autonomy dimension. Also here, Europe fails by and large to deliver in its pursuit to the top. Autonomy was first brought to the analytical table by Aghion et al. (2007). They sent out a survey questionnaire to the European universities in the 2006 top 500 Jiao Tong ranking, with a response rate of 36% (71 responses), focusing subsequently on 66 universities in 10 countries. Table 2.9 presents their results on money and different autonomy measures. Aghion et al. concluded: “[…] the research performance of a university is:

– – – – – –

positively correlated with the size of its budget per student: the higher the budget per student, the higher the performance; negatively correlated with its degree of public ownership: private universities perform better than public institutions; positively correlated with its budget autonomy: not being required to have its budget approved by governmental authorities is associated with better performance; not correlated with its building ownership: more autonomy with respect to buildings is not associated with better performance; positively correlated with its hiring and wage-setting autonomy: university that decide on faculty hiring and set faculty wages do better; negatively correlated with its degree of endogamy in faculty hiring: universities which tend to hire their own graduates as faculty do less well.”

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Table 2.9

Correlation between budget and university governance, and research performance*

Characteristics Budget per student University governance: Public status1 Budget autonomy1 Building autonomy1 Hiring autonomy1 Wage setting autonomy1 Faculty with in-house PhD

Correlation coefficient +0.61 -0.35 +0.16 -0.01 +0.20 +0.27 -0.08

* measured by the (logarithm of the) the Shangai ranking 1 Dummy variable, taking either 0 or 1 Source: Aghion et al. (2007)

In a subsequent regression analysis they find Table 2.10 which shows also the impact of the interaction between budget and autonomy for their sample of 66 top European universities.

Table 2.10 Effect of budget and autonomy on research performance* Variable Size of the university Age of the university Budget per student Budget autonomy Interaction between budget and autonomy

Effect of research on performance + + + + +

* measured by the (logarithm of the) the Shangai ranking Source: Aghion et al. (2007)

Goodhall (2006) concludes for the top 100 universities of the Jiao Tong 2004 that the P-score (presidents individual lifetime citation score normalized for discipline) has a very small but significant relation with the rank order. But note that there is tremendous variation (the range is 37 with a mean of 6.03 and the median is 2.27). Note also that this analysis does not control for the expenditure per student. High ranking universities might well feel comfortable “buying” top researchers for university leadership. In turn this might make those universities more attractive for top researchers. Goodhall (2009 a and b) pursues this line of inquiry further, by including time lags in analyzing the impact of the appointment of a president with a high P-score on the performance in the Research Assessment

56

A CHANCE FOR EUROPEAN UNIVERSITIES

Exercise (RAE) for a panel of 55 UK research universities. In this study she does control statistically for university income, while still finding a significant impact of the P-score average of 1990-1994 on university RAE performance in 2001 (hence using a lag of some 9 years). She qualitatively has supported her hypothesis with “expert knowledge” in the form of interviews with 26 heads in universities in the UK and the US. These heads see themselves as stand leaders for quality, sometimes by focusing on quality recruitment, sometimes by providing the example that top research and heavy administration can be combined.

2.3

European Universities used to be top

Ever since mobility world-wide became faster and cheaper – in the period after World War II – the US benefitted from a brain drain coming from Europe, because top US universities offered better opportunities to develop their talents. Yet, the dominance of US top universities over their European counterparts has not been at all times. Rather it developed slowly in the post-World War II period. Slosson (1910) gives an elaborate account of the condition of nine endowed “elite” and five state “elite” universities which are now all in the top of the Jiao Tong or THES league, while mentioning that then Dutch and German universities refused to recognize the degrees of any American institution except for these 14 universities. These US elite universities were small at the time (as were European universities) such that “[…] in fact, if any university should – by some unprecedented luck or foresight – happen to get and hold a dozen men of the highest ability as investigators and teachers in its faculty at one time, it would soon go ahead of all the rest [...]” (Slosson, 1910, p. 488). At that time many of the elite European universities were better off! In other words: it is highly likely that a ranking of universities in the early past of the 20th century would have shown a clear dominance of European universities. Virtually every European nation has its tale of European university professors visiting US universities in the early parts of the 20th century and reporting back. Berkel (1990) gives an overview of the Dutch tale. Two intertwined elements jump out in the observations of the European explorers of US universities: – The general admiration for the pragmatism, the quality and the diversity of US universities. – The general appreciation they felt in US society for US universities (a much greater appreciation than they saw at home). At the same time many of the reactions to these explorers were full of condescension and often outright dismissals – sometimes referring to

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57

the Flexner report (the report of the American professor Flexner, 1930) who sought European inspiration for the restructuring of medical education in the US in 1928. When praising the strength of US universities, however, they would belittle its relevance for Europe referring to “our different culture” (Van Berkel, 1990). But after World War II the tables turned. The US launched, after the Second World War, a rapid and well financed scheme of expansion of the labor force with higher education, providing free education for returning veterans under the servicemen’s Readjustment Act, commonly known as the GI bill, while Europe only engaged in a serious expansion of university education in the late sixties. In the process the quality of top US universities gradually overtook that of top European universities. Europe developed an inferiority complex vis à vis the US which was best expressed by Servan-Schreiber (1967) although Spengler (1920) preceded him with a culture of pessimism about the future of Europe, after the terrible events of World War I. The US are the younger brother, the son, the new generation, which on the one hand cannot be denied to be doing very well economically, in research, in universities, but on the other hand are considered to have lost the old values and culture. The truth is that the US invested more heavily with private and public funds in universities and attracted talented staff from all over the world, but mostly from Europe, while Europe’s priority – in the reconstruction stage – was to revive its industrial potential, with the result that Europe gradually lost its eminence in science to the US: While between 1901 and 1950, 73% of Nobel Prize winners were based in what is now the EU, this share dropped to 33% for the full period from 1951 to 2000 and to just 19% for the decade 1995 – 2004. In economics the ratio of American based to European based scholars, included in the Who’s Who, increased from 2.8 in the period from 1972 through 1983 to 5.7 in the period from 1990 to 2000 (Blaug, 1986 and Blaug and Vane, 2003). The THES and Jiao Tong ratings are too recent to show a trend, albeit that between 2006 and 2007 the only French university in the THES Top 20 ranking disappeared and – except for the UK – the number of European universities in the Top 20 – 100 decreased (from 35 to 31) while that in the Top 100 – 200 increased (from 44 to 51): a slightly decreased average position of European universities among the Top 200, as Table 2.11 further illustrates.

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A CHANCE FOR EUROPEAN UNIVERSITIES

Table 2.11 How European Universities scored in the THES rankings of 2004 and 2007 European Universities1) among Top 20 Top 100 Top 200 Top 20-100 Top 100-200

2004 5 35 86 30 46

2007 4 35 86 31 47

Notes: 1) Universities in EU and EFTA countries Source: Own calculations based on data from The Times Higher Education Supplement and QS Ltd (2005) and QS Ltd (2007)

At the same time the US became more prominent among the THES ranking’s Top 20 (from 11 to 13 between 2006 and 2007) and among the Top 20-100 (from 21 to 24) while virtually stable in the 100-200 range (from 22 to 20). Jiao Tong (JT) 2006 showed the emergence of Japan among the top universities, with six universities among the Top 100, e.g. Tokyo University (no. 19 in both THES and JT 2006), Kyoto University (no. 22 in JT and 29 THES 2006), and Tokyo Institute of Technology (no. 89 in JT 2006 vs. 118 in THES 2006). Among the JT 2006 Top 100 there are now nine universities in or around China (Korea, Singapore): European Commissioner for Education, Training, Culture and Youth, Ján Figel’, expressed his concern about European universities with the unusual statement that “British, French and German universities will be overtaken by those in China and India within a decade unless they improve quality and access” (The Times, May 21, 2007). Several times now we have referred to the mobility of (top) talent in the direction of (the areas with) top universities. This is easily illustrated in Figure 2.3 . It is in line with the conclusions of Thissen and Ederveen (2006) that students choose for the best universities possible.

59

THE LOOMING CRISIS

Brain Drain: Migration Balance of Citizens and Immigrants with Higher Education (2001)

Figure 2.3 40 35

Migration balance (%)

30 25 20 15 10 5 0 -5

Ireland

Poland

Finland

Germany

Korea

Netherlands

Japan

Denmark

New Zealand

EU15

Austria

Turkey

Norway

United Kingdom

Spain

Belgium

France

Portugal

Sweden

United States

Canada

Switzerland

Australia

-10

Source: Association of Universities in the Netherlands (VSNU).

In conclusion, first we notice that there has been worldwide a change in the quality positions of universities worldwide with the US taking over the European lead around 1945. Second, we see no change in the development of the past decades when US universities became far superior over European ones. Third, it is East Asian universities which are the runner-ups. If Europe wants to be competitive, it has to change its course quite dramatically, well realizing that within Europe there are major differences between, on the one hand, the UK and a sizable number of smaller European countries – which do quite well – and on the other hand, Germany, France, Italy, Spain and the newly accessed EU countries which do far worse than their tradition and population size would suggest. 2.4

Innovation and Competitiveness

Do universities – in particular the research universities – have a prime role to further innovation and the competitiveness of the region and country in which they are situated? Universities are first and foremost about education. Research universities have the privilege to base this education on research which – by itself – is an important input for social

60

A CHANCE FOR EUROPEAN UNIVERSITIES

and economic development. It is precisely the research based training which is supposed to contribute to innovation by those who have benefitted from it (Aghion and Howitt, 2006). Most countries formulate in their legislation on universities a third task for research universities: ‘contributing to social development’. Throughout the past decades this has been gradually turned into ‘valorisation of research’, i.e. whenever possible to turn research insights (see: www.ec.europa.eu/growthandjobs) into new products or production processes or policy, also referred to as “tech transfer”. It is often unclear to universities what is expected of them in terms of valorisation or innovation. Suppose valorisation goes to the detriment of publications in top journals like Nature or Science (as the time of top researchers can only be spent once), how is the trade-off regarded by society or its representatives in university governance? It is rare that universities put valorisation (e.g. in the form of patents) on par with publications in their internal resource allocation models. At the same time, across Europe, research universities are often criticized for being quite inadequate in their direct contribution (as distinct from the indirect one by means of the trained manpower) to innovation, in particular to small and medium scale industries – for which obviously they are neither equipped nor financed. It is also unclear to what extent valorisation efforts create a better support for training, in the same way research based education is supposed to lead to a more innovative worker. The European competitiveness drive was channelled into the strategy of Lisbon in terms of research input – the efforts which countries should make in terms of GDP (3%) devoted to research. At the same time – in the underlying documents – the ‘research paradox’ of Europe was cited: Europe does reasonably well in research publications but lags behind in (indicators of) innovation such as patents. Consequences for the organization of research were drawn on the level of individual countries in the EU where more money was made available for innovation driven research, for valorisation and for cooperation between private research (at least innovation driven) and public research. Research productivity in Europe is not lagging behind – despite the relatively low rankings of European universities vis à vis those of the US in the Jiao Tong ranking which is determined primarily by research performance. This is because public university research in Europe is so much more widely spread in Europe beyond top research universities than in the US or in East Asia. Figure 2.4 Figure 2.4 gives an overview of research performance across the different nations for 1993-96 and 2003-06 in terms of citation impact scores.

61

THE LOOMING CRISIS

Trends in Citation Impact Scores (1993-1996 versus 2003-2006)

Figure 2.4 1.60

35

Impact 1993-1996

30

Impact 2003-2006

25

% Change between 93-96 en 03-06

1.20

20 15

1.00 10 0.80

5 0

Percentage change

Impact score

1.40

0.60

JP

KOR

FR

AT

AUS

FI

DE

IE

SF

BF

NW

CAN

DK

UK

US

NL

CH

0.40

Source: Hollanders et. al. (2008), Figure 3.9, p. 29.

This is to be compared to the number of patents granted by the United States Patent and Trademark Office (USPTO). Figure 2.4 shows the number of patents granted in 2005, as well as the country shares in all patents world-wide, and in all patents in the EU27 (when applicable). The date of the grant of the patent is used, and not, as is often done in patent statistics, the priority date, which is the date closest to the invention. It is interesting to note the difference between the measures of applicant’s vs. inventor’s country of residence. In particular, the US apply for almost 2000 patents more than they invent, while most other OECD countries host more inventors than applicants. Another striking fact is, that in 2005, more than half of the patents granted world-wide went to the US. Out of all patents granted to the EU27, over 40% were given to German applicants/inventors, while the two next largest patent receiver nations are France and the UK with between 10% and 15%, depending on the measure used.

62

A CHANCE FOR EUROPEAN UNIVERSITIES

Table 2.12 Patents Across Different Nations in 2005 Patent grants at the USPTO, 2005 (by date of grant) by Applicant(s)’s country(ies) of residence % of World

by Inventor(s)’s country(ies) of residence

% of EU27

% of World

% of EU27

OECD member countries Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Republic Spain Sweden Switzerland Turkey United Kingdom United States

793.48 251.70 338.56 2736.91 10.33 327.64 858.31 2603.04 8578.39 10 33 15 120.17 1041.80 30606.65 4374.99 51.08 25.17 1719.60 99 189.30 9.84 9 0.5 175.46 1244.81 1307.65 6.4 1968.79 76045.82

0.55% 0.18% 0.24% 1.91% 0.01% 0.23% 0.60% 1.81% 5.97% 0.01% 0.02% 0.01% 0.08% 0.73% 21.31% 3.05% 0.04% 0.02% 1.20% 0.07% 0.13% 0.01% 0.01% 0.00% 0.12% 0.87% 0.91% 0.00% 1.37% 52.94%

EU27

19383.01

OECD – Total

135552.38

World

143644

926.78 452.41 528.81 2916.74 33.89 372.00 726.26 2897.31 9038.50 15.16 47.97 18.43 157.52 1314.82 30350.93 4358.44 40.85 81.89 1004.23 121.77 223.40 28.04 13.59 0.98 273.97 1129.00 989.22 8.64 3152.58 74146.07

0.65% 0.31% 0.37% 2.03% 0.02% 0.26% 0.51% 2.02% 6.29% 0.01% 0.03% 0.01% 0.11% 0.92% 21.13% 3.03% 0.03% 0.06% 0.70% 0.08% 0.16% 0.02% 0.01% 0.00% 0.19% 0.79% 0.69% 0.01% 2.19% 51.62%

13.49%

21272.32

14.81%

94.37%

135370.20

94.24%

1.30% 1.75% 0.05% 1.69% 4.43% 13.43% 44.26% 0.05% 0.17% 0.62% 5.37%

0.26% 8.87%

0.05% 0.05% 0.00% 0.91% 6.42%

10.16%

2.13% 2.49% 0.16% 1.75% 3.41% 13.62% 42.49% 0.07% 0.23% 0.74% 6.18%

0.19% 4.72%

0.13% 0.06% 0.00% 1.29% 5.31%

14.82%

143644

Non-member economies: EU Bulgaria Cyprus Estonia Latvia Lithuania Malta Romania Slovenia

2 11 1 1 2 3 5 6

0.00% 0.01% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

0.01% 0.06% 0.01% 0.01% 0.01% 0.02% 0.03% 0.03%

4.25 3.95 4.6 2.68 7.24 1 8.00 12.7

0.00% 0.00% 0.00% 0.00% 0.01% 0.00% 0.01% 0.01%

0.02% 0.02% 0.02% 0.01% 0.03% 0.00% 0.04% 0.06%

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THE LOOMING CRISIS

Table 2.12 Patents Across Different Nations in 2005 Patent grants at the USPTO, 2005 (by date of grant) by Applicant(s)’s country(ies) of residence % of World

by Inventor(s)’s country(ies) of residence

% of EU27

% of World

% of EU27

Non-member economies: BRIC countries Brazil China India Russian Federation

55 320.67 227.33 55.31

0.04% 0.22% 0.16% 0.04%

75.26 544.99 400.78 166.40

0.05% 0.38% 0.28% 0.12%

8

0.01%

12.67

0.01%

224.42

0.16%

195.25

0.14%

676.07 104.5 30.67 1.5 232.27 70.67 5311.12 7.92

0.47% 0.07% 0.02% 0.00% 0.16% 0.05% 3.70% 0.01%

933.81 7.15 93.90 20.25 344.53 89.79 5103.61 20.78

0.65% 0.00% 0.07% 0.01% 0.24% 0.06% 3.55% 0.01%

Non-member economies: other Croatia Hong Kong Special Admin. Region of China Israel Liechtenstein Malaysia Philippines Singapore South Africa Chinese Taipei Ukraine Source: OECD (2009)

Verspagen (2006) comments on the difference between US and European universities in terms of the patents obtained. He makes the point that in the US the Bayh-Doyle Act of 1980 has made it easier for universities to take out patents in industry-university partnerships or to share the revenue. Veld and Zwetsloot (2009) argue that without a similar legal framework European universities are bound to lag behind their American counterparts in their contribution to innovation. Their plea is well supported by Crespi et. al. (2006). For a sample of six major European countries they observe that about two-thirds of the patents that result (at least partly) from university research are not owned by universities but by private firms, while the application to products and production technologies of university owned patents is not substantially different from those of privately owned patents. Public knowledge from public research (unprotected), privatised public research (which has been patented before publication, and thus, turned into proprietary knowledge) and private, protected knowledge

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A CHANCE FOR EUROPEAN UNIVERSITIES

may lead to innovation: to new products or production processes. The 2007 Summary Innovation Index (SII) is presented in Figure 2.5 . The figure shows that Sweden, Switzerland, Finland, Israel, Denmark, Japan, Germany and the UK were the most innovative countries in 2007 and ahead of the US. The impression – left by the (research) universities rankings – that Europe would be punching above its weight in order to claim a strong competitive position is clearly false. The most surprising entry is that of Germany which, together with the other European Big 4, is so disappointing in the university ranking. Comparing Figure 2.5 with Table 2.2 shows how closely the innovation rank is to the university ranking by country, corrected for proportion size in the 20-200 league, with Germany as a major exception

The 2007 Summary Innovation Index

Figure 2.5

0.10

0.50

0.49

0.48

0.48

0.47

0.47

0.67

0.64

0.61

0.60

0.59

0.57

0.55

0.37

0.36

0.36

0.36

0.35

0.33

0.31

0.29

0.27

0.26

0.26

0.25

0.25

0.24

0.23

0.08

0.20

0.19

0.18

0.30

0.23

0.40

0.33

0.44

0.50

0.45

0.60

0.53

0.70

0.62

0.73

0.80

0.00 TR RO LV BG HR PL SK PT EL HU LT MT ES CY IT SI CZ NO AU EE CA EU BE FR NL AT IE IS LU US UK DE JP DK IL FI CH SE

Source: European Commission and PRO INNO Europe – INNO METRICS (2008). Figure 1: The 2007 Summary Innovation Index (SII), p. 5.

The INNO METRICS report dubs the above countries (plus the US) as “innovation leaders”, and Austria, Belgium, Canada, France, Iceland, Ireland, Luxembourg and the Netherlands as the “innovation followers” (European Commission and PRO INNO Europe – INNO METRICS, 2008, p. 5). Note that on the basis of top universities per unit of the population these are all top performers in the rankings (with France as the exception). The above mentioned report also presents the innovation scores for the selected group of countries over the period 2003 – 2007, with the conclusion that there remains a persistent but decreasing innovation gap between Europe as a whole on the one hand and the US and Japan on the other. Non-R&D based innovations (through organisational or mar-

65

THE LOOMING CRISIS

keting innovation) are contributing relatively more to innovation in the less innovative countries (European Commission and PRO INNO Europe – INNO METRICS, 2008). Griffith et. al. (2006) compare the systems driving innovation and productivity between France, Germany, Spain and the UK on firm level, using a model that describes the link between R&D expenditure of the firm, innovation output and productivity. They conclude that innovation patterns across these four countries are remarkably similar. Figure 2.6 shows our reasoning from ‘ranking’ to ‘competitiveness’. Competitiveness is not only driven by innovation but also by the conditions for “Doing Business” (The World Bank, 2008) like the number of days it takes to register a business, the tax treatments of businesses, the restrictions for businesses in hiring and firing, etc.

Figure 2.6

From Ranking to Competitiveness Research university performance

Research performance

Intellectual property or public knowledge

Non-R&D based innovations

Innovation performance

Competitiveness

“Doing business” / governance context

Degree of globalization of the economy

Size of the country

The Global Competitiveness Index 2008-2009 is presented in Figure 2.13 for selected countries. This index is based on “12 pillars of economic

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A CHANCE FOR EUROPEAN UNIVERSITIES

competitiveness” (Schwab and Porter, 2008, p. 4) that count with different weights: 1. Institutions 2. Infrastructure 3. Macroeconomic stability 4. Health and education 5. Higher education and training 6. Goods market efficiency 7. Labour market efficiency 8. Financial market sophistication 9. Technological readiness 10. Market size 11. Business sophistication 12. Innovation As the pillars make clear, the financial sector is only one element that is considered in constructing the competitiveness index. Therefore, the current financial crisis is not reflected in major changes in the rank of countries like the United States. Remarkably many of the countries in the Top 20 are small economies.

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Table 2.13 Global Competitiveness Index 2008-2009, Selected Countries Country United States Switzerland Denmark Sweden Singapore Finland Germany Netherlands Japan Canada Hong Kong SAR United Kingdom Korea, Rep. Austria Norway France Taiwan, China Australia Belgium Iceland Ireland New Zealand Luxembourg Spain China Estonia Czech Republic Cyprus Slovenia Portugal Lithuania Slovak Republic Italy India Russian Federation Malta Poland Latvia Hungary Turkey Brazil Greece Romania Bulgaria

Global Competitiveness Index Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 22 24 25 29 30 32 33 40 42 43 44 46 49 50 51 52 53 54 62 63 64 67 68 76

Source: Schwab and Porter (2008)

Intra-EU Rank

1 2 3 4 5

6 7 8

9 10 11 12 13 14 15 16 17 18 19 20

21 22 23 24

25 26 27

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2.5

A CHANCE FOR EUROPEAN UNIVERSITIES

Uneasiness

Frequently we have referred to a feeling of uneasiness around European universities – an observation of many Europe watchers who have had (extensive) experience in East Asia and the US. A way of objectivising this observation might be to look at the instances when universities are mentioned in the press in positive, negative or neutral sense with the hypothesis that in East Asia (Japan, Korea, China) this is far more positive than in the US, which in turn is more positive than in Europe. Another indicator might be the positive, neutral or negative mentioning of universities in parliamentary debates or by national or regional politicians. It is, of course, self-evident that European universities are suffering from a far worse climate than US or East Asian universities as far as the society’s willingness to pay for its universities is concerned as will be demonstrated in Chapter 5. A somewhat remarkable and ironic feature in the press coverage of European universities is that the accomplishments of research are widely publicised, but are either not at all or only scarcely connected (in the publications) to universities. They are connected to persons and brought in a way that makes the link to the organizing institute often opaque. This is contrary to East Asia or the US where the individual researchers are recognised but generally in a close connection with the institutions which harbour them. It is somewhat heroic to venture an explanation for the differences in appreciation of (top) universities in their respective society without extensive research (which – as far as I know – does not exist) assuming our observation of those differences is correct. Yet, the earlier quoted European visitors to pre-World War II America present an interesting explanation: US universities have from the beginning, been far more practically oriented with a strong place for the sciences. Slosson (1910) presents figures on enrolments in the 14 elite endowed and State universities for the very early part of the 20th century. Roughly 80% of the enrolled students were enrolled in the sciences or agricultural studies. The social sciences, the humanities and the arts are the new kids on the block. Only after World War II did the number of students outside the sciences start to increase. In contrast, the European universities were traditionally much less practical-oriented. They often wanted to be separate from society (‘ivory towers’) and felt that their research should be by their own preference and not driven by society’s questions. Von Humboldt’s “Freiheit der Lehre” (freedom to do research) has been widely interpreted in such a way that there should be no accountability for research. The sciences were tremendously strengthened in the traditional European universities as a result of the admission to universities of bright young kids from lower socio-economic groups. Yet, most of the scientific and technological de-

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69

velopment took place in polytechnics or technical high schools and not in traditional universities. East Asian societies are quite different a case as far as universities are concerned. The Economist (Nov, 2008) refers to the “obsession” of East Asia with education. This is visible in the drive demonstrated by families to obtain the best possible education for their children. At present, universities on the European continent behave like hedgehogs in an environment with fewer and fewer nourishment. They put up their Humboldtian quills (“Freiheit der Lehre, Freiheit der Lehre”) when under threat of societal criticism, rather than cooperating closely in developing a joint vision for a prosperous future. This can be illustrated by Boulton and Lucas (2008) when they write: “These enduring elements of success explain why, in the world of globalization, universities are now regarded as crucial national assets. Governments worldwide see them as vital sources of new knowledge and innovative thinking, as providers of skilled personnel and credible credentials, as contributors to innovation, as attractors of international talent and business investment into a region as agents of social justice and mobility and as contributors to social and cultural vitality” (page 4). There is very little evidence of this positive attitude in Europe, where per student budgets are constantly cut, monies as a percentage of GDP are not increasing or declining and the Governance becomes increasingly costly and inefficient. American higher education may have seemed somewhat complacent about its future, as is the natural inclination of a leader. Yet, there are voices to spur on innovation in the US as well so that its leadership role can be maintained. Voices like those of the National Commission on the Future of Higher Education (2006).

2.6

Conclusion and summary

European universities are, on the whole, inferior to US universities in the rankings systems which have seen the light in the first decade of the 21st century. The defence of Europeans is notably weak and ill-grounded: the top-performance in the US is the result of an average which might be lower. Even if in Europe the average would be higher (which is not empirically established) then this would not exclude top performance. Compared to population size, the UK performs best in the THES top 20 ranking, followed by Australia, preceding the US. In the Jiao top 20 ranking, it is the US followed by the UK and Japan. In the range of the top THES 21-100 universities, relative to population size Singapore, Hong Kong, Switzerland, Denmark, the Netherlands, New Zealand, Ireland, Sweden, Finland and Belgium are, with the UK,

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ahead of the US. For Jiao Tong 21-100 top universities Norway, Finland, the UK, Australia and the Netherlands lead the way before the US. Remarkable is the absence of Germany, France, Italy or Spain, the birth grounds of the medieval European universities in these lists of top universities. The difference between countries in the concentration of public research in universities might obfuscate the rankings. Countries where more public research is done in universities might find their universities ranked higher. However, this does not explain the dismal performance of the EU15 universities vis à vis those of the US. Analyzing the correspondence between the rank order of a university and several background variables shows that universities are better ranked if they are: – better financed – more autonomous – led by superior academics US universities, when statistically controlling for per student expenditure, actually do less well than universities elsewhere. As expected, the correlation between finance and rank order (or score) is logarithmical. Specialization does play a substantial role. The correlations are stronger in the first 20 than in the subsequent 21-200. It turns out that universities can reach excellence through a variety of different strategies. It is likely that the dominance of the US in the top quality university education did not start until approximately 1945 when the US expanded its higher education through the G-I bill. In the future it is likely that Asian universities will soon upset European universities in the top of the rankings, implying that Europe will not be the continent of brain gain in a demographic development which would be accommodated by more brain circulation. Research productivity in Europe is not lagging behind, contrary to what the rankings might imply. Yet in terms of patents, the US is decidedly dominant with 53% of the patent grants in 2005 versus 13% in the EU 27. Within Europe, Germany is responsible for 40% of the patents. The role of universities in Europe in patents application is decidedly less pronounced than that in the US, where the US legislation (Bay-Doyle act) has been very supportive to universities. In terms of innovation the European countries emerge which are high on the university rankings in the follower league (see table 2.2) if corrected for population size. The innovation ranking is closely related to the global competitiveness rank, where the US and Switzerland are leading (2008/2009) with (in that order in Europe) Denmark, Sweden, Finland, Germany, the Netherlands and the UK in close pursuit. European universities are in a difficult position. They are not as well placed in the rankings as they are for European social and economic competitiveness,

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71

presumably because they are insufficiently financed and have too little freedom/autonomy to perform better. Yet, this translates in the public domain to an uneasiness which easily leads to university bashing. Germany is in many respects a country full of contradictions. It is the only European country which does badly in the university rankings while still being at the forefront of innovation.

Appendix 2.1 Research expenditures by sector (US, EU15) Appendix 2.1.1 shows the share of total research expenditure by the sectors which perform research, and the size of the pies roughly represents the total research expenditure (136.4 Euro per inhabitant in 1981, 307.2 in 1991, and 465.3 in 2001). Almost two-thirds of all research in the EU15 is performed in the business enterprise sector and the remaining third is roughly split 50-50 by the government and the higher education sectors. The private non-profit sector with about 1% of the R&D expenditure is negligible. In the US almost three quarters of the expenditures are done by the business enterprise sector; and surprisingly, compared to the EU15, an even smaller percentage of research expenditure is done by the higher education sector (see Appendix 2.1.2). Yet, given the amount of total expenditure (462.7 Purchasing Power Standard per inhabitant at 2000 prices in 1981, 645.4 in 1991, and 811.7 in 2001), this smaller percentage still represents the same absolute amount of money going to the higher education sector (€100 per capita).

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A CHANCE FOR EUROPEAN UNIVERSITIES

Total R&D Expenditure by Sectors of Performance in the EU15

Figure 2.7

1981

1991

1%

1%

2001 1%

18% 19% 21% 18%

63% 17%

64% 65%

13%

Business enterprise sector

Government sector

Higher education sector

Private non-profit sector

Source: Eurostat (2009).

Total R&D Expenditure by Sectors of Performance in the United States

Figure 2.8

1981

1991

2%

3%

2001 4%

10%

11%

12%

18% 69%

15% 71%

11% 73%

Business enterprise sector

Government sector

Higher education sector

Private non-profit sector

Sources: Eurostat (2009) and United Nations Population Division (2008a).

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Notes

1 2 3

The ranking methodology was slightly different in 2003. Presented here is the current methodology which has been in place starting with the 2004 ranking. European universities in the context of the rankings refer to universities in EU and EFTA countries. Decimals arise whenever a patent is shared between two or more countries.

3

3.1

Challenges

Which Europe?

The central position of this book is that European universities could – if properly supported – be much more significant for Europe’s vitality and Europe’s strength of development. But do we want that kind of Europe, and are we willing to make the effort to achieve it? Europe is, on the one hand, praised as the continent where you would like to be (Rifkin, 2004, and Reid, 2004). On the other hand it suffers from brain drain to the US, its competitiveness is at stake and its innovation power lags behind. Hence, the Lisbon agenda – agreed upon in 2000 – of making Europe "the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion and respect for the environment”. Europe cannot and does not want to compete on labour costs. It has to compete world-wide on productivity and innovation within a context of sustainability. The European social model could very well be (made) complementary to a model with high productivity and innovation, and in that respect be different from the US model, which leans more on “animal spirits” (as Adam Smith called it, i.e. ‘you have to put in a decent effort to survive’) or the East Asian model which allows less divergence of views, and thus, limits creativity (see also Castells and Himanen, 2002). The Europe of creativity and of vitality, the Europe which attracts talented people from all over the world to study, to stay for a while is a Europe with better financed, better organised and more innovative universities which are more attractive to non-European students, delivering well trained youngsters to society in order to build, create and innovate society itself. The economic crisis makes this challenge all the more relevant. The affirmation of the crisis may weaken the position of Europe versus the emerging economies. It is only a benefit for all if emerging economies strengthen their economic position, but there is no reason for Europe to

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let its vitality dwindle. However, budget cuts for public higher education and public research seem to hang like dark shadows on the horizon in many parts of Europe. These threats to Europe’s vitality and creativity should be blown away as quickly as possible. In the following sections of this chapter we look at the challenges for European universities as a necessary (but not sufficient!) condition for a vibrant Europe. Mark Leonard (2005) is convinced that Europe will run the 21st century. Perhaps. But this requires more than letting “Generation E” (young Europeans who see themselves not as Spaniards or Czechs, but simply as Europeans) run Europe, as Reid (2004) suggests. Generation E is not yet in sight as universities are nationally organised and they train – when they train, they train for national leadership. At the end of the day even the top managers of European multinationals or the top bureaucrats of the European Commission are nationals of a certain country trained in a national university, (likely) topped with a European sauce and unable to converse easily, in general, in two languages for businesses (English and the national language) or three for bureaucrats (English, French and the national language). Leonard’s (2005) optimism on European cooperation on the diplomatic front is in sharp contrast to the experiences displayed at the conference with the title “Europe: the Big Absentee” (Maastricht, 2006). Present experiences show time and again that in international organisations or in international conflicts European countries tend to be very critical of US policies, but at the same time are so disunited that the US’ point of view prevails (see for the World Bank experience: Ritzen, 2004, p. 99). Europe should create room within its concept of a European Higher Education Space for European or world leadership as we will explore in Section 3.2 and 3.3. A well defined subset of its research universities could fulfil that role. This would, indeed, create a generation E, capable of working together on the diplomatic front. At the same time, Europe is in danger of being delinquent in generating equality of opportunity for the newly emerging, untapped pool of talent, namely that of immigrant children. A new thrust for equality of opportunity is no longer just a social necessity but also an economic requirement as is further analysed in Section 3.4. Europe should also be able to move closer to the sustainable ‘production feasibility’ curve. There is no need to think about low growth rates because of ‘saturation’ or of limits to growth imposed by global warming or the exhaustion of primary commodities. Section 3.5 focuses on universities and sustainable economic growth, while the last section (3.6) presents conclusions.

CHALLENGES

3.2

77

European Leadership

Universities traditionally have been bestowed with just the most prestigious and beautiful role an institution can play: preparing young people for leadership in society, in the professions, in the arts, in religion and in civil administration. Compayre (1893) documents how the early European universities emerged in the 11th to 13th century in Europe and how the worldly and religious leaders (Kings and the Pope) almost rivalled in their wish to found or godfather a university to provide for society’s leadership in their basically feudal societies. The second wave of new universities emerged in the period of the early 19th century. Von Humboldt (1809) and Newman (1852) can perhaps be viewed as the great-grandfathers of the rationale for these universities. They both emphasized the secular nation as the entity for which universities should educate the leadership. The US state and the US endowed institutions very much followed suit (Slossen, 1910). Civic leadership in the secular nation was closely related to the arts, the social sciences, the humanities and law in the European, early 19th century, university. Sciences and medicine played a minor role. This in contrast to the US, where around 80% of the 19th century students in the elite (state and endowed) universities was enrolled in the sciences, agriculture and medicine. Nevertheless, the notion of educating for societal leadership was still strongly present in these universities. In many respects the US universities were better prepared for the massification of higher education than the European ones. The increase in enrolment in Europe in the 20th century in the sciences, agriculture and medicine took place often in separate institutions or institutions with little attention to the idea of leadership in the nation state. They were very utilitarian: the emerging industries needed scientists and engineers. This is not a plea to copy the US model in which there is little support for research in humanities and social sciences. Yet, it would be better if society at large could be brought to the table of European research to contribute to the definition of the research questions and to absorb the answers of research. Between 1960 and 1980 enrolment in European universities exploded (as much as 10 fold). It was the labour market combined with social demand which caused the increase. Social demand drove up the participation rate while the rising number of graduates could easily be absorbed by the labour market. “Nation building” became less and less prominent as a goal of university education. The mass systems which characterize Higher Education today hardly claim any more civic leadership for their graduates, whether in the nation state or beyond. Governments have come to see them almost entirely as suppliers of manpower, with the Government role mainly focused on guaranteeing equality of opportunity.

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There is a tremendous challenge ahead for universities to provide leadership across the borders in a way analogous to Von Humboldt’s notion of nation building. This is more than just providing for the globalized labour market. It also includes the preparation to work peacefully across cultural and language barriers in national and international formal and informal institutions. This translates in challenges for universities in “internationalizing” education so that students can learn to understand and appreciate cultural differences. The Bologna process, in which most European countries cooperate to bring their higher education systems more into line, facilitates universities in these challenges. The growth of the number of foreign students (often from within the region, sometimes from far away) also helps in the process. “Europe building” could be the sequel for European universities, compared to the Humboldtian notion of nation building. “Europe building” would indeed purport to raise a class of European citizens whose first alliance would be a feeling of belonging to one Europe – while maintaining the ties with the region and country of birth, upbringing and lifestyle. Of course Europe building should be part of “world building”. The financial and subsequent economic crisis has raised new questions on leadership. This crisis propels the dilemmas of environmental sustainability, climate change, limits of raw materials and of world wide poverty to the forefront of higher education because it is clear that it is not the preferred option to return to the old trajectory of economic growth. This would only lead to disaster on the medium term. The renewed concepts of leadership which go far beyond short term profits are urgently needed. The crisis has affected “globalization” if measured by trade and capital flows and by migration. Roger C. Altman (2009) speaks about “globalization in retreat”. The retreat in real flows of goods, money and people may be temporary. The retreat in the minds of people or better – the fear for the effects of globalization, as evidenced by the French, Irish and Dutch no’s to the spirit of the EU and as evidenced by increasing nationalistic and sometimes even xenophobic tendencies within the EU may be more substantial and longer lasting. The retreat of globalization in the minds of people needs to be addressed as it is incompatible with the life styles of the people of rich countries. Without the flow of goods, money and people, our life style and our wealth can not be maintained; isolationalism, autarky or protectionism simply are not an option. At the same time, global competition imbues legitimate fear for job security where jobs are lost to low wage countries, for reduced public health, public education, protection and other public services, in European countries in which taxation levels have experienced a persistent downward trend. The quest for a different globalization which can find broad support in our societies is by no means one for universities alone. At the same

CHALLENGES

79

time, the new leadership to which universities contribute should embrace at least the topics which will dominate our societies in the years ahead: – The new ordering of the market after the demise on the AngloAmerican free market. – Avoiding the catastrophes of climate change, environmental decay and the exhaustion of non-renewable resources. – Sustainable globalization imbedded in social cohesion. It is a stark realization that some of the major scandals in the business world, for example Enron, involved graduates from top universities, such as Harvard Business School (Ignatius, 2009). European universities need to address the question how their education should be more embedded in the context of the responsibility of the graduate for the future. This is not a new discussion. In medical and science education the social and ethical implications have always been an important component of the curriculum spurred on from time to time by people like the physicist Oppenheimer who raised questions about the involvement of scientists in weapons of mass destruction. In the sixties and seventies the “limits to growth” discussion was on the fore front in the development of curricula. Yet, it appears that the introduction of the bachelor-master system in Europe took place in an environment dominated by thinking in terms of isolated professions and (sub) disciplines. In other words: it is time for a renewed effort to put university education in the context of social responsibility. Globalization has taken societies by surprise: as a thief in the night, in utmost stealth, it stole the nationalness or regionalness of our knowledge, our production, our social cohesion and of our institutions – or so it seems to many of our citizens. Often, they might have observed what happened, if they only had the proper eyes. In any case, we now find ourselves in a state in which most of our national and international students have been overtaken by globalization. Universities are a prime example: most of them have been unable to adapt to the new globalized world and are thus insufficiently serving society in providing global leadership. Globalized leadership is the ability to function effectively in the international labour market in advanced positions; in the positions were strategic decisions are taken in the private and in the public sector. These are positions for which universities should create or develop the neuro-software which both reflects the past experiences in the selected fields of study while encompassing the potential to a continuous intake of new experiences. This is a challenge for all universities. It is even an existential challenge for research universities in the demographically declining countries. They either have to adapt quickly to be-

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come world universities (in quality and attractiveness to foreign students) or will shrink and possibly disappear. 3.3

The globalized labour market

The vast majority of students study in their country of birth and stay there after graduation: labor mobility between states is rather low. I am using Europe to illustrate this point with the main thrust that the limited international mobility of students and of graduates is in sharp contrast to the growing globalization of the labor market. Many European graduates find jobs in an international environment. “Three years after graduation about 80% of all graduates communicate regularly with foreigners in their job, on average 40% of the graduates spend time in an international environment and about 35% of the graduates travel abroad for their work. The labor market for graduates in Europe is therefore more international than mobility figures suggest.” (quote from Borghans and Ritzen, 2006). International mobility after graduation as is shown in Table 3.1 is particularly low compared to that of the US. It is higher than the European average in Finland, Sweden and Austria. In all countries at least 2/3-th of the graduates communicates with people in other countries at their work, both in their own language and in other languages. Only the Brits communicate very little in foreign languages (surprised?). In Spain, France and Italy about 1/3-th of the students has work with an international dimension. This is further detailed in Table 3.2. Although the data are European, it is likely that the picture of Table 3.2 can be generalized mutatis mutandis to other continents: a globalized labor market has emerged for most graduates. It is easy to think of the exceptions, which are to be found in the “shielded” (or national) sectors of the economy for which there is little or no international competition, like public administration, health, education and the social sectors. Yet even there international contacts become more and more important as a means to learn about those sectors from experiences elsewhere and sometime simply as part of the job (e.g. international affairs).

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CHALLENGES

Table 3.1 Austria Finland France Germany Italy Netherlands Norway Spain Sweden UK All

Percentage of students living abroad for work after study 5.5 3.8 4.6 6.4 1.2 1.7 0.5 1.0 4.9 8.6 3.8

Source: Borghans and Ritzen (2006, p.3); from the CHEERS survey / 1999

Table 3.2

Austria Finland France Germany Italy Netherlands Norway Spain Sweden UK All

International activities of graduates in their job Traveled abroad Communication Other language Own language with people abroad 51.9 55.0 38.5 83.5 52.7 27.2 39.4 82.6 56.0 59.8 13.6 80.1 42.4 51.7 23.2 83.4 47.7 42.0 15.4 71.2 46.3 46.5 23.0 70.2 42.5 46.8 84.3 77.1 86.9 8.9 92.0 51.0 37.1 52.2 70.3 29.2 18.4 52.2 79.5 49.1 23.2

Source: Borghans and Ritzen (2006, p.3); from the CHEERS survey / 1999

Note that this data is collected in 1999. Since then air flights have become substantially cheaper. Also the new possibilities of internet have reduced the costs of travel abroad and communication with people abroad. As a result, mobility (as in table 3.1) is likely to be increased. Some of the data is curious, like Spanish graduates apparently communicate more with people abroad but travel less. How do universities prepare students for the globalized labor market? If one reads the websites and strategy documents of major universities (also those who are highly ranked in the THES or Jiao Tong ranking) they do not even seem to ask themselves this question. Or would it be that

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implicitly they feel that this preparation for the globalized labor market is well served by study travel abroad during the study? Travel abroad comes in many ways: – Compulsory as part of the curriculum, – To earn credits (as in the European Erasmus program), – As a “free” mover, – With financial support, – On own costs. Travel abroad is on the rise as we can see from casual observation. Most US elite universities have included it in their degree courses. Firm data on the magnitude of travel abroad during studies, however, are not available. From the data of Borghans and Ritzen it appears that students who spend time abroad during their study are 4 times more likely to work abroad after graduation. They are two times more likely to travel internationally for their work, are about equally likely to communicate internationally and have a 50% higher probability of a job with an international dimension. In other words: they are better prepared for the international labor market. The background of international activities of EU students can be summarized as follows: – Women are more likely to go abroad during their studies, while men’s work is more international after graduation. – People who are born abroad are more international in every dimension. – Students who prefer a varied social life have a higher probability to engage in international activities and value personal development more. – While students for whom home and family are important are less likely to go abroad or to have work with an international dimension. – Students who are focused on making a career or earning more are not more likely to spend some time abroad. Social prestige and making money matters however for the international dimension of work after graduation. Surprisingly students apparently do not see international experience during study as a human capital investment, in contrast to the evidence of Table 4.3 which shows that the % of graduates working on their level of education is significantly higher for those who have studied abroad. There is still a way to go in informing our youngsters about the world they live in! Such international experience does not have to come from travel abroad. It could also be brought into the curriculum. Brandenburg and Federkeil (2007) give a quite in depth analysis on internationalisation of higher education. The challenge for Europe from the preceding is clear and substantial. European universities need to escape from their national prisons to pro-

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vide for truly European graduates. To a large extent this challenge requires action of national Governments: to release universities from their national chains. In some respect the chains have been loosened: as a result of decisions of the European Court students from country X can stay in country Y in Europe under the same conditions as students of country Y (see section 6.4 on the Bologna process). Also the Bologna agreement has made it easier to study abroad. But the challenge is also directed towards universities themselves. How do they make sure that their courses are “internationalized”, providing examples from other countries and focusing on structures from other countries? How do they include study abroad in their curricula? The role of the EU is in this respect limited by keeping education outside the competency of the EU. Yet, (some) research universities, who are so closely related to EU competency for research should definitely be brought under the EU competency in a lean way, leaving the final ownership to countries, but providing a soft basis within the EU, as a European Statute might produce (section 4.4) 3.4

Equality of Opportunity as an Economic Requirement

The notion of equality of opportunity is in almost all respects a European one. It is closely related to notions on social cohesion, to the social contract theory of Locke (1690), Rousseau (1762) and later Rawls (1971) in which every one should have the same chances in whatever place and under whatever circumstances one is born. It is the European experience that this concept has always born fruit and enriched society. At the turn of the 19th to the 20th century it created wealth by changing the standards of admission to universities from an elitist classical gymnasium to a more general pre-university secondary education which was less restrictive for children from humble backgrounds with good minds. The Nobel Prizes won by Dutch scientists in that period were almost all for scientists with a humble background who did not get into university through the traditional way. This is almost an echo of medieval university where universities took pride in reserving places for students with humble backgrounds, many of which became icons of European science like Erasmus or probably Galileo and William of Ockham. In the period after World War II almost all European countries engaged in a drive to make sure that it was talent – not the socio-economic background of students – which counted for students to be admitted to university. In the process participation rates to university education increased dramatically: the substantial pool of talent was tapped. And again the economy benefitted from the newly increased human capital. Yet, a new pool of untapped talent has been formed in the recent period: children of immigrant parents with low or no educational attain-

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ment who for a long period prepared themselves and their children to go back to their native country. These children have no role models to serve them for the ambition to enrol in university. Moreover, they grow up in an environment in which the national language remains by and large a foreign language as there is no support at home to learn it with precision. The national language is the necessary medium for communication, also for having access to the (social) sciences, mathematics, the humanities, even the arts. This has become evident in the PISA results for countries with substantial percentages of immigrant children among the 15 year olds, for example in Germany. University participation rates of immigrant children have been on the rise in Europe but are still far below those of the original population. Raising these rates is important for the social fabric of Europe, but also to avoid future shortages of well trained manpower. The dog can wag its tail, but the tail cannot wag the dog: higher participation rates to university education of immigrant children have to be preceded by non-traditional methods of breaking through the deadlock in primary and secondary education and ensuring that children – with the support of their parents – learn the national language well and feel part of the society in which they are born. 3.5

Universities are underexploited for economic growth

European universities could play a much more substantial role to promote sustainable economic growth and competitiveness. This applies equally to research and non-research universities, and follows from the recently acquired insights in economic growth theory. In the past two decades the ‘Schumpeterian’ growth model won the day in economic analysis. It focuses on quality improving innovations that render old products obsolete, and hence, involves the force that Schumpeter called “creative destruction” (Aghion and Howitt, 2006). In this theory there is a ‘production frontier’ (the maximum production possible) and the degree to which a country is able to converge to that frontier depends on the country’s policies (see Figure 3.1). The production frontier itself is a result of investments in physical and human capital. Good policies ensure competition but also easy entry of new firms. Aghion and Howitt (2006) suggest that entry is more difficult in Europe – causing Europe to be less than convergent to the frontier. Their example is: “50% of new pharmaceutical products are introduced by firms that are less than 10 years old in the United States, versus only 10% in Europe. Similarly, 12% of the largest US firms by market capitalization at the end of the 1990s had been founded less than 20 years before, against only 4% in Europe, and the difference between US and Europe

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turnover rates is much bigger if one considers the top 500 firms” (Aghion and Howitt, 2006, p. 279). The “Doing Business in 2008” document of the World Bank (2010) which lists the different bureaucratic thresholds to entry in the US and in Europe would support the general observation on more difficult entry in Europe of Aghion and Howitt (2006).

Figure 3.1

The Production Frontier

GDP Production frontier (Good policy) production frontier (Bad policy) production frontier

Time

Entry of new firms provides the possibility to bring in superior technologies in the production process. New entrants are generally more innovative than existing firms, conclude Aghion and Howitt (2006). Aghion and Howitt (2006) then focus on the role of universities and find that the production function can only be reached by sufficient numbers of well qualified (“high brow”) graduates of higher education. Without such a supply countries or states remain in the “imitation stage” of new inventions and end up on the (bad policy) production function (Aghion et al, 2009). They make the point that this relation is causal. This follows an earlier analysis which led to the same conclusion (like Vandenbussche et al. 2004). Research universities are prime in the supply of “high brow” graduates. Graduate research universities can also contribute to innovation through research. A substantial part of public research funds in Europe flows (some 60% in 2001, see table 2.3) to research universities – which started in the 11th century from the notion that good teaching for future leadership could not do without good research. Non-research universities also play a substantial role in economic growth but not as much from their research (which is not substantial

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enough and often of an ‘applied’ type, i.e. product development and permeating ‘GMP’ – good manufacturing practice) as by their contribution to well trained manpower. As mentioned in Section 2.5, “Europe feels” (if such a thing exists) that the gap between research and application is too large. Europe does well in research, when measured by publications and citations while it does not profit sufficiently from this new knowledge in terms of new products or services. At the heart of this feeling lies the observed difference between economic growth rates in the US and in Europe which has been persistently around 1% a year in the decades of the 80’s and 90’s. Of course, the question lurks in the back if our minds whether this was an inflated growth in the US – based on financial transfers from the rest of the world to the US without serious (recallable) underlying value assets – which has been one of the precursors and possibly reasons for the financial crisis which unfolded in the last quarter of 2008. However, the scientific analysis of the crisis, its causes and precursors still has to be done. Although it is likely to have an impact on our understanding of the pre-crisis years, we shall suffice here by presenting the pre-crisis analysis. Originally, in the post-World War II period growth accounting (explaining what the sources of economic growth are) was embedded in the Solow (1956) model: it is investment in physical and human capital which makes countries more prosperous. Research played an accidental role as the “unexplained variance” – the part of economic growth which could not be explained by investments in physical and human capital and sometimes also seen as technologic progress. The way research is organised and the role of top universities was even less included in this highly simplified model (Ritzen, Sadowski and Duysters, 2007). In the preceding reasoning it was not only the supply of “high brow” graduates which allows convergence to the production frontier, but also entry of new firms. Entry is not only determined by thresholds but also by entrepreneurship: without entrepreneurs there are no new entrants – however easy it might be to start a new firm. These findings point in the direction that the lower ranking of European research universities among the top 20 of the world does not necessarily have to be associated with lower economic competitiveness of Europe or with lower economic growth rates. In combination with the relatively high research performance across the European universities, the lower growth rate is likely to be due to less entrepreneurship and possibly less innovative entrepreneurship. If such is the case, the policy conclusion is that European universities should be more in the business of contributing to entrepreneurship. Entrepreneurship and university education is a topic with relatively recent history. One of the leading insights is from Lazear (2005). On the basis of a theoretical model he concludes (using data on Stanford alumni) that those with varied backgrounds are much more likely to start their

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own business that those who have focused on one role at work or concentrated on one subject at school. The above reasoning on the role of universities and research in economic growth is in many respects new. Yet its thrust was already visible in the Lisbon declaration where the means for Europe to become the most competitive region in the world were sought in research and higher education, acknowledging underinvestment in these area. The underexploitation of universities in Europe for economic growth is emphasized by Aghion and others in the references given above: Europe could have higher (sustainable) economic growth by better (financed) universities and more high brow graduates. Aghion et al. (2009) add to this that more autonomy increases the effectiveness of research universities in contributing to economic growth. The underexploitation is visible in Table 3.3 which presents a picture of the public rates of return for the countries for which such data are available at the OECD (2008).

Table 3.3

Public internal rates of return for an individual obtaining higher education as part of initial education

Belgium Canada Czech Republic Denmark Finland France Germany Hungary Ireland Korea (2003) New Zealand Norway Poland Portugal Spain Sweden Switzerland United Kingdom United States

Male 15.4 7.9 17.7 7.2 8.4 6.9 9.4 22.5 13.5 10.5 8.1 6.8 17.0 16.5 5.8 4.8 6.2 12.6 12.9

Female 18.5 7.3 13.3 5.6 5.3 5.1 5.3 16.7 12.4 9.2 6.1 5.0 12.8 14.5 5.7 2.2 5.6 12.9 9.1

Year of reference: 2004 (2003 for Korea) Source: OECD (2008)

It is self-evident that higher participation rates depress marginal productivity of higher education and thus reduce incomes and rates of returns to higher education. Table 3.4 shows indeed – if juxtaposed to Table 3.3 – the strong correlation between the (lower) rates of returns and higher educational attainment rates.

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A CHANCE FOR EUROPEAN UNIVERSITIES

Higher education attainment rates, 2005 (% of population aged 25-64 with completed tertiary education)

Austria Belgium Canada Czech Republic Denmark EU Finland France Germany Greece Hungary Ireland Italy Japan Netherlands Norway Poland Portugal Spain Sweden Switzerland United Kingdom United States

17.8 31.0 46.0 13.1 33.5 22.4 34.6 24.9 24.6 20.6 17.1 29.1 12.2 40.0 30.1 32.6 16.8 12.8 28.2 29.6 28.8 29.6 39.0

Source: EC – ENTR, European Innovation Scoreboard 2007

Of course, countries with public rates of return above the rate by which they can borrow are underinvesting in higher education, in quality and/ or in quantity. Underinvestment is shown to be universally spread (with Swedish women as the exception), where in particular less wealthy countries in the EU, like the Czech Republic, Hungary, Poland or Portugal are among the more extreme underinvestors, but where also richer countries, like Belgium, Ireland, the UK and even the US show serious underinvestment. The underinvestment is even stronger if one takes the positive externalities of higher education into account. These are not measured in the public returns to higher education. Moreover we have assumed that the public benefits as measured by gross wage differentials of higher above middle education are a correct measure of differential marginal productivity, ignoring the possible impact of income (distribution) policy which might already have depressed gross wages of university graduates. Another point, also made by The Economist (2009), is that a substantial part of the costs associated with higher education consists in forgone earnings (individuals engage in studying instead of working). Hence in a period of economic crisis, when jobs are hard to find, investment in higher education is even more appealing.

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It is beyond our scope to analyze the separate impact of country’s university quality of Table 2.2 on the public rate of return once educational attainment is statistically controlled for. Yet, we surmise that such an exercise would show that the public underinvestment in higher education in Europe has both a qualitative as well as a quantitative side. Higher education itself is already a formidable sector in the economy. Kelly et al. (2006) give figures for the UK. The most remarkable is the contribution of higher education to exports. Cross export earnings from the HE sector were estimated to be over £3.6 billion in 2003/2004. The Lisbon declaration was in 2006 an excellent commitment and should have been a turning point. However, there is little evidence that such has been indeed the case. The economic crisis of 2009 might actually put the Lisbon strategy in reverse in the desperate search to limit and reduce budget deficits. Of course, such a strategy increases budget deficits as it reduces tax income growth. 3.6

Conclusions

European universities are far removed from providing the basis for a strong and viable Europe, in a cultural, social and economic sense. They continue to be nationally focused and have not yet translated the globalized labor market of their graduates into their curricula. Nor have they made that translation for sustainable growth after the economic crisis. The debate about the responsible European graduate is too quiet and soft spoken. Equality of opportunity is no longer in the present Europe which is demographically in decline a luxury or a social issue. It is of great economic urgency to bring the children of the new European into universities. Europe has – despite “Lisbon” – not yet taken the insights of new growth analysis on board. These insights are that the production frontier (i.e. the maximum economic growth) is only reachable through “high brow” training including the innovations due to the research connected to that training. Europe underinvests in higher education both in quantity as (likely) in quality. The strategy to limit and reduce budget deficits by cutting higher education and research budgets could very well induce a spiral downward in European competitiveness.

4

4.1

The Battle for Talent: Europe has a Chance

Introduction

European universities as a whole are not (yet) attracting world-wide the best and the brightest: these go to US universities (also if they are Europeans themselves) because the reputation of the US top universities exceeds that of the European ones as we saw in Chapter 2. Also, European universities lag behind those of other parts of the world (US and Australia) in terms of the number of students which they attract. At present, Europe on the one side enjoys substantial brain circulation with the US (Europeans with US degrees returning) but on the other hand still suffers from a qualitative as well as quantitative brain drain. It is likely that international migration of students will continue to grow in the decades to come. Driving factors are of the push-pull type: on the one hand the opportunity to improve one’s life chances by studying abroad (pull) and on the other the limited opportunities (sometimes quantity, sometimes quality, sometimes both) at home (push). European universities will have to improve their position on attracting (top) talent world-wide also because of demographics. Demographics differ between on the one hand the developed world (including Europe) and on the other developing countries. We argue in Section 4.2 that the demand for graduates in the developed world will continue to grow but that – because of the decreasing age cohort of youngsters – the supply will be inadequate to match the demand. European universities should realize that we will come under pressure to accommodate rising participation rates and to attract more students from outside Europe in part to compensate for the European supply deficit. The model of brain circulation could create a win-win situation between Europe and other parts of the world in the process of reducing the European graduate supply deficit. Europe is not the exception in its demographic dynamics, but rather part of a ‘rich’ (high income) world which is aging, while the ‘poor’ (low and middle income) world is ‘greening’. Also in the poor world the demand for graduates is rising, yet, presumably, less than the supply. This clearly creates a potential win-win situation with the oversupply of grad-

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uates of ‘poor’ countries (temporarily) mitigating the undersupply in ‘rich’ countries. It creates an opportunity for European universities to attract students from abroad who simply cannot find a high quality study place at home because of insufficient university capacity, while at the same time providing those students with a prospect for gainful employment in a developed country. Section 4.3 gives an overview of the dynamics of talent migration within Europe and world-wide. The pattern which emerges is a good indicator for the degree to which a ‘European Higher Education Space” (a goal of the European Commission) has been realized: not yet (if we take the percentage of foreign students as our measure). The Bologna agreement – moulding all EU university systems into the same structure – is meant to contribute to increasing mobility within Europe but has not yet done so. The last section presents concluding remarks. If European universities want to find a proper place in the international scene of student migration, then their context has to change. There is a need for a European Statute and for a well-guided language policy which allows a limited number of universities “to go English” also in non-English speaking countries.

4.2

Europe’s Chance

4.2.1 Europe’s Demand and Supply of Graduates Early on – in Section 1.1 – we noted that Europe’s demographics imply a substantial hazard for European universities. Europe’s population relevant for university education is shrinking and aging albeit with major differences between European countries as Table 1.1 has shown. To be sure: I look at these demographics merely to trace their consequences for European universities without a value judgement. A value judgement could be derived from the origins of the changing demographics, namely the free decision of the individuals, hardly affected by policies of subsidisation of costs of child care or by the level of child allowances – whether by tax subsidies or by direct government outlays. Free decisions are to be valued. Another value judgement stems from the short and long term consequences of these choices. The long term consequences definitely are positive as a decreasing population has better chances for a sustained existence as was emphasized early on by Meadows et al. (1972) and the “Club of Rome” which for the first time, systematically, drew attention to the limits to growth. However, in the ‘short’ run (still some decades) there will be major transitions, involving, for example, pension systems, (health) care provision for the elderly and ... universities. The present

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system of financing (based in most EU universities on formula financing for individual students) is likely to bring many European universities (with exception of those who increase their market share) into a downward spiral (see Section 1.1): even if their market share remains constant they will tend to lose students initially (because there are fewer around) but subsequently they will have to cut the budget to accommodate the reduced income, and from there on they might lose reputation because of the internal turmoil and the transaction costs involved in budget cutting. As a consequence they might even lose their market share. Only institutions with substantial reserves or with increasing market shares (increasing so much as to at least hold the number of students constant) are relatively safe in this process. This is the backdrop for the alternative scenario in which European universities are better able to attract talent from outside Europe while at the same time raising participation rates. The latter would be in line with the Lisbon goals of reaching “50% participation in higher education”. Was it 50% of the age groups 17 – 26 (the Netherlands) or of the working population 25 – 34 (Finland)? It was left unspecified and has been used very differently between countries. Yet, the common aspect has been in all EU countries: to boost the participation rate to universities. Demographic development in the age group 20 – 24 was shown by EU country in Table 1.1. This development will be important for the future supply of graduates, as it determines the supply of new graduates (depending on participation rates and graduation rates). The total supply of graduates depends not only on the inflow of new graduates but also on the retirement of members of the existing graduate labour force. We follow a simple model for the calculation of Figure 4.1 for the total supply of university graduates in Europe with: A constant university education participation rate for the EU at the average level of 2004 and 2005 (based on a simple division of the total number of university students by the age group 20 – 24). As an alternative we have used the constant rate for 2010 based on a linear extrapolation of the participation rates of the years 1998 to 2005 towards 2010. These are two lines for the number of university students in Figure 4.1. The average between the graduation rates of 2004 and 2005 is applied (0.115 and 0.202, respectively) to calculate the number of new graduates. The total supply of graduates develops according to a simple equation: Supplyt = Supplyt-1 (1 – α) + New Supplyt, where α is based on the recent history and put at 0.016. Vincent-Lancrin (2008) has analyzed the participation to universities in OECD countries along similar lines: with constant participation rates and with “trend” extrapolations. A superficial check learns us that the second scenario (“trend”) is close to our extrapolation on our high level of aggregation.

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95

This is a very rough calculation indeed. Participation rates might be lower or higher. Lower, because of the composition of the age group 18–24 year olds by socio-economic group: for Europe as a whole the average level of education of the parents of this age group might have decreased as a result of immigration of larger groups of lowly educated immigrants who have had relatively large families. Or higher, because of the increased attractiveness of the labour market of graduates. Also transition rates might change. Lastly, the coefficient α might be increasing due to the aging over the working population or decreasing due to more years of work before retirement as it has also done in recent years. Cörvers and Wilson (2009) base their estimates for the supply of graduates in Europe on more sophisticated models. They take into account not only participation rates but also, for example, the economic growth of different economic sectors. They foresee a sharp increase in the supply of graduates from 2006 to 2020. However, they point out that this occurs only if the recent trends will continue undisturbed. Note that our Scenario 2 (based on extrapolation of the recent trends until 2010) shows an increase in graduate supply until 2010. Then participation rate, graduation rate and α are kept constant at the values of 2010 and the supply of graduates decreases. On the demand side of the labour market for graduates one has to realise the “race between education and technology” (Tinbergen, 1977). Education in the whole world is losing the race against technology: in the world of work the demand for university graduates keeps increasing (as a result of the constant sequence of technological innovations) beyond the increase in supply (‘education’). This is in line with the new growth theory (section 3.4). Tinbergen (1977) observed for the fifties and sixties this “race between education and technology”: a gradual shift in the “production function” in rich countries, making economies more “HE intensive” as a result of technology and creating a higher demand for HE graduates, which could easily absorb the increase in the number of graduates. The production function captures different combinations of factors of production (physical capital, labour by level of education) which can lead to the same product, recognizing the degree of substitutability. A typical example is the constant elasticity of substitution production function. It has been recognized that production functions shift over time due to technological change. The race between education and technology was clearly won in rich countries by technology until around the first oil crisis. Then there was a ‘sur place’ between education and technology with a ‘wavering’ in technological progress, while the number of HE graduates grew fast. The rising relative wages of university graduates world wide at the end of the nineties and into the 21st century is evidence of a decisive continuation of

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the lead of technology. The continually high returns to higher education (see section 3.5) – despite a substantial increase in supply over time – tell the same story. Goldin and Katz (2007) have researched the implications of the race between education and technology for the US in line with the original work of Tinbergen (1977). They find confirmation for the US. Educational wage differentials were exceptionally high at the dawn of the 20th century and then decreased in several stages over the next eight decades. They add that the role of growth of the relative supply of skills in the period 1915 to 1980 played a major role in narrowing educational wage differentials. The slowdown in the growth of the relative supply of university graduates around 1980 was a major reason for the surge in their salaries (relative to those of other workers) from 1980 to 2005. The – world-wide – increase of the past decades in income inequality certainly is related to the fact that education has been losing the race against technology. At the same time, it should be recognized that there is an inherent handicap element in this race along two lines: Higher wage differentials for university graduates make it more attractive to follow university studies and can lead to higher participation and the concomitant number of graduates, mitigating in the long run the wage differentials. Technological innovations might not sufficiently occur if there is a shortage of (the right type of) university graduates. With great regularity OECD meetings of Ministers of Education have expressed their concern about an ‘insufficient’ participation in science and technical studies as an impediment to technologic progress and economic growth. However, there is little empirical evidence to support this conjecture. At the same time, we do find that the relative participation to science and engineering studies is dependent on the level of per capita income in the country: in such a way that higher levels are associated with an increasing participation in the non-STEM (Science, Technology, Engineering and Mathematics) university studies. By the way, it is not just STEM which produces technological innovation, but rather the mixture of humanities, social sciences and STEM. “Social innovation” may explain as much as 75% of total innovation (Volbeda, 2009). Florida (2002) and Pink (2006) also make this point. Not every country is on the ‘production possibility curve’ with its industries, i.e. produces the maximum possible. The technology may not be available, or there may not have been enough investment in machines, the industries might not have the adequate management and organization or not the people to do the work. Or: in the Schumpeterian view (see Chapter 3) there is not enough innovation, for example, through the entry of new firms. However, there is in countries a constant move of the actual production process in the direction of the frontier and this is visible in the staffing of industries, with a continuous upgrading of the staff, displaying nationwide a continuous increase in university graduates.

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This world-wide shift in the ‘production function’ is in line with the observation that globalization and trade liberalization have mostly wiped out low education/low wage jobs in those sectors of European countries were production can be easily moved away. A rough projection of the demand for university graduates is based on the assumption that the general increase in the number of employed university graduates during the nineties is continuing in the long run future. This was an increase per year of almost 12% on average (or accumulated over the nineties: 87.3%). Figure 4.2 includes the supply of graduates of Figure 4.1 as well as the calculated demand for graduates. Of course, our demand projection implies assumptions on economic growth as on the rate of growth of the demand for university graduates within GDP. At the time of the 2008/2009 crisis one might feel perhaps that the growth rates of the last two decades of the previous century would not return. We consider this unlikely as the evidence of the crisis of the past century shows that after a ‘while’, economies return to more or less the ‘old’ growth trajectories – however deep the crisis is (Rodrick, 2006). The demand projection implies also a steadily continuing rate of technological progress which gives rise to a higher demand for university graduates. In reality the rate of technological progress could be higher or lower. In order to get an idea of the sensitivity of the guesstimate of the demand I have included a trajectory with half of the growth in demand and a trajectory with one and a half of the growth in demand.

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→ Number of units

Figure 4.2

Supply of and Demand for Graduates in the EU27 (in millions)

200 180 160 140 120 100 80 60 40 20 0 2000

2005

2010

2015

2020

2025

Supply Low

Supply High

Demand - Scenario 90s x 1.5

Demand - Scenario 90s x 0.5

2030

2035

2040

Demand - Scenario 90s

2045

2050

→ Year

Notes: Demand for graduates is the projection of employment of people with tertiary education in EU27 based on applying the growth rate of employment of people with tertiary education between 1996 and 2000 in the EU12 (10.3%) to employment of people with tertiary education in 2005 in the EU27. (For comparison: the growth rate of employment with higher education between 2000 and 2004 in the EU27 is 15.5%; therefore, the EU12 growth rate applied to the EU27 already makes for a ‘moderate’ increase in demand for graduates!). Supply Low and Supply High are the supply of graduates from the baseline scenario and Scenario 2, respectively (see Figure 4.1). Sources: See Figure 4.1 (Supply). Own calculations based on data on employment by highest level of education attained (population aged 15-64), Eurostat (2008b) (Demand).

The figure shows clearly Europe’s challenge: to build bridges between demand and supply of graduates. Raising university enrolment rates – in particular among the children of ‘new citizens’ - is no longer (just) a matter of increasing social cohesion. It has become an economic necessity. But even ‘supply-high’ does not come close to ‘demand-low’. For continued economic success Europe has to become serious about the option to recruit students from outside Europe and to offer them (temporary) employment, in this respect following the US model.

4.2.2 The World-Wide Asymmetry in Demography It has been well recognized that demographic developments between rich countries (including the EU countries) and poor countries differ substantially. The baby bust in rich countries of the late sixties has increased the discrepancy further. The echo of the baby boom of the late forties is

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but a minor ripple in this trend. Figure 4.3 shows the size of the relevant age group for universities in rich and poor countries as it has changed in the past 15 years (1990 – 2005).

→ Population (millions)

Figure 4.3

Relevant Age Group (20-24 years) for University Education 1990-2005

500 450 400 350 300 250 200 150 100 50 0 1990 Rich countries

1995 Poor countries

2000

2005

→ Year

Source: United Nations Population Division (2008a).

Looking into the future, we realize that the trend of the past 15 years of Figure 4.3 of higher growth of the population relevant to universities in poor countries compared to rich countries is going to continue. Growth of this age group in poor countries will only slow down in 2012 whereas it has been declining since the mid-1980’s in rich countries as Figure 4.4 reveals.

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Total Relevant Age Group (20-24 years) for University Education 1950-2050

→ Population (millions)

Figure 4.4

600

500

400

300

200

100

Rich countries

Poor countries

2050

2045

2040

2035

2030

2025

2020

2015

2010

2005

2000

1995

1990

1985

1980

1975

1970

1965

1960

1955

1950

0

→ Year

Source: United Nations Population Division (2008a).

This decreasing trend in rich countries seems to be driven almost entirely by Europe. Figure 4.5 shows the fast decline of the relevant age group for higher education in the next 40 years: there will be over 15 million fewer youngsters in Europe!

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Total Relevant Age Group for University Education in Europe 1950-2050 Males and Females aged 20-24 Years

→ Population (millions)

Figure 4.5

60 50 40 30 20 10

2050

2045

2040

2035

2030

2025

2020

2015

2010

2005

2000

1995

1990

1985

1980

1975

1970

1965

1960

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0

→ Years Source: United Nations Population Division (2008a).

Note that this is not a crystal ball prediction: the group of youngsters participating in universities in 2020 has already been born. The exact translation into student numbers, of course, depends on how participation rates will evolve, and on the rate by which new target and other age groups than the traditional 18–24 year olds are drawn into universities (with the concept of life-long learning in mind). In the past this demographic trend has not translated itself into numbers of students because it was compensated for by a large gap in participation. Participation rates in rich countries have been much higher than in poor countries (see Figure 4.6).

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A CHANCE FOR EUROPEAN UNIVERSITIES

Figure 4.6

Average Participation Rates in Rich and Poor Countries Participation = Students / Age Group 20-24

→ Part. rate

70% 60% 50% 40% 30% 20%

10% 0% 1999

2000

2001

2002 Rich countries

2003

2004

Poor countries

2005

2006

→ Year

Source: Own calculations based on data for total enrolment numbers and size of the relevant age group (20 – 24) for universities, UNESCO Institute for Statistics (2008a). In the groups of developed and developing countries those countries with two or more and three or more missing data points, respectively, have been omitted from the aggregation. Data from Unesco Statistic Division.

The general characteristics of Figure 4.4 are illustrated for OECD and ‘WEI’ countries in Table 4.1 with the index in the population of 15–19 and 20–29 year olds between 2000 and 2015. If participation to university education only involved 20–29 year olds and participation remained constant, then the number of university students in OECD countries would fall by annually less than 0.5% between 2000 and 2015, while it would increase by more than 1% a year in the ‘WEI’ countries. Note that Lacrin (2008) is – in a second, so called “trend scenario” – somewhat more optimistic on the number of students in OECD countries, as this scenario includes increases in participation rates.

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THE BATTLE FOR TALENT: EUROPE HAS A CHANCE

Table 4.1

Index of the Population 15–19 and 20–29 in 2015 for OECD and WEI countries (2000 = 100)

OECD countries Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovakia Spain Sweden Switzerland Turkey United Kingdom United States

Ages 15-19

Ages 20-29

102 86 92 96 66 122 88 94 89 74 76 99 80 87 82 81 124 105 106 109 113 59 86 65 71 89 94 103 98 109

106 93 96 109 73 93 103 93 101 71 74 105 89 70 69 79 130 103 99 113 103 89 69 85 62 108 102 99 105 120

OECD mean WEI participants Argentina Brazil Chile China Egypt India Indonesia Jamaica Jordan Malaysia Paraguay Peru Philippines Russian Federation Thailand Tunisia Uruguay Zimbabwe

91

94

106 91 112 95 105 112 98 93 139 116 127 105 118 53 99 79 109 129

110 104 118 99 138 125 107 111 124 132 154 117 132 93 92 108 102 156

WEI mean

105

118

Source: OECD/UIS WEI and UN Population Division

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A CHANCE FOR EUROPEAN UNIVERSITIES

It is often remarked that an increasing demand for university education coming from older students may compensate for the demographic decline in the traditional university age population, with reference to the US where half of the graduate students was in 2005 between 25 and 34 years of age. However, there are as yet no signs that Europe is following the US trend. On the longer run in Europe with the newly introduced bachelor-master system some students are likely to defer the choice for taking a master degree while others may decide for this degree after work experience, so that indeed the participation rate of older students in European universities might go up. The impact of demography on the European universities can be best observed from Spain, Slovakia, Italy, Greece and the Czech Republic respectively (in order of the speed of decline of the age group 20–29) where the number of students is likely to drop by some 2% annually (as is the case outside Europe in Japan). On the other hand one notices from Table 4.1 the increase in the age group 20–29 in the WEI countries Zimbabwe and Paraguay with more than 50%, with such a giant like India (with 1.2 billion people in 2000) increasing by 25% between 2000 and 2015. The ‘poor’ countries with substantial growth of the age groups relevant for university enrolment will experience substantial pressure to expand their capacity at a quality and quantity level, both from social demand as from the demand on the labour market. Most of the poorer countries are expanding secondary education knowing quite well that this will lead to an increased social demand in the longer run for university education. Also from the (demand) side of the labour market there will be requests to expand the number of university graduates. Many of the poor countries are gradually moving out of poverty. The good news on the development of the past five years has been that average growth rates (also in per capita terms) in poor countries have exceeded those in rich countries. For the first time since the sixties there are signs of a convergence in per capita incomes of rich and poor countries, with the BRIC countries and countries like Mexico and Turkey as leaders. To illustrate this, the BRICs created 22 million jobs a year in 2000–2005 while OECD countries created only 3.7 million jobs according to the OECD Employment Outlook, 2007. Yet, this also means that an increasing percentage of these new jobs is on the graduate level. Table 4.2 gives an impression of the combined effect of demography and participation on student numbers in the rich and poor countries over the past 35 years. The share of poor countries in total enrolments (which increased world-wide by ca. 390%) has increased from ca. 52% in 1970 to ca. 75% in 2005 with a particularly impressive increase in China (from almost 0 to ca. 15%).

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THE BATTLE FOR TALENT: EUROPE HAS A CHANCE

Table 4.2

Total enrolment rich (Western European and North American) and poor (all the other) countries over time (1970 – 2005) 1970

1980

1990

2000

2005

Total enrolments (million students)

28.6 100.0

47.5 100.0

66.9 100.0 100.8 100.0 139.1 100.0

Rich (share)

13.6

47.7

19.8

41.6

24.9

37.3

29.6

29.3

34.2

24.6

Poor (share) of which India China

14.9

52.3

27.7

58.4

42.0

62.7

71.2

70.7 105.0

75.4

2.5 0.0

8.7 0.2

3.3 1.0

6.9 2.2

4.8 3.9

7.1 5.9

9.4 7.4

11.8 20.6

8.5 14.8

9.3 7.3

Source: Unesco Statistic Division

At the same time the expansion of university capacity in poorer countries is a tremendous challenge – also in view of the state of university conditions in those countries at present (see e.g. The World Bank, 2002). In the recent past, countries like China, Korea or Turkey have sought refuge in expanding the supply of graduates by a combined effort of expanding local university capacity and of sending students abroad (sometimes with the intention to bring them back as future national university capacity!). The chance for European universities is clearly visible: while the European university age population declines, other countries (with India as the front runner in terms of quantity) are seeking to create more opportunities for university training, while the local expansion of university capacity will take place only slowly. The bottom line is that there will be fierce competition between OECD countries to attract talent from outside of the OECD because of the demand/supply gap for graduates. Of course, at the end of the day, if migration of talent (hopefully and likely as brain circulation) does not occur to a sufficient extent, industries and businesses will have to migrate and locate themselves where the supply of talent is. 4.3

On Talent Migration

4.3.1 Deciding to Study Abroad The demographically and technologically induced shortage of university graduates in Europe might be reduced by talent migration. In the past talent migration has been associated with brain drain because it often was indeed brain drain. Increasingly there is a pull back/return of grad-

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A CHANCE FOR EUROPEAN UNIVERSITIES

uates who have enjoyed university training abroad due to the attractiveness of such a return: India’s emergence in Information and Communication Technology (ICT) is an example of ‘brain circulation’. But also for example China, Korea and Turkey have experienced a blissful return of graduates from abroad. Talent migration might be in the form of studies abroad or of work abroad or both. In this section we focus on studies abroad. The decision to study abroad starts with the decision to participate in university studies. There is a vast literature supporting the commonly held notion that participation in university education is ‘a good thing’ for the individual concerned. University education clearly gives better life chances: better employment opportunities, more interesting jobs, longer and healthier lives and higher incomes. This is captured by economists in the ‘human capital’ theory: individuals (or their parents) ‘invest’ in university education because the rate of return on the costs they make (income forgone and direct costs) is higher than that on other investments. So why does not every one participate? There are three constraints to participate in university education: ‘Capital market imperfections’, as they are called, where parents or the individual cannot afford university education, while a capital market for borrowing the money needed to participate does not exist. In most rich countries this is no longer a significant constraint for participation. Poor countries, in particular middle income countries, are working hard to also eliminate ‘capital market imperfections’ by means of scholarships (grants and loans). The perceived risk in succeeding based on secondary school experiences. University education demands a certain minimum level of cognitive, attitudinal and psychomotor abilities to succeed. These demands are translated into admission requirements. However, not everyone who satisfies these minimum requirements also decides to participate, where it appears that the risk perception is such that the higher the level of education of the parents, the more self-assurance on completing higher education and the lower the risk perception. It is not entirely clear what the maximum percentage of the relevant age group is which might qualify for admission in a stable rich society without capital market imperfections. The selectivity in the system of primary and secondary education might play a role, such that earlier selection creates less chances for a catch up in higher education participation of students whose parents have lower levels of education. Awareness and perceptions at home on the possibility to be admitted to university education as well as on the return to university education. Gándara (2005) documents how children of low income Latino immigrants achieve educationally far less than other children with the same ability. More in general, large segments of minority communities in rich countries have no experience within their immediate social circle with

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higher education and as a result consider it ‘beyond reach’ for their children, and the children for themselves. Studying abroad is another major decision. It is interesting to note that the early 11th to 13th century universities were founded on the notion of a substantial participation of foreign students (Compayré, 1893), albeit that the notion of “foreign” might imply “nations” (as they were then called) which are considered as regions. Yet, in terms of travelling or “psychological” as well as “cultural” distance from home, the medieval universities would indeed be far more “international” as most universities are today. Because today most students prefer to study relatively close to home. This is convenient, makes it easy on social contacts and reduces costs. At the same time, the interest to study farther away has been increasing all over the world. The driving force for increased mobility is simply that a study abroad is seen to increase prospective life chances, thus, off-setting the additional real and psychological costs. Studying abroad has in particular an added human capital value in the present situation where the labour market of higher education graduates has become internationalized. In a recent survey, 80% of the alumni of European universities indicated that they work in an international setting (Borghans and Ritzen, 2006). This explains the interest, for example, to study at a university like Maastricht both for foreign as for national students. Indeed, also national students will be better prepared for the international labour market if they study in an environment with 50% foreign students when using English as the language of communication (see also section 3.3). Studying farther away from home (whether in the own country or abroad) has another added value if it is simply better organized and exceeds studies nearby in quality. Indeed, (perceived) quality differences are also a major reason for international student mobility, as is (for example) clearly expressed in the opinions of international mobile students (Kelo, 2006). Thissen and Ederveen (2006) use an econometric analysis to come to the same conclusion. International mobility might be limited by capital market imperfections if the extra costs of studying abroad cannot be borrowed. It might also be limited by admission restrictions, whether physical or psychological in the countries of potential designation. The psychological restrictions which the US has imposed on entry into the country definitely are part of the explanation for the decrease of foreign students in the US in the years after 2004 (although it seems the international enrolments have stabilized according to the Open Doors Report of 2006 of the Institute of International Education). Also European universities are at risk of creating thresholds for non-European students because of the deterrence of the visa requirements.

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A CHANCE FOR EUROPEAN UNIVERSITIES

Student migration is but a special case of migration in general. This has been well studied as migration of people has happened at all times. Population increase has been a major reason for people to seek for less populated areas (Bauman, 2003). Population pressure aside, people have been moving at all times to find better opportunities for themselves and their children. The dynamics are well researched and empirically tested: individuals move because of income differentials (of course: from low to high) with thresholds in cultural and language barriers as well as in family ties, while admission policies of countries might further restrict migration. Demography gives rise to migration. Some countries – like Yemen with a high population growth rate – even promote emigration in official documents. Other countries promote immigration because of an imminent population bust. Yet, there is seldom a perfect match, as the immigration countries want to be selective in their admission patterns. The match is, however, present in terms of student migration – often both viewed as positive from the country of origin – with some hesitancy for potential brain drain – as from the receiving country. Students are not different from other humans: they move according to the principle of better opportunities, with the common restriction that they like to stay close to family and friends (the adventurers exempted). The two elements of differentials in population growth and in opportunity which we looked at before will be strongly at play in the student mobility world wide in the period up to 2060. Demographers expect that by then the world’s population will be more or less in equilibrium at about 10 billion – catastrophes excluded and assuming a sustainable development for such a large number of people. In the ‘transition phase’ from now to 2060 the world is demographically split into one part with a decreasing or constant population and another part with an increasing population. The second part has the potential to increase its human capital (including the number of university graduates) substantially. The first is likely to see its human capital age and shrink. Europe is – with the US and Japan – in the aging and shrinking league. How strong is the evidence that studying abroad has an added value? There is some evidence indeed from Nuffic (Netherlands Organisation for International Cooperation in Higher Education, 2007): Dutch university graduates that study abroad do obtain a better position. This is shown in Table 4.3. We know that the impact on the GPA at graduation on the level of the first job is statistically highly significant. But so is the impact of studying abroad as the table shows. There appears to be some self-selectivity in the choice of the study abroad: it is the better student (who often get a scholarship) who chooses to study abroad (first two columns of the table), caso quo that study abroad leads to a higher GPA. The figures, however, get a strong significance for the many cases where for-

THE BATTLE FOR TALENT: EUROPE HAS A CHANCE

109

eign study (exchange) is a compulsory part of the degree course. The new data set generated by the European Commission Initiative REFLEX (Research into Employment and Professional Flexibility) is likely to shed new light on this issue. Using that data set Rud (2009) is able to estimate the impact of an academic experience abroad on the wage of young European graduates controlling for a wide set of relevant factors (like gender and age of the respondent, field of study, country of work and others). She finds that an experience abroad while studying increase the gross hourly wage of the respondents of 20% on average.

Table 4.3

Impact of International Orientation of Studies for the Netherlands

Year (of graduation)

Grade Point Average 1)

With 2001 – 02 2002 – 03 2003 – 04 2004 – 05 2005 – 06

7.31 7.35 7.35 7.48 7.52

Percentage of graduates who start a job which corresponds to the level of their study programme Without With Without study abroad 7.25 70.61 60.28 7.23 70.91 58.60 7.24 68.91 56.45 7.34 75.82 59.44 7.37 74.93 59.04

Notes: 1) on a 1-10 scale where 10 is the best outcome Source: Nuffic (2007)

4.3.2 Intra-European Mobility Despite the early traditions of European universities with substantial participation of foreign students (see Compayré, 1893), student mobility within Europe in the post-World War II period was very small indeed: less than 3% of the students were studying abroad in another EU country. Even in border regions the numbers of trans-border students were (and are) limited, often because of the recognition or acceptance of foreign degrees or because of differences of conditions (student grants were only available for study within the home country). Gradually, the picture is changing, thanks to the Erasmus programme of the European Union, to the efforts of EU governments to abolish the restrictions on trans-border studies within the EU, and the Bologna agreement. The Erasmus programme was a very successful effort of the European Union (and its predecessor) to stimulate short periods of study abroad. Table 4.4 gives an overview of the Erasmus mobility.

AT BE BG CY CZ DE DK EE ES FI FR GR HU IE IT LT LU LV MT NL PO PT RO SE SI SK UK

Table 4.4

3776 5308 296 211 3059 17878 4545 489 27464 5998 20673 1841 1708 4012 14779 808 24 373 331 6914 3730 4787 792 7359 752 655 16508

Total 1.5% 1.3% 0.1% 1.0% 0.9% 0.8% 2.0% 0.7% 1.5% 1.9% 0.9% 0.3% 0.4% 2.2% 0.7% 0.4% 0.9% 0.3% 3.7% 1.2% 0.2% 1.3% 0.1% 1.7% 0.7% 0.3% 0.7%

in % 3565 5021 296 209 2812 16766 4278 460 27008 5860 20155 1726 1569 3972 14319 692 24 330 325 6446 3274 4586 792 7194 700 610 16153

from EU

Incoming (Total, incl. from Turkey)

Erasmus student mobility in 2006/2007

41 28 0 2 28 207 125 9 207 19 211 18 16 31 92 1 0 20 2 115 22 33 0 32 6 0 225

from EFTA 4032 5119 938 129 5079 23884 1587 527 22322 3773 22981 2465 3028 1524 17195 2082 170 807 125 4502 11219 4424 3350 2532 972 1346 7235

Total 1.6% 1.3% 0.4% 0.6% 1.5% 1.0% 0.7% 0.8% 1.2% 1.2% 1.0% 0.4% 0.7% 0.8% 0.8% 1.0% 6.3% 0.6% 1.4% 0.8% 0.5% 1.2% 0.4% 0.6% 0.8% 0.7% 0.3%

in % 3875 4980 938 122 4911 22728 1510 505 21920 3713 22425 2414 2943 1501 16928 1971 166 773 125 4209 10860 4343 3350 2475 949 1319 7115

to EU

Outgoing (Total, incl. to Turkey)

124 74 0 0 102 819 48 8 378 35 417 32 52 21 212 64 4 26 0 155 168 42 0 25 10 11 106

to EFTA

110 A CHANCE FOR EUROPEAN UNIVERSITIES

1490

from EFTA 153347

Total 0.8%

in %

4438 (0.2%)

189 (1.2%) 44 (6.9%) 1257 (0.6%)

149068

to EU

Outgoing (Total, incl. to Turkey)

Notes: The percentages are based on the number of exchange students relative to the total number of students in a given country. Sources: Total number of students from Eurostat (2008b); European Commission (2008).

1321 (0.1%)

149142

from EU

TU

0.8%

in %

Incoming (Total, incl. from Turkey)

327 (2.1%) 31 (4.9%) 2575 (1.2%)

155070

Total

Erasmus student mobility in 2006/2007

IS LI NW

EU27

Table 4.4

2933

to EFTA

THE BATTLE FOR TALENT: EUROPE HAS A CHANCE

111

112

A CHANCE FOR EUROPEAN UNIVERSITIES

Although the Erasmus programme only catered for no more than 1% of the students on average it did often open the eyes and has been the stimulus for substantial ‘free movement’ of students (outside of the Erasmus programme, but with the same structure; namely: a short stay at another European university – across the border – which does contribute to the credits earned at the home university). Some universities or university departments (like the Faculty of Economics and Business Administration at Maastricht University) have made such a stay abroad even compulsory. It appears that the ‘short stay’ mobility of bachelor students does imply a chance for a choice of a master’s degree in another European country (often at the university of the short stay). Mobility is on the rise in the EU as is shown in Figure 4.7 which depicts total and non-European students who study in one of the 27 EU countries but do not hold citizenship of that country. Clearly, the increase in mobility has speeded up since 2002. The Bologna Agreement (see Section 6.4) had the explicit intention to increase mobility. Therefore, one could say that the Bologna process of 1999 needed a period of three years to unfold its effects and stimulate mobility. It is, however, remarkable that the composition of the foreign student mix in the EU27 in terms of European and non-European students has remained rather constant Also the within-Europe mobility is still on a low level (where I would take 10% as a norm). Or: the Bologna glass is still more than half empty at present.

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Figure 4.7

Mobility is on the Rise in the EU27

→ Percent

10 9 8 7 6 5 4 3 2 1 0 1998

1999

2000

2001

2002

2003

2004

2005

2006

→ Year Non-European students studying in an EU27 country (% of all students) Total students who study in an EU27 country other than their home country (% of all students)

Source: Own calculations based on data from Eurostat (2008b).

Table 4.5 and Table 4.6 show the foreign EU students in the top ten EU home and host countries in 1998 an 2006. Respective tables for the 27 EU counties can be found in Appendix . They reveal that generally, mobility has increased in the past decade and that it has become less concentrated: while in 1998 75.5% of all intra-European foreign students were covered by the top ten home and host countries, this percentage has dropped to 66% in 2006.

25,267 8,491 2,716 348 258 11,392 164 4,623 4,926 31

58,216

1

UK DE FR AT ES IT SE RO BG IE

Total

Rank

GR

2

29,292

12,915 5,187 5,420 3,221 1,022 695 286 22 524

DE

3

25,403

5,196 6,818 3,608 6,621 2,886 0 153 18 2 101

IT

4

24,521

12,574 6,341 381 3,894 612 227 12 1 479

FR

5

17,953

16,359 646 578 43 262 16 49 0 0

IE

6

16,318

6,852 5,223 3,408 286 0 200 116 2 0 231

ES

UK

7

11,163

2,820 3,411 206 2,347 204 433 5 2 1,735

Country of citizenship (home country)

Foreign Students within the EU in 1998: Top Ten Host and Home countries PL

8

10,103

611 6,827 1,461 682 85 14 402 6 10 5

AT

9

8,952

1,045 6,776 356 0 492 94 130 17 1 41

PT

10

8,009

1,985 1,675 3,468 42 760 30 37 0 12

Total

209,930

82,804 45,617 24,193 14,029 14,205 13,584 2,406 4,969 4,964 3,159

1 2 3 4 5 6 7 8 9 10

Rank

Notes: the total is the sum of all the cells in the same row/column in the table. However, the rank is referred to the total of international students from/to all the EU27 countries. For example, Sweden hosts a great number of students coming from European countries which are not reported in the table. Then, the total of international EU27 students hosted in Sweden is much higher than 2406. The table with all EU27 countries is reported in Appendix 4.1.1. Source: Eurostat (2008b)

Destination country (host country)

Table 4.5

114 A CHANCE FOR EUROPEAN UNIVERSITIES

51,734

1

Total

Rank

DE

16,031 : 6,565 553 10,174 11,898 3,044 207 1,638 1,624

UK DE FR BE AT NL SE CZ IT ES

FR

2

44,412

14,842 6,346 : 17,680 445 754 1,619 26 915 1,785

GR

3

33,544

17,989 6,268 2,014 500 237 464 288 113 5,473 198

4

33,485

8,933 7,582 4,455 2,349 6,188 521 722 24 : 2,711

IT

5

32,140

6,817 16,106 3,427 470 1,341 880 926 246 1,332 595

PL

6

27,451

25,997 440 498 66 49 119 149 40 33 60

IE

7

21,608

8,628 5,355 3,664 1,087 394 795 1,163 20 502 :

ES

Country of citizenship (home country)

Foreign Students within the EU in 2006: Top Ten Host and Home countries

Notes: see the notes related to the previous table. Source: Eurostat (2008b)

Destination country (host country)

Table 4.6 SK

8

19,662

1,166 1,700 415 65 1,228 105 50 14,664 178 91

9

20,174

998 12,853 2,876 204 1,373 377 95 111 677 610

BG

10

14,408

944 4,468 4,332 400 628 211 234 34 1,874 1,283

RO

Total

298,618

102,345 61,118 28,246 23,374 22,057 16,124 8,290 15,485 12,622 8,957

1 2 3 4 5 6 7 8 9 10

Rank

THE BATTLE FOR TALENT: EUROPE HAS A CHANCE

115

116

A CHANCE FOR EUROPEAN UNIVERSITIES

Table 4.7 gives the totals of the intra EU net in-and-out flows. It shows that the UK has the most substantial net influx of foreign students, more than four times the number of students that ‘net flow’ into Germany (the number 2). However, the majority of European – foremost the Southern and Eastern European – countries are experiencing a net outflow. This ‘brain drain’ is most serious in Poland, Greece, Ireland and Slovakia.

Table 4.7

Net Inflow and Outflow of Students in the EU27, 2006 Net outflow

PL GR IE SK BG IT RO CY PT ES FI LU LT FR SI LV EE MT

31,419 25,366 23,377 21,448 19,979 19,705 17,334 16,308 10,591 9,526 5,766 5,599 5,301 4,914 2,203 2,119 2,022 758

Net inflow UK DE BE AT CZ NL SE DK HU

126,984 30,609 21,104 15,800 9,823 9,570 7,551 1,151 1,143

Note: A net outflow results when the number of students which study in a different country than their country of citizenship exceeds the number of foreign students hosted from other European countries. A net inflow results when more students are hosted than go abroad. Source: based on data from Eurostat (2008b)

In Chapter 3 we argued that society’s needs from university are – apart from a well educated professional labour force – no longer national leadership, but rather international or ‘world’ leadership. For Europe, international leadership starts with more room for training in European leadership, indeed by creating an effective European Space for Higher Education. Effective in the sense that indeed some 10% (as a provisional goal) of the European students takes the opportunity to study across the frontier and takes in the culture of another European country at the same time. Of course, cross-border European study is not the only means to contribute to European citizenship and leadership through university education: in Section 4.4 we dwell on the notion of a special statute for European universities and on the Erasmus Mundus Programme.

THE BATTLE FOR TALENT: EUROPE HAS A CHANCE

117

Intra-European student mobility could be a precursor to intra-European graduate mobility. In general, students often elect to work after graduation close to their Alma Mater, i.e. the host country. This also applies to foreign students (even though within the EU visa do not enforce a return to their home country). Even with the relatively small intra-European student mobility, it appears from impressions (there are no firm data) that the return rate of intra-European university students after graduation is relatively high. There are considerable obstacles in Europe to (academic) employment abroad. Social welfare systems and pension systems are so divergent as to discourage cross border mobility. There are some impressions of intra-European mobility of graduates as a whole from the CHEERS (Career after Higher Education: European Research Study, 2005) Survey. For the graduates surveyed (graduated before 1994) only 3.8% worked abroad (as said in section 3.3, this figure is likely to be higher for recent years). However, the likelihood to work abroad (table 3.1) is connected to study experience abroad (in the EU; see Borghans and Ritzen, 2006). The European mobility of graduates gives the impression of a slight net migration from the poorer EU countries to the richer ones. It is unclear whether this is a brain drain or a brain circulation in the sense that graduates after a while might return to their home country with the added human capital of work experience in more advanced economic and technological environments.

4.3.3 Europe and the World Student migration between Europe and the world is presented in Figure 4.8. In the figure the UK is mentioned separately. The picture which emerges is one of Europe which attracts students from all continents but loses at the same time more students to the US. When distinguishing the UK from the rest of Europe it turns out that it is the UK which has the attraction while the rest of Europe suffers from a substantial net loss of students.

118

Figure 4.8

A CHANCE FOR EUROPEAN UNIVERSITIES

Student Mobility Flows: Europe and the World, 2005

Africa: 203,010 (29,429)

Africa: 19 (0)

Asia: 348,861 (147,384)

Asia: 6,640 (747)

Oceania: 3,954 (2,291)

Oceania: 15,008 (5,818)

EU27 UK

North America: 35,201 (18,765)

North America: 70,822 (9,823)

South America: 59,988 (8,488)

South America: 274 (5)

World: 651,014 (206,357)a)

Total: 92,763 (16,393) Intra-European mobility: 395,694 (100,573 net to UK

Notes: The numbers in brackets refer to the students who flow into or out of the UK. For comparison, the total number of full time students in the EU27 (UK) in 2005 is 15,198,728 (1,391,503). a) The 67,130 (7,520) students who come to Europe (the UK) from unspecified countries and regions are not included. Source: Eurostat (2008b) and UNESCO Institute for Statistics (2008a).

To put the numbers of Figure 4.8 in perspective: in 2006 some three million students were studying abroad. Intra European mobility accounts for some 13% of all international mobility, the inflow of non-EU students for 22% and the outflow of EU students for 3% of total student mobility. The number of students who study abroad has risen sharply in the past 30 years as is shown in Table 4.8. I have added a guesstimate in the last column for the total number of foreign students in 2020.

Table 4.8

Foreign Students19 in HE Worldwide (in Millions) 1975

Million students enrolled outside their country of citizenship1)

0.6

1980 1985

0.8

0.9

Million students, full time equivalent (OECD)2) Source: 1) OECD (2008a), Box C3.1.

1990

1995

2000

2006

2020 (guesstimate)3)

1.2

1.3

1.9

2.9

4.5?

24.29 27.01 31.34 40.22 (in 1993) 2)

OECD (2009)

3)

Ritzen (2006b)

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THE BATTLE FOR TALENT: EUROPE HAS A CHANCE

The number of foreign students grew even faster than that of the total number of students in the OECD in the period 1990(1993) – 2006. The estimate of 4.5 million international students in 2020 might therefore turn out to be (very) conservative. Europe is quite inhomogeneous in terms of foreign students. Figure 4.9 shows that the countries which attract most foreign students (including European students – see Table 4.7) are Austria, Belgium, France, Germany, Luxembourg, Switzerland and the UK, followed by the Nordic countries and Ireland. Note that one finds a tendency here that students from outside the EU also seem to choose for countries with better universities (better as in table 2.2 which relates the ranking of universities of a certain country to its population size) as we found. Yet, the figure 4.10 shows that international European student migration and immigration of students from outside the EU are not strongly linked.

Figure 4.9

The Proportion of Foreign Students Among All Tertiary students and the Regional Distribution of Foreign Students’ Nationalities 2002/2003 Proportion of foreign students among all students Below 2.5 % 2.5 % to 4.9 % 5.0 to 9.9 % 10.0 % and above Non-EURODATA countries No data Nationalities of foreign students Unknown

Non-European

EURODATA

Other European

Source: EURODATA (2006).

Table 4.9 explores the position of Europe versus other parts of the world in terms of student migration. Once again we have made the distinction between the UK and the rest of Europe. Within Europe, the UK is the No.

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A CHANCE FOR EUROPEAN UNIVERSITIES

2 (after Austria in 2003 and after Luxembourg in 2006) in the EU27 in terms of foreign enrolments as a share of total enrolments in tertiary education. The other destinations among the European top five are Belgium, Germany and France (based on OECD, 2005, and 2008a).

Table 4.9

Foreign Students as a Percentage of Total Students in the country (selected countries/regions) 1998 & 2003 1998 (Rank worldwide)1)

2003 (Rank worldwide)1)

USA

3.2 (17)

UK

Market share, 2006 (adjusted for intraEU mobility)3)

3.5 (12)

Market share, 2006 (= foreign students in a given country as percent of all foreign students worldwide)2) 20%

22%

10.8 (5)

11.2 (5)

11%

12%

Australia

12.6 (1)

18.7 (3)

6%

7%

Europe4)

4.3 (-)

5.6 (-)

31%

25%

(excl. UK) Sources/Notes: 1) OECD (2005), 2) OECD (2008a), 3) own calculations based on OECD (2008a), 4) based on 20 EU countries (more precisely, all those belonging to the European Union at the time the data were collected – EU25 – except UK, Cyprus, Latvia, Lithuania and Malta). For some countries, only data for 2003 available.

The main region of origin of students differs markedly between on the one hand the UK and on the other Germany and France: the UK is predominantly Asia oriented, while Germany and France are more linked to Africa and Latin America. In terms of market share (foreign students studying domestically relative to all foreign students worldwide) the UK is clearly the No. 1 within Europe, and No. 2 worldwide, behind the US.

50’753 19’204 4’023 13’267 12’456 6’200 2’084 196 14’755 2’187 11’448 4’640

141’213

93’672 79’219 61’117 9’142 6’876 40’086 12’035 1’555 : 4’971 5’711 29’203

343’588

CI IN KOR DE FR JP TU MO US RU MY CAN

Total top 12

30’967

152’020

109’287

19’608

37’597

372’173

73’392

29’718

Total Africa

Total Asia

Total Europe

Total North America

Main regions

UK

destinations

US

Countries of origin

4’033

127’648

95’829

23’527

96’331

27’390 4’102 5’225 : 6’346 2’377 25’251 8’427 3’265 12’643 702 603

DE

4’064

51’544

45’780

111’862

68’144

17’132 717 2’376 6’565 : 2’112 2’412 29’299 2’771 3’083 384 1’293

FR

6’731

9’380

145’338

6’000

97’225

42’008 22’357 4’491 1’601 711 3’305 224 12 2’931 442 15’358 3’785

AUS

9’990

24’807

75’441

19’083

66’744

30’906 7’053 687 1’584 7’863 1’812 750 4’140 9’495 1’581 873 :

CAN

JP

2’007

2’868

122’538

926

114’472

86’378 425 22’344 353 377 : 160 53 1’708 366 2’009 299

Table 4.10 Foreign Students in 2006: Top Ten Host and Home countries

m

18’003

31’302

m

m

m m m m m m m m m : m m

RU

2’503

2’952

27’081

231

27’298

18’791 1’777 22 1’185 320 1’036 22 m 2’078 251 1’390 425

NZ

725

16’069

2’391

6’311

10’665

587 107 381 1’624 1’785 139 39 4’713 648 562 3 77

ES

531

32’644

6’429

4’582

6’980

960 386 324 1’638 915 327 288 813 402 793 5 129

IT

332

31’373

3’824

9’841

24’092

1’302 182 61 553 17’680 165 319 3’031 212 458 10 119

BE

80’242

481’964

1’048’845

250’927

369’879 135’529 101’051 37’513 55’329 57’559 43’584 52’240 38’265 27’337 37’893 40’574

Total top 12

94’352

745’756

1’416’263

361’191

451’526 148’116 103’825 78’242 65’780 61’035 56’984 55’189 49’325 49’200 43’969 43’582

Total all countries 1 2 3 4 5 6 7 8 9 10 11 12

Rank

THE BATTLE FOR TALENT: EUROPE HAS A CHANCE

121

2’267

8’446

330’078

222’936

11.3

11.8

2

4’869

67’068

584’817

475’169

20.0

25.1

1

Total Oceania

Total South America

Total all countries, 2006

Total all countries, 2000

Market share, 2006

Market share, 2000 3

9.9

8.9

187’033

261’363

8’239

409

DE

4

7.2

8.5

137’085

247’510

10’779

348

FR

5

5.6

6.3

105’764

184’710

1’970

3’907

AUS

6

5.0

5.1

94’401

148’164

11’337

849

CAN

7

3.5

4.4

66’607

130’124

1’256

522

JP

8

2.2

2.6

41’210

77’438

m

m

RU

9

0.4

2.3

8’210

67’698

255

3’877

NZ

10

1.3

1.7

25’502

51’013

25’470

47

ES

11

1.3

1.7

24’929

48’766

4’231

79

IT

12

2.0

1.6

38’799

47’012

1’079

28

BE

73

72

1’386’435

2’101’255

140’130

17’202

Total top 12

100

100

1’894’792

2’924’679

182’261

18’756

Total all countries

Rank

Notes: m stands for missing data. Values in column total all countries are computed treating missing values as zero. The reported destinations are the top 12 as for number of incoming international students among the countries reported as destinations in the web version of OECD(2008a). Source: OECD (2008a), web version

Rank

UK

US

Countries of origin

destinations

Table 4.10 Foreign Students in 2006: Top Ten Host and Home countries

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123

Table 4.10 reports the flow in and out top destinations and top countries of origin in the world. US and UK lead the way as host countries, while China and India (with China accounting for 15% of all outgoing international students!) are the countries with more citizens studying abroad. A great role in explaining the destinations of international students seems to be that of past political power or influence of host countries. This is the case for Spain and South America, France and Africa or Russia and countries which are old members of the Soviet Union (like Uzbekistan and Kazakhstan, not reported here). The quality of university also plays a great role: for example, a small country like Belgium is able to attract almost exactly the same number of international students than Italy. The US has a long history of foreign students and has experienced a constant growth in their numbers over the period 1960-2000. At the same time the percentage of such students, studying in the US, remained pretty constant: the growth of foreign students kept place with that of national students. The story is different for Australia. In 1980 Australia had very few students. Since then the numbers have been increasing rapidly and continuously beyond the general increase in Australian students and in foreign students worldwide. As a result, Australia ranked number one in 2003 in terms of the percentage of foreign students (see Table 4.9). Yet, New Zealand has even outplaced Australia in 2006 in the percentage of foreign students. The steady attractor of foreign students (in numbers) is the US, with the highest market share of foreign students worldwide, as Table 4.9 shows. This development fits in the “rise of the creative class” (Florida, 2002). For the US foreign students have become a major precursor for employment of foreigners. The US have for a long time had a triple deficit: trade (balance of payments), budget and human capital. At the same time they were able to “finance” the human capital deficit through immigration (see Lahiri, 2003, for a beautiful story on the human face of the finance of the human capital deficits). The US’ share in international students, however, has been declining in the period 1985 to 2005 (from 38% to 22%), as a result of increasing competition, the relatively high (pre-scholarship) price of US education and the increased admission threshold to the US after 9/11.

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Figure 4.10

Student Mobility Flows: The United States and the World, 2003

Europe: 76,957

Europe: 26,505

Africa: 40,193

Africa: 8

Asia: 368,145

Asia: 2,929

Oceania: 4,811

UNITED STATES

Oceania: 5,199

North America: 27,589

North America: 282

South America: 68,588

South America: 1,118

586,31a)

Total: (8,326 from UK)

Total: 36,014 (13,647 to UK)

Notes: For comparison, the total number of full time students in the US in 2003 is 9,946,359 (Eurostat, 2008b). a) The 33 students who come to the US from unspecified countries and regions are not included. Source: UNESCO Institute for Statistics (2008a).

Figure 4.10 enables us to compare the flow of students who study in a different country than their country of citizenship for the US and Europe (see Figure 4.8). Europe is mostly host to African and Asian students (about 45% of all incoming foreign students) while in the US, over 60% of foreign students are Asian. Europe and North America have a lively mutual flow of students. Over 70% of Americans studying abroad do so in Europe. It is remarkable though that over one-third of all Americans studying abroad go to the UK, probably due to the language. At the same time, almost 80% of Europeans studying abroad are in North America. The impact of foreign students in the US may look relatively small as a percentage of total students. However, if one looks at the natural sciences and engineering it is substantial. Table 4.11 gives a more detailed impression of the share of foreign-borns among US degrees and enrolments.

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Table 4.11 Foreign-born Share of US Degrees and Enrolments Bachelor’s Natural S&E

1985 3.0 6.5

2002/3 3.1 6.8

Master’s Natural S&E

9.4 22.8

13.2 36.4

Doctorate Natural S&E All S&E

14.5 22.4 18.3

21.4 37.5 32.2

Postdocs

39.6

57.7

Grad Student Enrolments Natural S&E All S&E

21.3 18.7

31.7 27.2

Source: Freeman (2008)

Note that in the US more than half of the postdocs in 2002/3 were foreign-born! This fits in the general picture of the US as a substantial ‘brain gainer’. Foreign born researchers make up a substantial resource for US academia and its research output. Look at American Nobel Prize winners (Table 4.12):

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Table 4.12 Percentage of Foreign Born American Nobel Prize Laureates (of All American Nobel Prize Laureates) Per Discipline Per Year Physics

Chemistry

Physiology/ Literature Medicine 100% no Americans

2007

no Americans

no Americans

2006

0%

0%

0%

2005

0%

50%

2004

0%

2003

Peace

Economics

0%

33%

no Americans

no Americans

0%

no Americans

no Americans

no Americans

50%

0%

0%

no Americans

no Americans

0%

100%

0%

0%

no Americans

no Americans

0%

2002

50%

0%

0%

no Americans

0%

50%

2001

0%

0%

0%

no Americans

no Americans

0%

2000

0%

50%

50%

no Americans

no Americans

0%

Source: Own calculations in reference to data by The Nobel Foundation (2009)

Even more striking is the brain gain when it comes to potential Nobel Prize winners. This can be well exemplified with the list of the 27 potential Nobel Prize candidates for 2006 by Thompson Scientific Citation Literature Profiles. It turns out that 18 reside in the US, eight in Europe and one in Japan. But note that all those residing in Europe were born and raised in Europe. But out of the 18 potential Nobel Prize winners who reside in the US, only ten were Americans, born and raised. The others are six Europeans and two Indians by birth. Another way of putting it is that of the 14 Europeans by birth and upbringing which have a good chance to win a Nobel Prize a full 44% (namely six) left Europe at some point to go to the US. Or: if Europe had been able to provide an attractive research environment in Europe, then half of the potential Nobel Prize candidates would have been European and only 37% American” (Ritzen, 2006a, pp. 1-2). There is in the US (and in Canada) considerable concern about the European competition in attracting foreign students and staff (see for example: Stewart et. al., 2006, pp. 9 – 11 or Freeman, 2008). The ‘Bologna Process’ (see Section 6.4) is supposed to strengthen Europe’s position

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127

vis à vis the US. Solutions to improve the US’ position (Freeman) look very much like the European approach: – Overseas branches – Make immigrant status easier for overseas students – Exploit quality edge – Expand lower quality US institutions The latter is somewhat surprising, yet, has been tested. The reasoning was that the elite US universities only involve a relatively small portion of the university students in the US (no more than 1%!). Only ‘broadening the base’ would increase the number of foreign students in the US, so one might think. This might look like a doomed strategy, as foreign students choose for quality institutions (Thissen and Ederveen, 2006), and yet it turned out to be successful: the growth in foreign doctorate students was concentrated outside the top-ten universities. For US universities the motivation was to exploit their excess capacity which was the result of the fast expansion in the sixties with a large contraction of domestic students in the seventies. For potential PhD students from developing countries the opportunity to study even at a moderate-quality US PhD program apparently still dominated home country options. The question which Freeman (2008) but also Bettinger (2007) raise is “can [the US] maintain leadership in science, technology, culture broadly defined by building on its ‘first mover’ advantage to be the spoke of networks linking US and foreign scholars and sourcing students and faculty worldwide [...]?” and is definitely not yet answered affirmatively. The jury will remain out for quite some time. That jury will have to consider that 15 out of 20 top universities world-wide are US universities and that the US expenditures per student are still roughly double that of other OECD countries with the potential to create a quality edge. But what about the other major economic power within the OECD: Japan? Japan’s universities are not easily accessible to foreign students as a result of the language barrier. The Japanese universities which have a good international reputation found themselves subsequently unable to attract substantial numbers of foreign students despite an active government policy, namely to achieve the “Plan for 100,000 foreign students by the year 2000” of 1992. Indeed, by 2005, this number of foreign students in tertiary education had reached the level of some 120,000 students after a steep rise from some 50,000 in the early nineties. But note that in the past decade more than half of the foreign students in Japan were Chinese and more than 90% Asian, as Figure 4.11 shows, while the majority studies Japanese culture and language.

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Figure 4.11

Migration of University Students: Japan 2005

Europe: 2,801 (EU: 1,641) Africa:904

Australia: : 3,380

Asia: 118,661 (China: 83,264)

US: 44,092

Oceania: 523

JAPAN

UK: 6,179

North America: 1,824

Other EU: 6,101

South America: 1,189

Korea: 1,106

World: 125,917

Total: 62,853

Source: OECD(2007a), Table 3.8.

China suffers from the same language restriction as Japan. The number of foreign students in China has been rising steadily. Yet, most students study Chinese language and culture, making the incoming flow quite lopsided. 4.4

Conclusions and Policy Proposals

Europe’s universities are not attracting many foreign students, whether European or from outside Europe. The great wave of increasing numbers of foreign students has bypassed by and large Europe (with the exception of the UK). This puts Europe at a disadvantage in the next decades when Europe, like other parts of the developed world, is experiencing an aging of the population. In that process the number of university students and the ensuing supply of graduates on the labour market are likely to decrease while the demand for graduates will continue to increase. This is in contrast to the labour force dynamics in many developing and emerging economies with a likely oversupply of graduates. Yet, Europe (the UK exempted) does not seem – up to now – to be able to attract this oversupply, by first attracting students.

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129

4.4.1 Intra-European Mobility revisited Within Europe, mobility is too small to indeed contribute to ‘European citizens’ – youngsters with substantial educational experiences in at least two countries – because European universities do not really exist; they are the universities of one particular nation. A special statute for European universities might promote European mobility, and thus, contribute to more European citizenship and leadership. Under a European statute the university is able to attract finance from the country of origin of the students, also when the studies are outside the country. The accountability of the university is towards an independent agency related to the European Commission. The governance is such that it allows for autonomy (see chapter 2) and constant innovation (Chapter 7). It would be advisable only to allow existing public institutions to apply for a European statute in order to avoid a watering down of the market for European students. Such a public institution then should retain its block grants originally allocated by national government, but have them transferred to the independent European agency. It also should be able to compete for research grants in principle in all European countries. Note that an elaboration of the notion of a European statute is such that as a maximum 10% of the existing universities in any of the EU countries should be under the European statute by 2020. This would be in line with the assumption of a 10% mobility of European students in 2020. The Erasmus Mundus project could be substantially increased as a second inroad (after the European statute) to increase mobility. This program promotes joint degrees in Europe. Here the student does not study full time in one country but experiences study in a number of EU countries in an organised, well constructed curriculum. This is to be preferred above the mobility in the EU of short stays abroad as were developed in the nineties through the Erasmus program and are now followed up in some universities by compulsory stays abroad. Often, however, these are not ‘constructed’ and an organised part of the curriculum. Their contribution to the learning of the student is debatable. At present, one can conclude that they have had their function and can gradually be phased out when joint degrees should gradually become the norm. The experience with the financing of the living costs of short stays abroad should well be taken into account when moving in the direction of joint degrees or a European statute. Mobility of students means generally that the living cost component of study increases. Casual inspection informs us that there might be a threshold for students who do not have a strong financial backing from parents or otherwise. Let us not make study experience abroad an elitist thing but let us include the extra costs of mobility in student loan and grant systems.

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4.4.2 Europe and the World revisited To increase the (inward) mobility of students from outside Europe into Europe major efforts have to be made. It is clear that students from outside Europe elect universities because of a positive benefit/cost ratio (where psychological benefits and costs are included as well). Benefits are highly related to the reputation of the university. Costs include the costs of learning a foreign language. The costs of learning English is clearly outweighed by the benefits on the labour market, but such is less the case for Spanish, Italian, German or French and is virtually absent for Dutch, Finnish or Swedish (sorry for that!). If universities on the continent of Europe want to attract more students from outside Europe they have to question themselves whether English should not be the central language of teaching, research, administration, student services in that university. At the same time, it would be important to maintain the national language at most of the universities in any nation. Moreover, the costs of the transition from, for example, a German language university into the English language are substantial. Hence, it should be a careful process by which only some (and not all) universities make this transition, without excluding other universities in their efforts to attract foreign students. Also, European universities in a joint effort with national governments should aim at creating more differentiation, not by redistribution but by additional allocations for the best performers – as the German government has done in its “Spitzenuniversitäten” (Top universities) initiative and similar Spanish initiative of September 2009. In that way more European universities might penetrate the top 50 of the Jiao Tong or THES ranking – with the implied effect of a greater attraction for nonEU students. Europe has in many respects a good quality of its university education. But it needs to make more efforts to attract top talent in a highly competitive environment. The present patters of talent migration do indicate a serious win-win possibility for brain circulation in the intermediate period of the next ten years. Students migrate from demographically young to demographically old countries because of on the one hand the perceived quality abroad and on the other the limitations at home. The prevalence to seek studies abroad is highly related to the increase in the level of income of the country of origin: in many countries one sees the increase in studies abroad multiply several times as much as the increase in income. Governments and institutions alike might find student mobility more attractive if it is embedded into longer run (structural) relations between institutions and firms. Institutions partner because they can learn from each other: the ‘demographically older’ university sharing its ‘good manufacturing practice’ by which it has achieved its reputation (and ranking)

THE BATTLE FOR TALENT: EUROPE HAS A CHANCE

131

with the ‘demographically younger’ university, through the training of staff of the ‘younger’ university. A business and industry network should be the bedding to give credibility to the human capital contribution of the partnership. Some suggest a globalisation of demand and supply in post secondary education (OECD, 2004b). This is precisely the challenge for Europe, with an international student (and young professionals!) mobility which serves the non-EU students, the country of origin and strengthens at the same time the EU. Cross-cultural learning should – in this context become part of the pedagogy or learning strategy of each and every EU university.

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A CHANCE FOR EUROPEAN UNIVERSITIES

Appendix 4.1 Foreign students within the EU

THE BATTLE FOR TALENT: EUROPE HAS A CHANCE

133

134

A CHANCE FOR EUROPEAN UNIVERSITIES

THE BATTLE FOR TALENT: EUROPE HAS A CHANCE

135

136

A CHANCE FOR EUROPEAN UNIVERSITIES

Notes

1 2 3 4

5 6 7 8

9

10 11 12 13

When speaking of supply of graduates, I refer to the supply of people in the population who have attained higher education. Share of graduates in the population aged 20-24 Share of graduates in the number of students α is set at its average value between the years 2004 and 2005. α is computed as 1(gradsupplyt-newgradst)/gradsupplyt-1, where: gradsupplyt = total number of graduates at time t; newgradst = new grads at time t. Sources are given in the comments to Figure 4.1. Change between 1992 and 2002 in the EU12. This is not the same number as used in calculating demand in Figure 4.2. In what follows the terms rich and developed as well as poor and developing shall be used interchangeably to describe the two country groups. WEI: World Education Indicators; WEI country: country participating in WEI program. For example: the German BaföG (Bundesausbildungsförderungsgesetz, Federal Educational Aid Act) has only been applicable to studies which are entirely abroad since a legal decision since autumn 2007. Before that, students studying abroad could only receive BaföG when they had studied at least a few semesters in Germany. Note that the Erasmus Mundus Programme is not the same as the Erasmus Programme. “Erasmus Mundus 2009-2013 is a cooperation and mobility programme in the field of higher education that aims to enhance the quality of European higher education and to promote dialogue and understanding between people and cultures through cooperation with third countries” (EC, 2009). The 32 EURODATA countries are the EU27 countries, four EFTA countries (Iceland, Liechtenstein, Norway, and Switzerland), and Turkey. In this context, foreign students refer to students enrolled in a country other than their country of citizenship. Due to changes in the method of data collection or manipulation by the OECD, data may not be completely comparable between 2006 and 2003/1998. (http://scientific.thompson.com/nobel/profiles)

5

Stop the Financial Strangling of European universities

5.1

The Erosion of Public Finance

The ideal of full public finance of education of all levels including higher education and a world without restrictions on admission has been widely shared in Europe in the era after the Second World War. UNESCO adopted as one of its fundamental principles – following Article 26 of the Universal Declaration of Human Rights – that “higher education shall be equally accessible to all on the basis of merit”, which often is quoted in European politics as an argument against any tuition fees, against any limitation of university places and against the selection of students (as long as they have the ‘right’ kind of secondary school degree). Germany is a case in point. Article 12 of the Constitution (as amended March 19, 1956 stating the right to choose an occupation and the prohibition of forced labour) is often invoked to bar tuition fees in public institutions. This article says (part I): “All Germans shall have the right freely to choose their trade or profession, their place of work and their place of training”. However, in January 2005, the German Federal Constitutional Court (Bundesverfassungsgericht) decided to overturn a ban on tuition fees which was based on this article. Each state can now decide whether its universities will charge for their services and how much. The ideal of full public finance was a proxy, the means, to achieve the best in terms of equality of opportunity. The UNESCO website is outspoken in making that connection. Yet, the notion of full public finance – which is still widely pursued in most of Europe – is at the moment strangling on European universities because government finance simply has been unable to provide sufficient funds for first class university education for all. If European universities are to be an important factor in Europe’s competitiveness – culturally, socially and economically – they have to be released from the noose of public finance, while maintaining and expanding equality of opportunity through other means than public finance of universities, like through student loans and grants. The strangling is visible in the combination of the increasing demands of society on universities in terms of numbers and quality on the

138

A CHANCE FOR EUROPEAN UNIVERSITIES

one hand and decreasing finance per student on the other. The decrease in per student financing per year in HE (public and private) is exemplified in Figure 5.1 for the Netherlands.

Figure 5.1

Decrease in Expenditure per student in the Netherlands, 1950-2005 unadjusted

CPI adjusted

Wage Index adjusted

25

→ Thousand Euro per Student

20

15

10

5

→ Year 2004

1998 2000 2002

1992 1994 1996

1986 1988 1990

1980 1982 1984

1974 1976 1978

1968 1970 1972

1962 1964 1966

1956 1958 1960

1950 1952 1954

0

Note: Expenditures (“Totaal uitgaven tertiair onderwijs”) were divided by the number of students and corrected for the Consumer Price Index (CPI) and wage index, respectively (where 2000 = 100 is the base year). Student numbers include students in vocational training (hoger beroepsonderwijs) and academic higher education (wetenschappelijk onderwijs). For the years 1972 and 1973, no data for enrolments in academic higher education is available and these data is, therefore, omitted. Source: Own calculations based on CBS StatLine (2008) for data on expenditures and students, CBS StatLine (2009a) for data on the consumer price index and CBS StatLine (2009b) for data on the wage index.

The figure shows the steep increase in per student expenditures in the period 1950 to 1970. When student numbers increased per student expenditures decreased. The Figure shows that since 1975 the CPI and the wage index are closely related: adjustment for CPI or the wage index leads to almost the same results. Between 1975 and 2005 the real per student expenditures were halved. The Netherlands is used as an example of a reality which unfortunately has been the case virtually all over Europe. Universities are very people intensive: 80% of the expenditures are wage costs. The room for ‘productivity’ improvement (in terms of innovating the student/staff ratio while maintaining quality) is virtually absent. This means that the wage index should be used to make compari-

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STOP THE FINANCIAL STRANGLING OF EUROPEAN UNIVERSITIES

sons over time. The wage-adjusted expenditures in the Figure show the strong decrease over time.

Figure 5.2

Expenditures on higher education per student in the US, 1960, 1969-2007 (Current and adjusted by Higher Education Price Index 1982=100)

20

15

10

5

0 1959 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

→ Thousand US$ per student in postsecondary degree-granting institutions

25

current US$

adjusted by HE price index (1982=100)

→ Year

Notes: The HE price index of 1959 is approximated by the value for 1960. HE refers to postsecondary degree-granting institutions (“Data through 1995 are for institutions of higher education, while later data are for degree-granting institutions. Degree-granting institutions grant associate’s or higher degrees and participate in Title IV federal financial aid programs. The degree-granting classification is very similar to the earlier higher education classification, but it includes more 2-year colleges and excludes a few higher education institutions that did not grant degrees”; Dillow et. al., 2009, p. 46) Source: Dillow et. al. (2009), Tables 3 (enrolment), 25 (expenditure on education), and 31 (price indexes).

Contrary to the Netherlands, where per student expenditure decreased since 1975, the US spent more per student also when expenditures are adjusted by the higher education price index between 1959 and 1969 (see Figure 5.2). These adjusted expenditures did slightly decrease in the 1970s. As of 1982, expenditures per students adjusted for HE prices increased until the early years of the 21st century and have only started to drop slightly again lately. This trend of somewhat increasing expenditures per student is in contrast to the sharp decline in the Netherlands. The person from outer space who sees Figure 5.1 could easily conclude that societies either did not think much of higher education and – as a consequence – reduced expenditures, well realizing that this implied a serious reduction in quality, or alternatively had found that higher education could increase productivity (so that the expenditures per student could decrease without affecting quality). The second hypothesis, how-

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ever, would have to be rejected quickly, because of the so-called ‘Baumol disease’. Baumol (1967) showed convincingly that the relative price of services whose quality depend on the involvement of people (like ballet or drama, but also child care or education) is likely to increase over time, when wage increases are the result of the productivity increase in the manufacturing sector while other sectors have to follow those wage increases in order to be able to attract people. The evidence of other parts of the world (the US and Japan) shows that they understood the “Baumol disease” and more or less maintained the expenditure level of the sixties (adjusted for the general wage increase), so that by 2000 the US or Japanese expenditures per university student were more than double those of Europe. Rests the first hypothesis which our person from outer space would find unsettling because in public statements societies seemed to attach a high value to quality higher education. Hypocracy? No. It was political inability to deal with the expansion of university participation. At the outset – in the sixties – all analyses which were made of the expected and desired expansion of university education concluded that expansion could not be realized by public funds only (see for example the Dearing report, 1997, in the UK). Also it should be accompanied on the European continent by differentiation with respect to the length of study and with respect to the depth: the average length of university study in the sixties of seven to eight years in countries like Germany and the Netherlands might have been acceptable for an elite system, but it was simply not commensurate to the demand of the labour market for graduates in the seventies and beyond: in terms of depth of the study the demand on the labour market was more varied while universities provided one size to fit all. Der Spiegel (“The Mirror”) – a German weekly – joked in the nineties that by extrapolating the average age of graduation of German university graduates and doing the same backwards for the age of pre-retirement, it would be only a matter of some decades before university graduates might directly enter pre-retirement. The increase in demand for university places was positively viewed – as a generator of talent, and as a social mobiliser. The labour market needed more university graduates. Yet, the continental European elite systems of universities had many unattractive elements for massification: high drop-out rates, long durations of study for all students and little attention for “learning efficiency”. Virtually every continental European country had commissions and policy documents in which warnings were implied: do not expand universities without adjustment. However, there was mostly insufficient political support for major changes. It was in a time when the economies of countries’ were booming and financial constraints were not yet viewed as serious. It was the oil crisis of the seventies and the concurrent/subsequent stagflation which showed the vulnerability of the massification of an elite system fully fuelled by public money. Governments had very little other

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choice than to seek for the combination of drastic budget cuts as well as dramatic structural changes in universities leading to a shorter duration of university degree courses. The effect of the latter is clearly visible in Figure 5.1. A restriction on numbers of students was out of the question as the labour market demand for graduates was rising and anyway social demand was rising even faster. Some countries enacted changes in governance of universities in order to increase flexibility and innovation in universities, but this was the exception rather than the rule. The structural adjustment in the lengths of studies on the European continent was insufficient to keep total university costs from rising in a period of increased participation. Cuts could not be avoided in order to keep within the budget. However, the budget cuts went further due to the need to bring down the mounting overall budget deficits of governments (resulting from the economic slump) on the one hand and the pressure to decrease taxes on the other. Decreasing taxation levels have been in Europe – like in the US – the dominating political practice argued on the basis of neo-conservative, anti-state ideology as well as an economic rational. This is well documented for the EU in Figure 5.3 Prescott (2002) puts the taxation level in an economic framework very much like that of the “Laffer Curve” which made President Reagan’s economic policies famous: the lower your country’s taxation, the higher the economic growth and so the higher your tax revenue. In practice, the US did run up its budget deficits when it reduced taxation levels, but it also experienced (additional) economic growth. Note that some European Governments (like Germany) continue to advance tax reductions in the post crisis period as a means to stimulate the economy.

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Figure 5.3

Taxation rates (Public Expenditures to GDP) over time

54

52

→ Percentage

50

48

46

44

42 1995

1996

1997

1998

1999

2000

2001

EU25

2002

EU15

2003

2004

2005

2006

2007

→ Year

Source: Eurostat (2008a).

When public funds decrease and the social demand in higher education increases then only private finance (tuition fees) can keep universities from being strangled. However in the sixties and seventies there was no room for manoeuvre for governments to increase tuition fees. The infrequent attempts in this direction in Europe were met by fierce opposition from students and universities alike, sometimes accompanied by strikes or even riots. And then in the period of retrenchment it turned out to be very difficult to introduce or raise tuition fees. The political door for tuition fees became ajar in the late eighties and governments in the Netherlands (1990), Portugal, Austria, Poland and the UK (1995) used that opportunity. In some countries like Italy private finance had already been rising due to the ‘Verelendung’ of the public universities. Private universities – requiring full cost tuition fees – became popular leading to the mix of public and private financing of HE in 2005 in OECD countries of Figure 5.4. The private part of higher education expenditures is the result of two components: – Tuition fees in public universities; – (Close to) full cost tuition fees in private not for profit universities.

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Private institutions – of course – need not charge the full costs if they are endowed by gifts. However, unlike the US with a pre-crisis stock of endowments of close to half a trillion US$ (Hammond, 2008), endowments play a minor role in university finance in Europe. A guess of the total of endowments of European private university would not yield more than some billions at most. As a consequence private institutions have to run on full costs. Endowments of public universities are even rarer. They have to do with the public funds and tuition costs (see further: section 5.3). In Figure 5.4 the private contributions are split up between the household contributions (tuition fees) and other private entities (including endowments or contract income from industries). A comparison between the top (2005) and bottom shows a substantial average increase in private finance (5 percentage points) in particular in Portugal, Sweden, the Slovak Republic – who were virtually tuition fee free in 1995, but also in Japan, the US and Chile which doubled the share of private finance between 1995 and 2005.

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Figure 5.4

Public and Private Expenditure on Higher Education as a Percentage of Total Expenditure on Higher Education in OECD countries, 2005 (top) and 1995 (bottom)

Public Expenditure

Private source: Household expenditure

Private source: Expenditure of other private entities

Total Private Expenditures (Source unspecified)

100%

80%

60%

40%

20%

Denmark Greece Finland Austria Turkey Iceland Belgium Sweden Germany Ireland France EU19 average Czech Republic Hungary Spain Netherlands Slovak Republic Slovenia Poland OECD average Estonia Italy Mexico Portugal United Kingdom New Zealand Canada Israel Australia United States Japan Korea Chile

0%

100%

80%

60%

40%

20%

Chile

Japan

United States

Israel

Australia

Canada

Spain

Germany

United Kingdom

OECD average

Czech Republic

Ireland

Hungary

Netherlands

Austria

EU countries average

Norway

Denmark

Finland

Slovak Republic

Sweden

Portugal

0%

Note: The OECD reports data for public expenditures that exclude public subsidies to household and other private entities. In most cases, the OECD provides sufficient information on the subsidies to disaggregate them from private expenditures. Sources: OECD (2008a), Table B3.2b (top panel), data for Canada and Turkey in the top panel are for 2004 from OECD (2007a), Table B3.1 (also source for bottom panel).

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In the EU, the UK is at this moment the frontrunner in tuition fees, followed by Portugal. Of course, every increase in tuition costs is debated against the background of equality of opportunity and as a result accompanied by extra room for student loans and grants (see the next section). European countries find themselves in an unfavourable position in private HE finance as Figure 5.4 (top panel) shows: all non-European OECD countries have more room for private finance. Turkey is the exception in the sense that it looks almost European. However, the top of Turkish HE is characterized by a dominance of private universities (Bilkent, Koç, Sabanci). The expenditures for the private Turkish universities have not been included in the private expenditures part of Figure 5.4. Besides the UK, Portugal, Italy and Poland are the other exceptions in the sense that they are almost non-European OECD countries. In 2005, Chile and Korea relied more than any other country (± 80%) on private finance. The next highest ranked country in Figure 5.4 (top panel) is Japan: “Higher education in Japan is supplied primarily by fee-charging institutions. In addition, public universities in Japan have some of the highest tuition fees in the developed world” (Hahn, 2007, p. 6). “For-profit education (not captured in these statistics and difficult to assess because of an absence of reliable data) seems to be growing in OECD countries and beyond. Outside the OECD, “China has introduced [in 1978] a number of reforms that have brought private finance into higher education, including an authorization in 1985 for universities to collaborate with industry and one in 1989 to allow fees for tuition […]. One estimate suggests that from 1990 to 2001 the share of public finance in higher education expenditure decreased from 99 percent to 55 percent, representing a remarkable upswing in private finance […]. This upswing coincided with, and supported, a massive increase in the number of students enrolled in higher education” (Hahn, 2007, p. 6). Hahn suggests that China has mostly turned to for profit higher education. “[In India, for] much of the second half of the 20th century, the expansion of higher education in India was financed by the central and regional governments. The strain on public finances caused by the expansion prompted the government in 1997 to start promoting financial independence, including the introduction of more than nominal tuition fees. Evidence from a national survey suggests that private spending has increased dramatically, with private per capita expenditures on education increasing fourfold from 1983 to 2003 […]” (Hahn, 2007, p. 6). “[In Indonesia,] tuition at Indonesian universities was set by the central government [until the late 1990s]. In 1998, legislation was passed that gave a number of universities the right to determine their own tuition levels. This right was subsequently extended to all universities in 2003. In the late 1970s, tuition accounted for less than 10 percent of the revenues of public institutions of higher education in Indonesia; by 2004, that figure had risen to 20 percent […]” (Hahn, 2007, pp. 6-7).

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Looking at the total of public and private expenditure on tertiary education for the year 2001, Aghion et al. (2008) find that the frontrunners in total spending are rich countries, led by the US and the Nordic countries. The difference is that the US use primarily private sources and the Nordics public funding. Furthermore, in the US, “public spending alone is relatively higher than in the EU” (p. 29). A surprise is that the UK spends relatively little public resources on higher education. Let’s take this one step further and explore the link between private finance and public finance in a more general way. How strongly is private finance related to total expenditures per HE student? This is demonstrated in Figure 5.5. In order to account for the wealth of the country we have chosen for per student expenditures relative to GDP per capita. Of course higher tuition fees need not increase educational expenditures on a euro for euro base: they may also free up resources for other public purposes. Estimating the effect of private expenditures on total expenditures, i.e. public plus private expenditures, the following regression equation is obtained:

total expenditure = 0.757 (private expenditure) + 0.392, (0.1897) (0.0374)

with standard errors in brackets and an R2 of 0.355. An increase in private expenditure by one international PPP dollar increases total expenditure by roughly 75 international PPP cents. This effect is significant at 1% (pvalue of 0.0004). As expected, a one dollar increase in private finance creates less than a one-for one increase in total finance. Or, in other words, only about one quarter of private contributions to higher education is crowded out by public expenditures or captured by reducing public expenditures.

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Figure 5.5

Total Expenditures per Student against Private Expenditure per Student, both relative to GDP per Capita, 2005

1.0

Total expenditure on tertiary education (public + private) per student relative to GDP per capita (thousand PPP international $)

0.9

CAN (2) DK India (1)

0.8

CHI

US

0.7 SE 0.6

UK MEX

NOW (1) Austria

NL DE FI BE NZ TUR (1) SI FR HU PTSK CZ IE ES PL IT EE GR

0.5 0.4 0.3 0.2

Australia JAP

KOR

0.1 0.0 0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Private expenditure on tertiary education per student relative to GDP per capita (thousand PPP international $)

Note: CHI=Chile; year of reference for Turkey, Norway, and India is 2003; for Portugal and Canada, the years of reference for the number of students are 2003 and 2004, respectively; the number of students for India for 2003 has been adjusted as it was likely subject to a typo. Methodology: Government and private expenditure were converted to thousand PPP international $ with PPP conversion factors, then divided by number of students. GDP was divided by population and converted to thousand PPP international $ with PPP conversion factors. Then government and private expenditure per student divided by GDP per capita. Sources: Government and private expenditure in million of national currency and student numbers: OECD (2009); GDP (in current LCU = local currency unit), population, PPP conversion factors (LCU per international $): The World Bank (2009).

This summarizes the story of the reduction of per student expenditures: a massification of HE without sufficient adjustment in private finance (tuition costs). Yet, do expenditures matter? Some politicians (and civil servants) would point out that the budget cuts have been followed by an increase in the research productivity and a decrease in drop-out. It is perhaps superfluous to point out that there is spuriousness in this connection. Research productivity was not increased by budget cuts but by a change in the research focus towards published (and cited) results. Research productivity would probably have been higher with these changes in focus without the budget cuts. The decrease in drop-out has also most likely been hampered by the budget cuts rather than been caused by them. It was the transparency on drop-out (through publications) which made

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universities aware that students do not like to opt for universities with high drop-out rates. If per student expenditures are related to the room for private finance as the international experience captured in our regression analysis suggests, then governments apparently have only used private finance to reduce public expenditures for about ¼ of public expenditures. Figure 5.6 illustrates – if juxtaposed to Figure 5.4 – the sizeable slope in Figure 5.5. Public expenditures for higher education as a percentage of GDP tend to go down somewhat when private expenditures increase. Yet, Figure 5.5 shows also the room for ambition with the noted frontrunner-ship of the US and Korea: the only two countries which spend more than 2% of their GDP on higher education, one (the US) through a blend of public and private, while the other mostly relies on private income for HE. Within the EU the ambition (as proxied by the willingness to devote the GNP to HE) is less than half that of the US, with the Big 4 of Chapter 2 (Germany, France, Spain and Italy) hanging in the bottom part. It is remarkable how strong the ranking of universities – if considered from a country perspective as in Table 2.2– is related to the ambition of countries for HE, with the noted exception of the UK which comes strongly out of the rankings, while being pretty much a miser in terms of its willingness to pay for HE.

Figure 5.6 Public

Expenditure for Higher Education as a Percentage of GDP (2002) Private

3

% of GDP

2.5 2 1.5 1 0.5

Source: Schleicher (2006, p. 10), Table 8.

EU

ands Mexi co Germa ny Hung a ry France Spain Portug al New Z ealand United Kingdo m Cze ch Repu b lic Au stra lia Italy Japan Kore a

Netherl

Ireland Poland Turkey Iceland

Denma

rk Finland Swede n Norw a y Belgium Gree ce Unite d St ate s Austria

0

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The decade 1995-2005 has shown a quite uneven picture in terms of the changes in per student expenditure. Figure 5.7 shows the index of expenditures per student in OECD countries in constant prices with the index of 100 in the year 2000 for 1995 and 2005. On average, in the OECD as in the EU19 the expenditures increased somewhat (roughly 10%) but note that this is less than the compound rate of growth of real wages! Despite the fact that this period is characterised by relatively high economic growth rates still expenditures decrease substantially in countries like the Czech republic and Hungary, and decrease slightly in the Netherlands, Norway, the Slovak Republic and Sweden. Some countries show an impressive increase: Austria, Greece, Poland, Portugal, Spain, Switzerland and the US while others appear to be close to the wage index on the per student expenditures.

Figure 5.7

Change in Expenditures per Student on Educational Institutions (Tertiary) for all Services in Constant Prices, 1995, 2000 and 2005 (Index 2000 = 100)

Notes: (1) Public institutions only. (2) Public expenditure only. (3) Year of reference 2006 instead of 2005. Source: OECD (2008a), Table B1.5.

The present gap between per student expenditures in the US and Europe (with a 2.6 times higher level in the US) is an important explanation for the difference in attraction of these continents for top talent. If Europe wants to be the region of top talent it needs to boost HE expenditures (of course, in a differentiated way). Public finance cannot be the solution. Taxation levels will continue to go down and the competition for tax rev-

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enues between the different public tastes (education, social welfare, defence, public safety, etc.) will become stronger and stronger. There is but one solution: increase the room for private finance, as an inevitability which at the same time can improve the allocation of resources because of the price signal it gives. 5.2

Equality of Opportunity and Beware of Too High Tuition Fees

The principle of equality of opportunity is fundamental to our societies. Every individual should be able to develop his/her talent fully independent of the household he/she is born in, the path of growth in the early years or the parental income. Tuition fees could block equality of opportunity in a world with “capital market imperfections” (section 4.4). However, all countries with a substantial private HE finance (see Figure 5.4) also have a well developed government-supported student loan program (e.g. Korea, the US and the UK). Still, able students might not yet be convinced to participate because they do not “see” the advantages (including a higher income) as discussed in section 4.4. The interest rate for loans is an immediate factor in the cost-benefit calculation for university participation. This interest rate does depend on the (effectiveness of the system of) collection of loan payments – which is related to the overall institutional quality of the country as well as to that of the special system of student loans. E.g. this is well-developed in India, but virtually absent in Turkey. “Securitization” – “selling” the illiquid assets of, for example, a student loan system – can help to provide the finance for a loan system. Yet, securitization has been also a negative factor on the credit crisis of 2008/2009. A social loan system as proposed by Barr (2002) seems to be the solution because the student only pays back an ‘education’ tax on income earned above a threshold level. The Blair Government introduced such a system in 2006 (combined with tuition fee differentiation). Students can borrow the tuition fee (₤3,000 max for a bachelor degree) and pay back this loan with a 9% tax above ₤15,000 until the full amount borrowed is paid back. The introduction of this system did not affect participation. It did increase the tuition income of universities by ₤1.3 billion. Note that this is different from a general HE tax where the tax rate is higher for those who have completed university under a full public finance system. Such a system is exactly as it is set up: it penalises participation in HE and encourages alternative ways to develop talents. It would be also highly impractical and impossible to implement (e.g. how to tax those who have studied in country X with the education tax and work in country Y without the tax or the other way around: will degrees earned in country Y – without the tax – of persons working in country X with the tax also be taxed?).

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A big minus of Barr’s system is that it only operates within borders. How does the tax authority recoup the loans outside the national borders? In a globalized world a more international solution would be preferred. A European social loan system would already be a better alternative. The US seems to be a case of too high tuition fees. Participation by “new” Americans (immigrant children) and by lower socio-economic groups is decidedly lower than in other OECD countries. The relation with the average debt at graduation of US$ 19,200 (The Project on Student Debt, 2007) is too obvious to ignore. Average debt at graduation has consistently been rising from some $12000 in 1986-87 to double that amount in 2007-2008 (FinAid, 2009). At the same time: Europe needs to take its tuition fee phobia to the therapist and start to practice tuition fee policies and social loan systems. In this way finance for HE could be increased while maintaining, yes, even improving equality of opportunity. Equality of opportunity may be hampered in the US by tuition fees without sufficient loan facilities. However, in countries like Germany, France and Italy social background plays a much larger role than in the achievement of students than in the US. “German children of highly educated parents have 4 times more chances to enter university than children of parents with little education” (Schleicher, 2006, p.15). Schleicher – and with him many others – feel that the tracked secondary school system leads to too early a selection and as a result to insufficient chances of children of lower socio-economic classes to enter university. In Chapter 2 and 4 we discussed the need for Europe to increase participation in university education because of the demand on the labour market. This increase has to come overwhelmingly from the children of lower socio-economic classes. Equality of opportunity is thus, not just a social point of departure; it is also an economic necessity. Equality of opportunity is not so easy to measure. Crude differences in university participation between different socio-economic groups may not sufficiently account for differences in ability. A comparative measure of intergenerational mobility between countries might be better. Figure 5.8 shows on the Y-axis intergenerational links (the opposite of mobility) with Denmark, Norway and Canada giving much room for youngsters to end up in a different socio-economic group than their parents. The intergenerational earnings elasticity is defined as the fraction of income that is, on average, transmitted from parent to child. The OECD (2008b) suggests that this mobility is strongly related to income inequality. The trend line of Figure 5.8 supports this hypothesis. The overall picture is one in which equality of opportunity is determined by a complex of factors, which include The existing notions in a country on a fair distribution of income. The higher the income inequality which is accepted in the country, the lower is equality of opportunity.

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The degree of pre-selection in the secondary school system. Higher education finance, most notably the way in which ‘capital market imperfections’ are reduced for children from lower socio-economic groups through loans and grants.

Figure 5.8

Intergenerational Mobility and Income Inequality

Intergenerational earnings elas ticit y 0.6 GBR

0.5

ITA USA

FRA

0.4

DEU

ESP

0.3 SWE CAN

0.2 DNK

FIN NOR

AUS

0.1 0 - 20

25

30

35

40

Gini coefficient of income inequality

Source: OECD (2008b, p. 213), Figure 8.2.

In the US there is concern about the future that ain’t what used to be: the idea that today’s children are expected by adults to be worse off than they are (Pew Research Center, 2006). It seems (but is not so clear) that higher incomes are more pessimistic about the future of their children than lower incomes (Hispanics are downright optimistic). This translates into an expectation of the gradual decrease in the intergenerational earnings elasticity in the US. 5.3

Effective Finance and other income

Effective finance is the combination of on the one hand the expenditure side – education and living costs – and the other the income side – income for universities and income for students. In a little matrix:

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Table 5.1

Expenditure and Income Sides of (Effective) Finance Expenditure side Universities

Universities

Operational and other costs

Living costs

Tuition fees

Public finance Tuition fees Other income Parents/Savings

Students

Income side

Wage costs/ Staff

Students

Work Loans, grants and scholarships

Effective finance should ensure: The availability of high quality education. We purport that this is in Europe not sufficiently the case. The accessibility of high quality education. Europe generally does quite well in accessibility. Yet, one should be aware that in many countries students spend more time in earning a living than is in line with the hours stated for an effective learning career. Many universities have felt that they cannot but accommodate this pressure. The number of hours of study (contact hours plus other organized learning time) is as a result lower than originally assumed in the curriculum. This has a depressing effect on the quality for those students who want to study full time. By the way, the empirical evidence of the Netherlands shows that a job of a limited number of hours for a student enhances the student’s performance but that jobs which require more than approximately ten hours a week depress performance (ROA, Reflex Report, 2007). Gradually, universities are adapting by offering honours degrees and other means of differentiation to accommodate different ways of student involvement. Europe should also pursue other avenues of income, like philanthropy and income from university-industry relations. University philanthropy has a long history in the US, with the remarkable contributions of Carnergie, the “iron king”, and Rockefeller Sr., the “oil man” donating to-

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gether more than half a billion US Dollar in 1915 to “uplift man” with the famous statement of Carnergie: “The man who dies rich, dies disgraced”. Carnegie’s motto still carries the day in the US as the total endowment in the US of a half a trillion suggests. The volatility of this type of university finance in times of an economic crisis has shaken many of the US elite institutions in 2008 and 2009. In 2007 the National Association of College and University Business Offices proudly announced that the endowment funds were invested in a superior performing way (MIT and Yale returns: 23%, for example). The wry other side of the page are the terrible losses suffered by the high risk-high return strategies of many university endowment fund manager in 2008 and 2009. “American-style endowment campaigns and management are spreading now to Europe. The most notable examples so far are at Oxford and Cambridge […]” (Hahn, 2007, p. 14). Yet, by and large, philatrophy is still a minor part of university income in Europe. Also outside Europe philatrophy is spreading. To mention a number of examples (Hahn 2007, pp. 14-15): A $500 million donation to the Indian Institutes of Technology by a group of wealthy alumni. A $10 billion donation by the prime minister of the United Arab Emirates to education in the Arab world. The Sampoerna Foundation, which works with the Bank Internasional Indonesia and the International Finance Corporation (IFC) to establish a risk-sharing facility that provides loans on subsidized terms to students and parents. The Sampoerna Foundation provided initial cash reserve that may cover any first losses, while Bank Internasional Indonesia provides the loans, and the IFC structures the deal (Sampoerna 2006). Or in Turkey, the examples of the “foundation universities”, like Koç, Yeditepe or Bilkent. These are exceptional cases, however; in the great majority of cases, philanthropy is at best one part of a larger strategy of revenue diversification by universities. University-industry collaboration can also be a source of income. To quote Etkowitz et.al. (2000): “The Massachusetts Institute of Technology and the University of California at Berkeley pioneered a model of selfsustained funding for research through income from patents. [...] Many American universities have subsequently developed a significant role as partners with regional industries and as world-class innovators. Universities in other parts of the world, particularly Europe and Japan, are trying to match the success of American universities on university-industry collaboration”. The income of universities to be derived from successful university spinouts should not be overrated. Some universities have had substantial income (like the University of Wisconsin from one single patent), yet,

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overall this income amounts to no more than 3% of the income of US universities which are – unlike European universities – greatly supported by the Bayh Doyle Act of 1980 (see Chapter 2) in the protection of their intellectual production and the possibilities to sell this knowledge. Nevertheless, the pursuit of valorisation of the knowledge is an important task, with sufficient background experience to build upon (see Tang et. al., 2004). Government funding allocation mechanisms are not part of this chapter but the subject of governance questions (next chapter). 5.4

Summary and conclusion

The dismal story of Europe is one of a serious expansion of university education in the 60’s, 70’s and 80’s accompanied by a more or less constant (real) budget, thus leading to more or less a halving of per student expenditures over the period 1975-2005. Universities were not allowed to compensate this decrease by tuition fees while other private funds were not available. The absence in government policy of any consequence taken from increasing student number lies almost entirely in the decreasing role of taxation. In good and in bad times, tax money has been returned to the citizen either because it was “due to be returned” (good times) or because “it stimulates the economy” (bad times). In the EU15 the taxation rate decreased by more than ½ percentage point per year in the period 1995-2007 – and there are no signs that this development is stopping in the present (2009) post crisis period. Some leeway is given around the world between 1995 and 2005 for tuition fees, where the largest increases occur in the countries (like Chile, the US, Japan, Australia and Korea) who had already a substantial input from private finance. All in all, OECD countries increased their private finance part of total expenditures on higher education by 5 percentage points. Private finance does not crowd out or replace public finance. Only about ¼ of additional private finance is “captured” to reduce public finance. Equality of opportunity is served by a generous student loan and grant system, in combination with relatively modest tuition fees. Fees which are too high may effectively reduce the participation of bright young kids from poor backgrounds, whatever the loan system. The UK had demonstrated that a “modest” tuition fee increase (to ₤3000.- in 2006) did not affect equality of opportunity, thanks to a “social” loan system. The role of private finance other than tuition fees is in Europe very limited. A culture of philanthropy for universities does not exist. This is in contrast to the US where Carnegie’s motto: “A man who dies rich, dies

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disgraced” has contributed to a maasive US$ ½ trillion in university endowments funds.. Private university income from industry contracts or spin-offs is – with some exceptions – negligible as a contribution to the financing of European universities.

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Notes

1

The HE price index is based on per student expenditures over time. It is close to the wage index.

6

6.1

Give Innovation a Chance: the context

The Context of a University

A European university – whether private or public – works within the legal framework of a nation. This is the context for its potential to function, to provide education to students, to do research and to contribute to society in other ways. Most countries have put universities in a straightjacket by which they have to function, full of regulations on how to conduct its business often with executive functions (like the hiring of staff, building or otherwise) far removed from the workfloor and encased in the ministry. Very few countries have been able to deal create a university context of full autonomy and full accountability, while it is clear and reaffirmed in the analyses of chapter 2 that autonomy of universities leads to better universities. Yet, the caterpillar of a bureaucratic university has the potential to develop into a butterfly (section 6.2), i.e. a university which is constantly reinventing itself in light of new learning insights and in the light of the changing, more globalized environment of the university. The Bologna agreement has been a major shift in the external environment of many European universities. Section 6.3 gives an overview of the legal nature of the Bologna agreement in a European Union which considers higher education to be a matter for the individual countries, not the EU as a whole. Increasingly, however, through the non-discrimination article of the EU, the European Court has removed barriers to student mobility. The Bologna agreement is a form of soft law, which indeed does create a far more transparent landscape of European universities and facilitates as a result the intra EU mobility of students and the intra EU competition between universities. The implementation of Bologna, however, is fully national reducing in the process the potential gains. Part of the external environment are the rules and regulations imposed by governments on selection of students. Section 6.4 argues that

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those parts of higher education which want to be internationally competitive should be selective. The external environment, in particular resource allocation for public universities does hardly contain incentives for universities to do well for students in all the areas we mentioned before: – Innovate the learning process by implementing new knowledge about learning. – Innovate the internationalization process, so that students are well prepared for globalized world. This is the topic of section 6.5 while 6.6 contains some conclusions. 6.2

The Caterpillar and the Butterfly

We can be optimistic about university reform. The evidence of the postWorld War II period demonstrated that universities adapted in structure and substance as required by the external demand. Indeed, I use here the term ‘external demand’. However, one can also be quite depressed about university reform as being too little, too late and – as I shall try to demonstrate – not based on a good understanding of the ‘external demand’ (maybe with the exception of the response to the Dearing report in the UK, 1997) but driven by the structural context of the economy and that of demography. The Reform came about because of external crises. They were the perpetrators of changes, while the universities themselves hunkered down, putting up their quills and hoped for respite in implementing innovations. The present (2009) economic crisis can again be a major catalyst for change hopefully with universities taking the lead. In the following sections I describe the changes in the national university systems using Burton Clark’s (1983) typology. He describes the forces that influence the higher education system and identifies three important poles in the resulting dimension: the academic world itself, which he calls the academic oligarchy; the state, as the translator and financier of socially strategic questions about higher education; and the market, the remaining sphere outside the government, which influences the way university functions. The triangle that can be drawn between these three poles then forms the trajectory the universities followed in their governance over time. I use my own transition or better ‘Werdegang’ through these successive stages of the caterpillar in the Netherlands as an illustration but will try to generalize the Dutch experience for the European Union countries as the higher education system of other countries can also be placed in the Clark-triangle. After World War II, the Dutch university system very much resembled the Humboldt system of academic oligarchy. This lasted until approximately 1969, when a 25 year period of ‘self-analysis’ with help from the government began. From the mid-nineties the universities

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moved on to a system that resembles the British/American mission model. Figure 6.1 sketches the Dutch development of universities in the magnetic power field of these three poles of attraction as distinguished by Clark: the State, Academic Oligarchy and the Market (read: autonomy). It is the transitioning away from academic oligarchy, then first in the direction of the state and subsequently towards the market. This development is also found in many of the ‘Bologna countries’, albeit with different speeds.

Figure 6.1

Forces Influencing Universities with the Dutch Experience

State

1985

NL

Market

1965

Academic Oligarchie Source: Clark (1983).

An impression of the position of selected ‘Bologna’ countries in the triangle around 2005 is presented in Figure 6.2. The ‘eastward’ movement of the Dutch system can also be found back in Denmark, France and Germany in the beginning of the 21st century.

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The Position of University systems of Different Countries in the Triangle, 2005

Figure 6.2

State USSR Denmark Sweden France

Canada

US Market

NL

UK

Japan Germany Italy Spain Academic Oligarchie Source: Clark (1983).

The Dutch movement depicted in Figure 6.1 through the magnetic field of influences can be characterized by the following four stages: – The university of tradition or the oligarchic university; – The ‘democratised’ university; – The bureaucratic university; – The professional university. These stages are recognizable for university systems throughout the European Union. One hopes that after these stages we can speak of a fifth stage – the innovative university. The latter stage has not yet been reached by most European countries. The legal setting and systems of public financing in most countries have kept universities back from being as innovative as they should have been in view of the needs of society. The evolution of the caterpillar was enforced by the combination of demography and external economic circumstances. For instance, the ‘democratization’ movement coincided with a huge increase in the number of participants while economic growth was viewed as endlessly high for any foreseeable future. Another example: the bureaucratic university was the result of a levelling off of participation in combination with the oil shocks of the 70’s.

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In the following we give more details on the evolution of the university systems viewed the three spheres of influence.

6.2.1 The Oligarchic University In the period from World War II to the second half of the sixties, the academic profile of the average Dutch university was rather continental and German in nature. Universities stood with their backs to the world, even though the sciences and medical disciplines had a strong international orientation. Research was aimed at pure scholarship, at increasing knowledge for the sake of increasing knowledge. Academic teaching was considered a derivative of research. The leading principle was freedom of teaching and learning, aimed at developing a research-oriented attitude; the unity of teaching and research was the essential characteristic. Within this system high demands were made on the students. The financial threshold meant that the influx of students from lower and middle class backgrounds was very limited. Students were still an elite group and neatly cooperated with the system. The universities existed in an ivory tower of scholarship; the individual professional chair was the centre of the organisation of teaching and research. The Senate consisted of all full professors who had been appointed by the Crown. Their (elected) chairman had the title of Rector Magnificus. The Rector and the Senate were charged mainly with promoting the general interests of teaching and the exercise of scholarship. Thus, the academic structure was a real oligarchy. The Curatorium of the university at the time should be compared to a Supervisory Council rather than a Board of Governors, although it combined powers of both. These concerned the ‘substantial’ powers of the Supervisory Council, such as the approval of the budget and the plans for university development at the time, but also the nomination of potential professors for appointment by the Crown and ‘taking measures to protect the health of students against dangers of infections’. The government was not directly involved in teaching and research; it was only involved in a few formal status-related aspects, such as the Crown-appointed professor and the professor-director. University governance was in marked contrast with university administration. The university was an extension of the civil service, with a chancellor-director at the head of the administrative organisation and very much bound by government-issued guidelines for the implementation of resolutions. The social sciences were emerging and in Eindhoven and Twente new technical universities were founded. In government circles there was some talk of programme coordination for scientific research, in particular for studies that required large, costly apparatus. University employees were civil servants with civil servant pay scales. In 1968, the Dutch government commissioned the Arthur D. Little bu-

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reau to make the first study into the effectiveness of the universities’ functioning. In the report Arthur D. Little subtly remarked that the university administration was growing out of control and, finally, that there should be a better division of powers. The oligarchic university could survive so long because of its relatively shielded position in society – supported by the elites in elite-dominated societies with low participation rates to universities and a stable demography. The oligarchic university was unfit to become a mass university for large numbers of students – which arose because of the large increase in participation and the parallel increase in the size of the age groups 20-24 as a result of the baby boom.

6.2.2 The Democratised University But by then the universities were tripling in numbers as the baby boomers of 1945 found their way into universities. Not only were numbers of 20-24 year olds increasing, also participation rose led by the drive of equality of opportunity. Pretty much all over the developed world participation to universities seemed to be more governed by parental income than by the talent of the potential student. Figure 6.3 illustrates the development of student numbers. Not only were there more students, they were also different students coming at a time of high economic growth rates – which gave the impression of infinitive possibilities for social change.

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Figure 6.3

The Development in Student Numbers in the Netherlands

600

→ in thousands

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400

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200

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1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

0

→ Year Notes: Student numbers include students in higher vocational training (hoger beroepsonderwijs) and academic higher education (wetenschappelijke onderwijs). For the years 1972 and 1973, no data for enrolments in academic higher education is available and the data is, therefore, omitted. Source: Own calculations based on data from CBS StatLine (2008).

The early ripples of 1969 turned into shock waves as no sea seemed too high to the student movement. Many members of staff chose for partnership with the students and their collective power was sufficient to have a number of far-reaching legal measures concerning higher education approved. University governance and administration became the target of many questions that could not be left unanswered. In 1970, the Dutch Minister of Education Veringa put his WUB (Wet Universitaire Bestuurshervorming – University Government Reorganisation Act) bill forward in Parliament. Due to the widespread social unrest surrounding the universities, the WUB was soon widely supported. After the revolutions in Tilburg and Amsterdam, the WUB resolutely removed the Curatorium, the Senate and the College of Rector and Assessors from the universities. The WUB went very far in its democratisation of the university administration. Veringa himself later commented that he wanted to stay ahead of the students. University governance was divided in four layers, each with considerable powers (an Executive Board and an elected Council of academic staff, support staff and students with joint decision-making

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powers). It is ironic to note that the inspiration for the role of the councils came from the Yugoslavian model of “worker self determination” in firms – which, of course, has not turned out to be a great success. At an operational level, the WUB created the department around a certain subfield (with possibly several chairs). All academic members of staff in permanent employment were automatically members of the departmental board. This echelon of staff also formed 50% of the members of the entire departmental board. The other half consisted of temporary academic staff, support staff and students. As a result, board meetings of institutes and laboratories, which frequently had more than five chairs, might as well be conducted in an Auditorium! A – vague – distinction between governance and administration remained in place, with the administration remaining organised within the university, but it had by then been separated from the national government. The new governance structure came at a time when government Commissioner Posthumus (1968) had concluded his reflections on the future organisation of university studies in a situation of the mass-university. He concluded that the studies should be reorganised with a shorter duration of studies and a closer relation between the average length of the study and the nominal length as a means to express better the demands of society for university education. These ideas were adopted as government policy in the 70’s – but were met with strong opposition from universities (students, faculty and administration elite) and from the elites in society (including organised employees). As a result of the ever-increasing influx of students a need was felt to strengthen the organisation of teaching. New staff categories were introduced at the university, including student advisors and teaching coordinators. In 1972, Esquire De Brauw put the direct benefit principle firmly on the agenda by proposing to raise the tuition fees from Hfl 200 to Hfl 1,000 and the examination fee from Hfl 10 to Hfl 100. The increasing influx, in combination with the economic development in various regions of the Netherlands (mine closures and closures in the textile industry) prompted the question whether there was perhaps a shortage of universities. After much lobbying, the wise decision was taken to launch a new university in Maastricht, starting with a new medical faculty. This university has made itself heard on a number of occasions, particularly in the area of teaching! In response to student pressures, new methods of teaching were introduced. On some occasions the debate was not only about the method, but also about the content, for instance in what wrongly became known as the Daudt affair. Students expressed a specific interest in more ‘socially relevant’ research, and the respect for formal academic authority disappeared. Professors largely ‘withdrew’ into the strongholds of the ZWO (Nederlandse

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Organisatie voor Zuiver Wetenschappelijk Onderzoek – Netherlands Organisation for the Advancement of Pure Research) and the KNAW (Koninklijke Nederlandse Academie van Wetenschappen – Royal Netherlands Academy of Arts and Sciences). Academic staff in the positions of lecturer and senior lecturer in particular organised themselves in the Association of Personnel at Universities and Research Institutions, the VAWO. A large number of staff who had not yet obtained their doctoral degree was appointed. The observer sees many parallels between the Dutch developments and those in other EU countries: – The ‘democratisation’ with substantial power of the non-professional staff and of students to decide through ‘councils’ without accountability; – The resistance to change the length of study with a substantially increased enrolment; – The lowering of appointment standards for academic staff. It then was no surprise that in the second half of the 70’s, the emphasis moved to planning, when the oil crisis made it clear that the ‘democratised university’ was as a ship run on the financial rocks.

6.2.3 The Bureaucratic University The start of the 80’s saw the launch of a number of large operations to keep the cost of higher education under control. The cost level of the 70’s became unsustainable when tax income of governments fell due to a substantial reduction in economic growth. The first of these operations was the introduction of a two-phase structure for university degree courses, which aimed at shortening the duration of studies, but which, unintentionally, also led to a less academic and more professionally-oriented character of course programmes and teaching in the humanities and social sciences. Secondly, the link between teaching and research funding was severed with the introduction of conditional research funding. This was a (successful) attempt to create accountability and to prevent that much of the direct government funding for research (the first flow of funds) would be siphoned off from the scientific and medical domain to the domain of the arts and humanities and social sciences, with the increasing demand for teaching in those subjects as a lever. Thirdly, the much-maligned TVC operation (Taakverdeling en Concentratie – Division and Concentration of Tasks) was introduced: a substantial reduction of government finance. A second TVC-like operation, called Selective Reduction and Growth (selectieve krimp and groei, SKG) followed, again a financial reduction. The external accountant was first introduced at a number of universities to control the financial situation. In the second half of the eighties, gov-

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ernance and administration were, for reasons of effective control, separated more rigorously. The day-to-day administration was increasingly concentrated at the middle level of the faculties, and the rather nondescript position of secretary-administrator was followed by the faculty director, usually as a mandatory of the Board. In those days the deans were left completely out of consideration when it came to administrative mandates, as their primary responsibility was considered to be teaching and research. The deans were not expected to perform administrative duties, let alone take integral responsibility. A higher education inspectorate was formed. Systems for teaching quality assurance and research assessment were introduced via the VSNU (Association of the Universities in the Netherlands), which had just been founded in 1985, but predominantly via the HOAK policy document (Hoger Onderwijs, Autonomie en Kwaliteit – Higher Education, Autonomy and Quality), published in 1985 as well, which cast its long shadow ahead. Integral management, less government intervention in higher education and increased accountability afterwards, it was all there! Academic research benefited from the increase in indirect government funding, the second flow of funds, which resulted from the transformation of ZWO into NWO (Nederlandse Organisatie voor Wetenschappelijk Onderzoek – The Netherlands Organisation for Scientific Research) and, in addition, the launch of STW, the Foundation for the Technical Sciences. In the second half of the eighties, the EU became another important source of research funding. The end of the eighties saw the beginning of a restructuring in the area of research: more funding was made available for AIO (research assistants) networks, which could obtain the designation 'Centre of Excellence' soon after. These characteristics of the bureaucratic university (a decisive move in Clark’s triangle to the North in Figure 6.1) can clearly be recognised in other countries in Europe: – The budget cuts leading to a substantial reduction in per student expenditures (see Chapter 5); – The creation of more accountability in research financing; – The introduction of internal and external quality control; Note that the word ‘internationalisation’ was not yet mentioned in policy documents before the eighties as part of the oligarchic or bureaucratic university

6.2.4 The Professional University One might say that the 70’s marked the demise of the classic university and the eighties were marked by cutbacks and restructuring. In that sense the 90’s and beyond marked a kind of new beginning, years of development, innovation and improving the quality of teaching and research as well as the administration, including a new governance.

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As part of this process, teaching was organised in a more professional manner and educational institutions were introduced on a larger scale, partly to counterbalance the extra weight of research (research schools) and externalisation in the organisation of research. In addition, the number of university courses with CROHO (Centraal Register Opleidingen Hoger Onderwijs – Central Register for Degree Courses in Higher Education) recognition increased to almost 400 (about 200 in 1998 alone and 100 in 1999!), which prompted criticism about such a high level of proliferation. It should be said that this criticism seemed inspired by financial considerations rather than by considerations of proliferation, differentiation or quality. Higher education went through a period of rapid internationalisation, which was further defined on a Europe-wide basis in Bologna. We are on our way to one European higher education area: too cautiously perhaps, but, nevertheless, on our way. Higher education features on the agenda of GATT conferences. Who could have dreamt of this in the 70’s and 80’s! Admittedly, in the 90’s a few unpopular measures had to be taken on the home front, which included in the Netherlands the introduction of the progress-related grant (one good turn deserves another!) and cutting a few more frills out of the student grants and loans system (restrictions to the student pass for public transport). The operation that took place under the Lubbers-Kok government, whereby the management (including the finance) of unemployment of university staff was transferred to the institutions, was not so much intended as a cutback operation but as a means to call a halt to the practice of passing on bills (which most universities currently organise internally). An unintended, yet important, side effect of this operation was the introduction of PhD grants for students at a number of universities. The largest part of the cutbacks in university teaching and research laid down in the coalition agreement of the first purple government disappeared behind the horizon in 1998. It was hoped that forbearance would mean acquittal; but this was not the case. Despite the economic prosperity, Minister Hermans loyally carried out all the cutbacks that had been postponed. The structure and contents of quality assurance for university teaching and research gradually received more attention and recognition internationally. Experiments were carried out with the binding advice on continuation of studies (BSA), at first hesitantly, at Leiden University. But by now virtually each university that wants to play a part in the quality assurance arena has embraced the BSA. The Government assessment was introduced whether or not a course will be a worthwhile addition to the existing national course provision (later in part incorporated in the accreditations of the NAO (Netherlands-Vlaamse/Dutch-Flemish Accreditation Organisation). Yet, presumably the main defining change was the introduction of a new law (the “WHW”, the Law on Higher Education and Research) which

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brought back accountability within the universities. The role of ‘councils’ in decision making was reduced from co-deciders to advisers with a strong influence – hence, creating full accountability for the administration towards society. The administration was placed in the hands of an executive board of three members, to be selected by a supervisory board of five members appointed by the minister. The five cannot be active politicians or (senior) civil servants and are generally CEOs of (large) multinationals or hospitals, senior judges or directors of cultural institutions. They are mostly part of the network of the 200 leading Dutch (wo)men. The executive board is fully in control of the budget with very few limitations on the allocation of the budget. They appoint the deans which have full authority in the faculties. Whatever the formal governance and the formal authorities of professors, deans and the central administration, the dean cannot function well without a certain degree of consent of the main professors, and the central administration cannot function well without a certain degree of consent of the deans. Lars Gustofsson (2003) gives in the philosophic thriller “The Dean” in an interesting way an illustration of a dean who drives the central administration crazy, when the central administrator does not take the urgent advice of the dean serious. To quote: “When the Dean decided to mind the Administrator Palmer seriously, I realized for the first time something of the – I do not hesitate to say – demonic forces which he could develop” (p. 120 in the German language version). In this respect the element of ‘academic oligarchy’ (in Clark’s language) will always remain in the university – whatever the structure. The continued success of Dutch universities in the available measures of success as described in Chapter 2 (THES, Jiao Tong and CHE rankings) can, in part, be explained by the tailoring of the governance to the organisation needs, defined by many as “autonomy”. Similar developments have taken place in other countries. The Lisbon Agenda very much engendered this in 2000 with the strategic goal for the EU to be the most competitive region in the world, through a more knowledge-intensive society. In higher education the Dearing Report (1997) has been another catalyser. Although written for the UK Government, the Dearing report has been widely discussed in Europe and has helped to stimulate policy reform. The core elements in this report are lifelong learning, contributing to a learning society, regional economic development, pure academic research and authority based on expertise, technological innovation, social unification and public accountability. In the meantime Germany (as of January 2007) has made the universities more autonomous and decreased the influence (in the triangle) of the academic community. In France, President Sarkozy has similarly brought substantial changes very much in line with the thoughts of imminent French thinkers (Davidenkoff and Kahn, 2006). Denmark en-

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gaged in great changes as a consequence of an OECD report of 2003. Ireland adopted changes but maintains a strong influence of the existing academic community in the universities’ administration. It is remarkable to see that these changes came within the context of the development in the economy and those in demography/participation in higher education. The student numbers in Western European universities are stabilizing and – if anything – might drop in the years to come (see Chapter 4) as a result of demography and its composition. Naturally, this brings about a new concentration on the quality in relation to the demands of society, in particular those of the labour market of globalising economies. The great financial crisis of 2008 and the subsequent recession can help to spur the development of the ‘innovative’ university as a sequel to the professional university. The professional university is focused on the ‘going concern’ but has been insufficiently ‘utilised’, ‘stimulated’, ‘challenged’ – whatever word you want to use – to be innovative. Innovative includes the connection with new knowledge and new markets. It also includes risks, taken with ample attention to checks and balances. One aspect of the context of the innovative university should be clear: it should not be left to the state, and thus, (de facto) party politics (the North in Figure 6.1), even when public finance remains a major source of financing. Equally clear is that it should not be left to the existing academic community (the South) – as that will be too conservationist. Yet, the ‘market’ (the East) is only attractive if it is well regulated. An independent higher education authority might be a solution. Within universities it is essential that innovation is on the agenda, both in terms of the strategy as in the corresponding budgetary needs. An innovation fund of some 10% of the total budget is a minimum for universities which take innovation serious, within the context of full autonomy in universities on academic policy and the means to implement it. 6.3

The Bologna Process

The butterfly story is a national one in Europe. Caterpillars went through the evolutionary process in each EU country independently and hardly knew the others’ evolution – even though they were so much part of one family. Yet, the EU or its predecessors played no role. In the different stages of emergence of the European Union, like the European Coal and Steel Community and the European Economic Community established in Rome in 1958, education and culture were kept (far) away from any jointness of policies. It is a good (academic as well as political) question why so many national policies like economics, justice, international affairs and agriculture, to name but a few, became the subject of jointness

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in Europe while education has remained at the national level. And yet, the question is hardly ever posed. It is as if it was assumed to be selfevident that education (including higher education) is national, or better – in the EU lingo – subject to the “subsidiarity principle”. The subsidiarity principle reads as follows: “In areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarity, only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can, therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community” (EU & EC, 2002, Art. 5 of the ECT). Note that the subsidiarity principle does not exclude joint action. Rather it applies to those issues and sectors where Member States apparently “achieve sufficient action”. In other words: the subsidiarity principle applies to higher education because the present state of affairs is deemed ‘sufficient’ and hence, no further European action is required, while our analysis points at huge insufficiencies. When the Chair of the European Commission, the Frenchman Jacques Delors was in office from 1985 to 1995, he strongly advanced “the Europe of the citizen”. One surely would imagine education to be an essential building block for that lofty goal. But this is in contrast to the feelings of the citizens as they are perceived by ministers of education as I observed in my almost decade as the Minister of Education of the Netherlands. Most individual EU countries do have “Europeanization Programmes for education” but there are no political movements, NGOs or pressure groups to advance the notion of bringing education under the wings of the EU. This is understandable in a country like Germany where there is already considerable (internal) debate about whether education is the responsibility of the individual states or that of the federal government. The conclusion has been until now that it is the former that is responsible (also for HE). Moving towards more jointness in education on the federal level is not considered to be politically acceptable in Germany, with exceptions. These exceptions appear, for example, in the “Spitzenuniversitäten”-Initiative (Top universities initiative) in the framework of which the federal government selected universities to receive substantial additional finance. Also, research is organized federally. But further steps do not seem to be supported by the citizens. Other European countries like Spain show likewise more gusto for a regional responsibility for education (“close to the citizen”) rather than the other way around. Yet, in Spain the determining role of the central state in higher education is fully acknowledged as a national initiative in 2009 to promote excellence shows (El Pais, 18 Sept, 2009). But for Europe as a whole there is no political support to see higher education as a common and not just a national concern. It then was almost a miracle when four countries (France, Italy, the UK and Germany) voluntarily agreed on the “Bologna” course, quickly

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followed by many other countries, so that by 2008 in total 46 countries agreed to engage in more or less the same HE structure of a Bachelor’s degree to be followed by a Master’s degree. I use the term miracle to indicate the potential positive effect on the connection between the universities in the participating countries and the demands from society (as delineated in Chapters 2 and 3), realising that I still have to argue my case. The argument is that the nationalness of universities has shielded them from the kind of international competition which could have brought about the desperately needed innovations in order to serve society in its quest for excellence, for European and global leadership and for the labour market which has been internationalised. An open European policy which could have brought about this competition simply did not exist, as degrees were not effectively transferable across boundaries. Human capitalists would say that the costs, in terms of time and effort, that, for example, a German employer had to bear to assess the value of a Belgian or Danish degree simply were too high to even consider such a graduate for employment in his or her firm. There was an early recognition among civil servants that Europe needed coherence in higher education in order to reap the benefits of a European labour market with the cross-border mobility which would engender innovation and productivity increase. Yet, originally (in the seventies and eighties), all efforts to create more coherence within the EU and its precursors were devoted to diploma recognition, first for the professions and later also for not professional diplomas. In this process, Member States consistently and fervently defended their own competencies against any European interference with their educational systems. As a Minister I noted this pattern. The Maastricht Treaty (1992) which constituted the European Union decided to focus on economics and finance, justice and foreign affairs as areas of priority (as “pillars”) in jointness. There was no groundswell in other areas (like higher education). When I raised the subject of European competency in higher education among ministers in informal gatherings or during the lunch meetings of the European Council of Education Ministers, I simply drew a blank; “Why should we do that?”. Universities were equally bland: it simply did not come up in their minds that more coherence would benefit their position world-wide. No wonder then that – in 1992 with the repeal of Article 149 of the ECT (see Appendix B for the original text of Art. 149) – the Maastricht Treaty explicitly excluded European competencies to take harmonisation measures in the area of education. A minor role for the EU was kept in 1992 in the policies of the Community, namely to deliver a “contribution to education and training of quality” (EU & EC, 2002, Art. 3(q) of the ECT). Subsequent treaties (including the draft “Constitution”) continued along these lines: EU countries felt happy with diploma comparisons as a sufficient basis for the coordination and a way to abolish

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barriers to mobility. Barriers to mobility had been identified, such as the requirement of a national diploma or language requirements, and such barriers could be interpreted as obstacles in arriving at an internal market – the goal of the European Economic Community, the precursor to the EU. In practice, however, they still exist, such as is evident when Belgian institutions refuse to accept degrees from other EU countries. The recognition of diplomas had become in the nineties a substantial part of education bureaucracies, of politics and of litigation in Europe. Many of the education ministries in Europe had a substantial number of staff of civil servants totally devoted to compare educational degrees in “input terms” with the aim to arrive at common curricula (in terms of length and subjects) as the basis for mutual recognition. From the beginning this assumed homogeneity and rejected differentiation. It was to some extent political as every country tried to push “its” curriculum as the standard and definitely wanted to avoid that “its” curriculum needed adjustment. There was also substantial litigation, for example, in the “Reyners v. Belgium” case of a Dutch national who “was refused admission to the Belgium Bar on the grounds of his nationality” (Schneider and Claessens, 2007, p. 3). It turns out that in fact it is litigation and the European Court of Justice which have created the European Higher Education Area (EHEA), not just by its decisions on employment of graduates but also by decisions on recognition and on student mobility. The point of departure of the Court was always the non-discrimination principle of Member State subjects with respect to access to education and the principle of free movement. A consistent application of this principle removed many obstacles in studying abroad and employment in country X with a degree from country Y. And then the Sorbonne Declaration (the basis for the Bologna agreement) fell from heaven like manna, led by – a French minister who was looking for a political profile while never before having shown much of an interest in Europe, – an Italian minister who had before been the European Commissioner for Education, – a British minister who was a university professor and very proEuropean and who had nothing to lose anyway because Europe adjusted to the British system, – and a strong German minister. At the occasion of the Sorbonne University’s eight-hundredth anniversary they signed the basis for what might be a major revolution in higher education in Europe and beyond: a ‘Joint declaration on the harmonization of the architecture of the European higher educational system’. It was the time when the Attali report had just been published in France (May 1998) and when the Hochschulrahmengesetz was amended in Ger-

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many in August 1998. In the latter bachelor’s and master’s degrees were introduced; traditional German degrees were supposed to be less known and, therefore, less attractive for foreign students. In the Attali report the existence or emergence of a single European model of higher education was proposed, based on a sequence of studies and degrees of 3-5-8 years and a Bachelor-Master-Doctorate structure very much along the lines of the Anglo-Saxon system. A year after the Sorbonne declaration, in June 1999, ministers of education from 29 European countries met in Bologna, to sign this document, the so-called Bologna Declaration. Many of the signatories were countries from Central and Eastern Europe, not Member States of the European Union at that time. The Bologna declaration is, in our opinion, a very typical form of “soft law”. No parliament, neither on European nor on national level, was involved in this development. At present, the majority of the 46 states involved in the Bologna process have adapted their systems to a BachelorMaster structure or are going to do so in the nearest future. In some of the Nordic, Central and Eastern European countries the Bachelor-Master model has already been implemented. An excellent overview of the present implementation of the Bologna Process is found in Leegwater (2009). The good intentions and a remarkably strong consensus among those who signed on the Bologna agreement were insufficient to lead to good implementation. That is not to say that the many people involved have not worked hard enough to make the Bologna process a success: they did. Tremendous time and energy have been poured into the implementation of the agreement. And yet: in many respects this implementation was far away from the intentions, goals and purposes of Bologna. The glass of Bologna’s implementation is as a result less than half full and there is an urgent need to reflect on how to re-work the process so that the time and energy which have been and will be spent are, indeed, well spent. The gauge for the success of Bologna (or the half failure as it is now) is the intention to create more mobility for students within the Bologna space, to reduce “perception costs” that employers attach to the value of a degree from within the Bologna space, and to increase differentiation in that space. All of these good intentions have hardly been reached and definitely not been achieved to a reasonable extent due to the hijacking of Bologna by the participating nation states. Nation states implemented “Bologna” by taking the national context of the past as the point of departure rather than that of the future. As a result, under the surface of the same Bachelor-Master structure the sea is full of different and incomparable fish. Every country decided on its own on the length of bachelor’s and master’s degrees. Each country installed its own accreditation agency (with an attempt to have one agency between Flanders and the Netherlands) with their own criteria. All countries have different systems

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and standards for quality control. In most countries the possibility for innovation through the introduction of the bachelor-master system was ignored. Governments were satisfied just when existing degrees were translated into the new structure. On the other side, some international projects are trying to improve comparability among degrees. The Competences in Education and Cross Border Recognition (CoRe) project is trying to implement a standard degree profile for the Bologna space. However, the analysis done after the first session of this project shows how universities are still far to be able to develop common standards to classify learning outcomes (Lokhoff, 2009). The necessary transaction costs for innovation were equally ignored leading to a loss of quality in the process. And finally, not a single country introduced any further differentiation in higher education – in line with the heterogeneity of students. To the contrary, the homogenization of higher education within many of the EU countries continues with the same speed as before. It then does not come as a surprise that mobility of students and of graduates within Europe has hardly changed. I can hear the reaction to the above: “patience, dear man”, “you just need to wait for Bologna to take hold”. Indeed, the present situation will evolve and mobility may grow somewhat, even in the present (national) structure of the implementation. Yet, Europe should be in a hurry to thwart off the catalysing effects of the demographic change on its ability to attract and develop the best of talents. Therefore, the structure needs to be changed so that countries feel more accountable to their partners. Concrete steps to be taken are: Internationalise accreditation and quality control (within the Bologna space or at least the EU space). A very simple way to do this is by allowing (or requiring) accreditation of degree course X in country Y to be awarded by the accreditation agency of country Z. This can only be accomplished by some standardization of processes and certification of accreditation offices. This would be an important step to take in order to increase efficiency as some of the national accreditation offices are overloaded while others are underutilized. A second step to be taken is to allow Europe-wide (and possibly “Bologna”-wide) accreditation by an international professional organisation. There are at least two areas which beg for accreditation by professional organisation: – Medicinal education with a strong history in cross-boarder cooperation and – Business education with three active accreditations (AACSB, Equis and AMBA). An active devolution of accreditation to professional organisations is – where they exist – also needed to avoid the costs of double or triple quasiaccreditations.

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A third step is to align quality control – at least within the European space – in order to, indeed, reduce the perception costs of the quality of the degree on the part of students and employers. This is all in combination with a financial compensation for the transaction costs of innovation either in the room to charge higher fees or through public finance. The Louvain 2009 meeting on Bologna brought this perspective closer if one believes the press releases. On the work floor of the individual university, however, no change was registered by the end of 2009. Differentiation was discussed, and the implications of a Carnegie-like differentiation in the European Union. “In 1970, the Carnegie Commission on Higher Education developed a classification of colleges and universities [... d]erived from empirical data on colleges and universities [...]. [The] set of multiple, parallel classifications [which in 2005 replaced the single classification system] [is] organized around three fundamental questions: what is taught (Undergraduate and Graduate Instructional Program classifications), who are the students (Enrollment Profile and Undergraduate Profile), and what is the setting (Size & Setting)” (The Carnegie Foundation for the Advancement of Teaching, 2009). But no new policies promoting differentiation are as yet visible in the Bologna countries by the end of 2009. Differentiation would need to be translated to accreditation. The accreditation of research-based bachelor’s degrees needs to have different standards from those of a research university with a strong focus on emancipation from those, of a (community) college type, of a profession based and any other kind of bachelor’s degree. The need for differentiation of HE is widely recognized: students are different and the labour market demand is heterogeneous. Yet, the systems of HE remain rigid and under pressure to homogenize. Future Bologna implementation should avoid falling into this trap of the past. Why look for Bologna or the EU as a means to break the domestic deadlocks on differentiation? Because the European Union is a shining example of precisely doing that - of reducing political costs of controversial policies at the national level. A perfect example is the “Stability Pact”: those EU countries that adopted the Euro agreed on reducing budget deficits to levels far below those that they were able to “sell” domestically without the context of the international agreement. The EU is by no means the only international organisation which helps to break domestic deadlock by means of international systems. Collier and Dollar (2002) document that trade agreements can do the same.

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Differentiation, Selection and Equity

Europe has a long history of undifferentiated higher education. Gabriel Compayré (1893) gives a most readable and entertaining overview of the early history of the universities in Europe, like Bologna (1158), Paris (1200), Palencia (1212), Cambridge (1217), Padua (1222), Naples (1224), Avignon (1227), Salamanca (1243), Prague (1347). He gives an excellent background for the reasons why there was and is little or no differentiation in European higher education. The writer wants to be remembered “as a French writer, whose least mediocre work, translated in English before being printed, was published in America” as he says in the Preface. Why did he make such a statement? Because he found no interest in Europe for his writings while the US was keen on learning from history? We don’t know. We do know from his book, however, that it was the elite nature of European universities which made differentiation superfluous. You might say there was “digital” differentiation: of the zero – one type. Either you studied in an elite university (a very small percentage of the relevant age group) or you did not study at all. The early roots of universities have given rise to the present tree. Also the major reinventions of the European universities like those by von Humboldt and Newman abstained from any further differentiation than the digital one because of the elite character of university training. At the same time we know that Europe needs a differentiated system of higher education – nationwide or Europe wide – in order to approach the ‘production frontier’. World wide we can construct a higher education production frontier using the PISA results of different countries as in figure 6.3 showing that – on a nation-wide level, yes: a statistical tradeoff between high achievements for ‘slow learners’ and high achievements for ‘fast learners’ exists leading to different shapes of the bell-curve – BUT that such a trade-off could be at very different levels, also with the same resources. For example, it appears from Figure 6.4 that UK has more excellent 15-years-old students then Germany, but also more kids with extremely low achievement. But the Fins do far better than the Germans and the British over the whole range of “faster” to “slower” learners with similar average expenditures per student: the Fins have a better organisation of education, leading to better and more effective teachers over the whole ability range of students.

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Figure 6.4

The academic achievement curve (selected countries)

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→ % of sample

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0 below 1

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Notes: The achievement levels are taken as according to OECD (2008a). The point values in the graph represent the area underlying the achievement curve for a given level (in this sense, the representation in histogram form as done for OECD would be more appropriate). Source: OECD (2008a).

The organisation of education is what counts. Differentiation and specialisation of higher education institutions is likely to bring the system closer to the production frontier. Douglas (2007) describes beautifully the development of differentiation in California. It is an example of the general US experience. From the very beginning, the US started with selective institutions in combination with broad based non-selective higher education. Initially, the selective institutions were private. Gradually, also selective public institutions were established, like the University of California in the still relatively wild West. It was the Pilgrim Fathers’ legacy of local autonomy which indirectly was a cause. In this spirit of local autonomy the US never wanted to engage in national or state school exams and – as a result – it lacked a signalling device for the ability of high school graduates to pursue successfully higher education. As a consequence, selectivity, also for public universities, was accepted (see for an alternative explanation: Carnevale, 2009). In contrast, Europe traditionally had its selectivity arranged in secondary schools, in particular in the streaming towards Gymnasia which were viewed as preparatory to university studies. “If von Humboldt (1820)

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or Cardinal Newman (1854) – the great thinkers of European higher education – do not once mention the selectivity question, this is because Europe has and had a selective secondary education system. In the absence of such a system the US needed to be concerned about admission to public higher education in view of a social demand, for example, of Californians which asked “that the university lower admissions standards and grow even faster in enrolment” (Douglas, 2007, p. 35). Europe has seen a major increase in secondary education participation (reaching close to 100% of the age group) and to higher education. Yet, in the process, with exceptions (UK and Ireland, for example), it only allowed for a minor differentiation, namely between polytechnics or higher vocational education and research universities, under the clouds of a political climate which looked for more homogeneity rather that more differentiation. This was the climate which made UK Polytechnics turn into Universities. The comparison with the US shows another remarkable element of the European political climate: a lack of a sense of respect for a differentiated mission. In the US community colleges, colleges and research universities treat each other with respect for the differentiated mission in a horizontal view. Note the pride in Berkeley where in recent years half of the graduating class spent the first two years in a community college, while they graduate at the same rate as beginners of Berkeley. The European tendency has been to consider differentiation as vertical where those on the “bottom’ of the ladder are looked down upon and those on the top are looked at with jealousy. In reality there is quite a bit of differentiation in European higher education. But universities do not want to acknowledge this in fear of loosing public (research) money, which is often based on funding formulas which are undifferentiated themselves and do not reward differentiation. Therefore, it does not appear as differentiation and is not coupled with selection in admission. Differentiation implies selectivity with equity. Without selectivity “at the gate” it is impossible to guarantee a strict focus of a university on a special group of students. An almost absurd example is a university for the blind which has an open admission for students. Selectivity with equity implies that it should not be the student’s SES background which determines the outcome of the selection and the subsequent enrolment. It was the equity concern which lead Mr. Chauncey and colleagues at ETS (Educational Testing Service) to develop in the US the Standardised Achievement Test (SAT) after World War II as a means to combat selection at US colleges based on the SES background. For European universities this was a no brainer as their potential students had – in most countries – passed a selective, nation-wide school exam: they were, thus, by definition qualified and should all be admitted.

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The recent discussion in European countries on selectivity in the bachelor degree focuses on ‘matching’: getting the proper match between the differentiated (in terms of the educational approach, difficulty, required effort, required contact time, etc.) supply of university education and the demand from students. Sometimes the match is made on the basis of interviews, letters of motivation, etc., sometimes it is done electronically. The gradual emergence of a European space for bachelor education is a new challenge towards selectivity. How do the selective, national exams, which determine entry to national universities compare across nations? The European civil servants have worked for years to make these exams comparable. However, this is a true Sisyphus task. It would be more useful to introduce selectivity or matching in particular in those universities which allow substantial numbers of foreign students. In developing selectivity, it would be wise to learn from the lessons of the US experience with the SAT and the ACT (American College Testing’s college admissions examination). Recently, in October 2008, the following appeared in the New York Times (Staples, 2008): “These and related problems are the subject of an eye-opening report from a commission convened by the National Association for College Admission Counseling. The commission, led by William R. Fitzsimmons, the dean of admissions and financial aid at Harvard, offers a timely reminder that tests like the SAT and ACT were never meant to be viewed in isolation but considered as one in a range of factors that include grades, essays and so on. […] The commission deals bluntly with the parties it blamed for inflating the importance of college entry exam scores. It calls on college guides and bond-rating agencies to stop using test scores as proxies for academic quality or financial health. And it wants an end to the increasingly common practice of using minimum admissions test scores to determine eligibility for merit aid. The commission insists that the tests have not been validated for that purpose and often rule out applicants based on a single missed item.” At the same time Douglas (2007, p. 225) shows how powerful the SAT is in explaining the first year Grade Point Average (GPA) “of the University of California students: 12.8% by SAT I, 15.2% by SAT II and 21.1% by SAT II plus high school GPA” (the percentages refer to the r-squared of a regression of GPA on SAT). Of course, these figures also imply that there are many other factors than SAT or high school GPA which explain college success. Graduate university education in the Bologna countries has quickly recognised the need for selection, in view of the increase diversity of the influx of students. Like for the bachelor degree, graduate schools are well aware of the quality of national bachelor degree graduates. However, they have no idea of the quality of those programs in other countries. The

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quality control differs vastly between European countries and so do the accreditation standards. It is likely that substantial part (at least some 10% by 2015) of the 3000 or so European universities will have adopted some common standard test for admission. A rough calculation of the number of new entrants in the master degree stage is at present EU-wide approximately between 700,000 and 900,000. Many of these new entrants have taken their BA at the same university or at a university or college which gives them an automatic ‘right’ to participate without further matching/selection. But already at this stage some 10% do not have that right, either because they come from a different country or because they seek entrance to a selective (and sometimes a so-called private, meaning non-government financed) degree. This percentage is likely to rise substantially (I would expect to some 30%) in five years from now which means between 200,000 and 300,000 students a year which have to pass through such a test. The type of test or tests to be used should of course be based on the available evidence. Kuncel and Hezlett (2007, pp. 1080) provide us with several meta-analyses from admission tests in a variety of disciplines. “Four consistent findings emerged: (i) Standardized tests are effective predictors of performance in graduate school. (ii) Both tests and undergraduate grades predict important academic outcomes beyond grades earned in graduate school. (iii) Standardized admissions tests predict most measures of student success better than prior college academic records do […]. (iv) The combination of tests and grades yields the most accurate predictions of success […]”. They conclude that “[standardized] admission tests provide useful information for predicting subsequent student performance across many disciplines. However, student motivation and interest, which are critical for sustained effort through graduate education, must be inferred from various unstandardized measures including letters of recommendation, personal statements, and interviews. Additional research is needed to develop measures that provide more reliable information about these key characteristics” (Kuncel and Hezlett, 2007, p. 1081). It is in this direction that ETS has developed the PPI: the Personal Power Index. In summary: European universities are likely to change drastically in their functions in the years to come. The potential created by the Bologna Agreement for cross-border mobility plus the need for more differentiation will see a wide-spread application of matching/selection in the top 10 – 20% of European universities. This will bring about a new thrust towards admission procedures and the underlying information for selection, including standardised tests. Equality of opportunity could actually be increased in the process.

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Reward Learning about Learning

In Chapter 3 we sketched the challenges for European universities. These require better governance (Section 6.2) and a suitable finance (Chapter 5). They also require a drive for educational innovation: the improvement in the methods of instruction, so that the learning of students is optimised. This is not a one-size-fits-all approach but could very well be differentiated between and even within universities to address the learning capabilities and styles of the different students. The list of potential innovations which could increase the learning effectiveness and the quality of learning in terms of the value added for the student is among others: – Problem based learning with its overwhelming efficiency (see e.g. Schmidt et. al., 2009) – E-learning. This great promise of the 90’s (with MIT leading the way by publishing its curriculum content on the internet) is hardly harvested: E-learning plays a very limited role outside the distance learning institutes and even within those institutes – Dual or concurrency learning: work combined with institutionalized learning has hardly come about. – Joint or dual degrees of different universities, bringing together the best of these universities and – if it concerns universities in different countries – offering a chance for cross-cultural learning. – Curriculum updates are hardly systematically organised. The curriculum in place reflects the presence of qualified staff rather than the other way around. – Cross-cultural learning. Perhaps this is the greatest challenge of all in view of the previous sections. Cross-cultural learning is sometimes organised through the adoption in the curriculum of compulsory or optional periods of study abroad. Sometimes it could be the result of the mix of students from different nations in the same study group. Yet: it has seldom been thought through in terms of the learning goals which are to be met. Universities are not so unique in the education world in their hesitance to learn: this seems to be a consistent factor in education. (Constant) attention to learning about new insights in the profession is relatively absent in the production process of education: while (the) learning of students is found at all levels of education, there is plenty new knowledge to be learned for universities! Indeed, education itself is also the subject of research, to efforts to understand better the process of learning. There is, for example, ample literature on the relation between different elements of the educational ‘input’ (teacher quality, class size, etc.) on educational accomplishment of the students (‘output’). This literature is important, even though the results do not always point in the same direction

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as only part of the variance in the outcomes is statistically ‘explained’ while the models underlying the statistical analysis are often debatable with major questions on causality (what causes what). In higher education there are several pieces of research which point virtually unilaterally in new directions. For example, the superiority of problem based learning versus conventional lecture-based instruction is clearly demonstrated in a survey by Dorchy et al. (2003). They find in all 17 studies analysed a positive effect on skills. Seven of these studies report also a positive effect on knowledge. Yet, 14 studies report a negative effect on knowledge with two outliers. If those are left aside the negative effect approaches zero. Also, a new study of Coenen and Borghans (2009) addresses the effect of several teaching methods on early labor market outcomes of Dutch graduates. They find a statistically significant effect of problem based learning on gross hourly wage of young graduates, using fixed effects to allow only for within-school variation and controlling for several factors. I use problem based learning as an example of ‘not learning’ on instructional methods in higher education. However, the example stands for a complex space of new methods which generally have been ignored in the past centuries. Indeed, one can speak about the past centuries as many universities still follow the learning method of the founder of the Sorbonne (Robert de Sorbon) quoted in Compayré (1893, pp. 300 – 301), focused around the lecture (“a given lesson”) as the only learning instrument: “1. To devote a certain hour to a given lesson, as St. Bernard had already counselled; 2. To fix his attention on what he has just read and not pass over it lightly: ‘between reading and study,’ said St. Bernard again, ‘there is the same difference as between a guest and a friend; between a salutation exchanged with a passer-by in the street and an intimate and unchangeable affection’; 3. To extract from his daily reading some one thought or truth, and engrave it on his memory with especial care, as prescribed by Seneca; 4. To write a summary of what he has read; for words which are not confided to writing vanish like dust before the wind; 5. To confer with his fellow pupils, either in the disputations, or in familiar conversations; this exercise is still more advantageous than reading, for its effect is to clear up all doubt and obscurities;

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6. Finally, to pray, which, according to St. Bernard, is one of the best means to learn.”

The prayer may have been abandoned, the discussion among students may have received less attention, yet, the general approach of Sorbon to learning comes often close to many a present day universities’ practice. It is a paradox that learning institutions pay so little attention to their own learning. Learning is organised in the public sector with no incentives to learn and innovate. A chemical factory which does not operate according to the latest knowledge would quickly be broke as competitors – who do learn – would corner the market with better and cheaper products. Moreover, the education ‘output’ (the knowledge and skills acquired by students) is generally not measured along a scale which allows easy comparisons between universities. Competition between universities is, as a result, not based on learning achievements but rather on other indicators (sometimes the number of pubs in the city, often – for research universities – the research). All of this might change when the OECD is successful in developing standardised achievement tests for higher education, much like as was done with PISA for 15-year olds. The simple fact that PISA (Project International Student Achievement, a comparative test of 15 year olds on reading, mathematics and science) allowed for comparisons across countries had a tremendous effect on educational instruction practices (see e.g. Hopkins, Pennock and Ritzen, 2008). One should constantly be aware of the problem of teaching to the test (Koretz, 2008). Among the educational innovations which require more attention are e-learning and ‘dual’ or ‘concurrency’ education. E-learning has tremendous potential, both on its own and blended with other conventional instruction methods. In their new study Rienties et al. (2009) underline the great possibilities that IT offers for lifelong learning. Analyzing 120 effective online courses, they show how the new technologies can provide the wide differentiation and flexibility which are natural necessities of this kind learning. Concurrency learning can be highly effective for many students but has hardly been applied, not in the least because it is so costly to provide and organise the internships for the students, while formula financing systems do not reward those extra efforts. Of course, part of the reason for the neglect of innovation in most universities is the lack of incentives: there is no reward for (better) performance, while the transaction costs in terms of retraining, conceptualizing a new curriculum, etc., of the transition from a traditional system of lecture-based instruction to a new system may be substantial. The new era of learning about learning is approaching fast: educational neuroscience gives us a picture inside the box, where cognitive

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psychology earlier in the 70’s marked attempts to optimize learning by applying computer models and computer (see e.g. Atkinson, 1972). Personalised learning, like personalised medicine and personalised food are around the corner. OECD (2007d) has made substantial effort to chart the present state of understanding on educational neuroscience. Yet, all of these advances in learning will remain in the far outskirts of our space unless we increase transparency on output (educational accomplishments) and ways public formula financing schedules reward value added in output. Marshall S. Smith (2008) argues that “open source”/ “open access” could also be a driver for innovation. MIT decided in 2001 to make all its course material public. Whoever would want to use the course ware was free to do so. Indeed, several universities stepped up to the plate and have found a reputation in using MIT’s course ware. Other universities have compared their own course ware with that of MIT and made decisions on the basis of that comparison. In this respect the MIT course ware has set a standard and contributed to innovation. Yet, the effect of MIT opening up access to its course ware is quite different from university X opening up its course ware for open access. Such an action would be quite superfluous: why would any one be interested? Or could it be that the public would like to know how the course ware of X compares to that of other universities? In that case quality comparisons should be made by experts, rather than using the costly “open access” method. Open access in itself of course also takes away the incentive to invest in innovation where open access creates free riders. Learning of universities should broadly encompass not just new types of (personalized) instruction methods, but simply track back how their output acts for students to society, working at the labour market or society at large – which they serve through their graduates. Very few universities look seriously towards their alumni or the alumni of other, comparable institutions (with the exceptions served amongst others by the CHEERS survey and ROA analysis, see e.g. Borghans and Ritzen, 2006). It would be logical that university curricula would be regularly updated, using panels of alumni, employers and others. However, it is the absence of a culture of innovation, which makes such exercises rare in universities, leading Derek Bok (2006) to complain about underachievement of the US colleges (which he might easily have generalized to colleges world-wide). One good example of this in the US is the new (2009) professional science masters where advisory employer boards are required to be rostered. “Many governments are moving away from supply-side allocation mechanisms in higher education, in which universities are granted funding based on, for example, the number of students enrolled. These mechanisms are being replaced by demand-side mechanisms in which universities receive public funding based on output, such as graduation rates

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or the production of high-quality research” (Hahn, 2007, p. 17 quotes Salmi and Hauptman, 2006). Education performance should also be part of modern public fund allocation to public universities. 6.6

Summary and conclusion

European universities are not only short-changed in finance: they are also seriously handicapped in their modus operandi, in their autonomy (embedded in accountability). The 2009 economic crisis is an excellent opportunity to free up the energy and resources of universities to perform better in education and in research. The Bologna agreement introducing the bachelor-master system all across Europe is potentially a boost to the competitiveness of European universities. However, the implementation is too nation-specific, so that the transparency of European universities has not increased as much as could be possible. Selectivity of those European universities which want to be internationally recognized is essential. In a well-differentiated system of higher education, this segment has as well a place as more open accessible parts (like community colleges). Equity is not at odds with selectivity: to the contrary. The incentives for innovation in learning in European universities are too weak. Resource allocation of public funds should include such incentives.

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Notes

1

2 3 4 5 6

Professor Daudt, a well-known political scientist from the University of Amsterdam, refused to adopt some methods of assessment of students’ performance that were too democratic. He resolutely adhered to his points of view, which resulted in what would now be called demonization. Professor Daudt moved on to the University of Leiden. For a more detailed summary of CROHO accreditations, see IB-Groep, 2008. See Lenaerts (1994) For an extensive overview of the litigation see: Schneider and Claessens (2007). See Racke (2007) for a good description of the process. Henry Chauncey was the first president of ETS.

7

7.1

The Future of European Universities

A Coherent View is Needed

There is a dark cloud hanging over European universities. They have a rich history and have worked hard in the past decades to live up to the expectations of society. And yet, they are underappreciated and unable to attract the best of talents. Also, they are not in the position to bring about a larger participation of presently disadvantaged groups in higher education. The present deep-carving economic crisis could help to speed up the needed reform to enrol more students and to become world-wide leaders in higher education, by focussing economic stimuli on innovation in HE and on new equipment for research. Such a package satisfies the ‘three Ts’ requirement for economic stimulus measures: timely, targeted and temporary (Larry Summers’ January 2009 recipe). Universities could also be the place to harbour temporarily laid off researchers, thus ensuing that their value does not diminish due to idleness while unemployed. There is a danger as well in the present economic crisis. It may obfuscate the looming talent crisis in Europe which is catalysed by demographics. Europe’s demand for HE graduates will soon increase (far) beyond the supply as the demand keeps rising while the supply decreases as a result of a decreasing demography. The present crisis enforces a focus on the short run. Previous economic downturns have in the past decades led to budget cuts for higher education and have effectively eroded the financial basis for world class HE. It would be important that the public actions to deal with this economic crisis are rooted into a long run view: that of a looming talent crisis. To thwart off that looming crisis it is essential not to think piecemeal but rather with a coherent view. A coherent view on the future of European university education should – by nature – be European ‘plus’ and not a national or country view as the OECD (2008c, p.6) would have it. ‘European plus’ means based in Europe but with a global perspective, departing from the globalized labour market for European graduates. Yet, it is understandable that the OECD focused on individual countries and could, thus, avoid the

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difficult question: What does European imply in a world where university education is organised nationally? Our answer would be that Europe could show its strength in bringing about results in breaking deadlocks which individual countries have not been able to unravel. The ‘Stability Pact’ is an example of breaking the deadlock of (the reduction of) government deficits. In the realm of university education it is the Bologna Agreement which acted as a potential innovator where the nation states were unable to come to a solution and where, moreover, innovation only could succeed by common action. Indeed, the ‘European plus’ view implies a commitment to joint action so that the energy of European universities could be released by creating a level playing field for competition and cooperation. At present the playing field is far from level as the state support for the same quality HE differs substantially across countries, so that private costs for the student differ. The field is actually also still enveloped in a fog as the comparative quality of HE across borders is not easily assessed. This also makes cooperation across boundaries (for example, with joint degrees) difficult. A joint degree can only be awarded if all universities which participate in that degree know what the other has to offer for that degree and under which conditions (in terms of regulations) they operate; for example, certain countries demand 60 ECTS points for a master degree, while others demand 90 or 120 ECTS points for a degree with the same name (and awarding the same title). The history of universities of the past fifty years has been one with a dominance of politics. The Bologna Agreement is a prime example since it came from the desk of politicians in all its stages of preparation. It appeared that the universities themselves – in whatever organised context – had not thought about the issue. I am at the same time afraid that in this case the appearance is the reality. By and large, universities are engaged in the daily toiling, in the going concern of education, research and social commitment. Universities generally have very little capacity and cannot afford the effort to deal with the future of their context and organisation. When politics adopts this role of thinker of the future and proposes reforms, universities are inclined just to react, mostly conservatively, after having foregone their right to the initiative. And yet, a coherent view on the future of European universities should first and foremost be developed by the universities themselves, based on a proper exploration of the expected changes in the context, let’s say, the market, of the university for the next 20 to 30 years. The plea of this book is to challenge universities to think about their future, or better, to dream about it, so that their capacity is fully utilized with the expected concomitant reward in terms of broad recognition by society, social acceptance and social prestige. This book has succeeded if it gives rise to a platform to discuss the alternative futures of European universities and the changes needed to bring about the brightest one of these possible futures. Participants in the plat-

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form are the universities themselves who are willing to shed their Pavlov reaction in combating each other in the short run and their attitude towards politics as an enemy which is to be fought rather than a friend who wants to be led. Politics comes in as well but rather as an organiser of the debate than as a dominantly opinionated partner. Organised labour – whether through the employers’ side or the employees’ side – is an important partner in the platform. 7.2

Building Blocks of a Coherent View

The building blocks of a coherent view have been expressed in the preceding chapters and are summarized in Figure 7.1. The main building block is comprised of the requirements of the European labour market both in terms of leadership and in terms of professionalism (block 1a). Here, one immediately recognizes the need for differentiation of higher education. The demand for higher educated manpower is highly heterogeneous. When it comes to their underutilization it appears that universities could and should do better for the upper extreme of the distribution curve of demand of the labour market, i.e. top talent both in terms of cognitive competencies and in terms of leadership attitudes and competencies. As for the supply of graduates, the underutilization is at both extremes of the distribution: too little attention for emancipation and too little focus on top talent. If they were ice-cream sellers, the universities would all stand at the same place, at the head of the beach with the same ice cream rather that dividing themselves and seeking for the niches, in this case both in terms of geographical positions and flavours. Closely related to the European demand for professionalism and leadership as a driving force of European universities is the attractiveness of Europe’s universities for foreign students (block 1b). The present international openness and attraction is – the UK exempted – far below that of other sectors of the economy and below the potential despite the attempts of individual European nations, like the DAAD (Deutscher Akademischer Austauschdienst: German Academic Exchange Service) programs and the French programs to attract foreign (non-European) students. Two elements play a role: the reputation (often proxied by rankings) and the language with English as the language which attracts students. European countries beyond the UK have difficulty with both: the reputation of their universities is often less than the objective quality because they have not ‘marketed’ themselves and the use of English rather than the national language in universities gives rise to serious sometimes ideological, sometimes practical questions. The ideological question is whether national universities should engage in any other language than the national one. The practical question is the retraining of staff in another language. For part of the academic staff it is not easy to teach in

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English. This is generally more of a problem for the support staff which also needs to master English if the university indeed wants to take away the threshold of having to learn the national language for foreign students. I question whether all universities should attempt “to go English”, because of the investments and the subsequent scale economies involved. Many four-year colleges (or the European equivalent) could well function in the national language and prepare its students for the international labor market through the curriculum and study abroad, rather than making only part of the investment for a fully English institution which can accept foreign students without endangering their expectations (as happens now so often in universities who say that they teach in English but in fact are in most respects still national language oriented).

Figure 7.1

Building Blocks of a View on European Universities

4a Public finance

1a European-wide need for leadership and professionalism 1b Open and attractive to students from outside Europe 3a Differentiation according to mission of university

4c Student grants and loans

4b Private finance

2 Equity, social mobility and partication European Higher Education

5a Transparent for prospective students – Accreditation – External & internal audits – Control 5b Organisation which solicits the innovative

3b ‘Branching through’ European universities

5c Stable, sustainable, well governed

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A second building block is equality of opportunity. Europe as a continent has a tremendous advantage in the concerned drive to link individualism and individual responsibility with social cohesion and trust or ‘bridging social capital’ as Putnam (2002) would say. The relatively high levels of trust lead to lower costs in economic transactions whether it is on the labour market or in any of the commodity markets. Social cohesion and trust rely on the implicit contract: don’t do to another what you wouldn’t want to happen to you – or: make sure that you treat the other as you would want to be treated if you were in his/her position. Equality of opportunity is one of the sequels of this contract: no child should be dependant on the financial position of the parents to be able to fully develop higher talents. Any view on the future of higher education should take equality of opportunity as its point of departure. Equality of opportunity is a consideration of national and European interest. It cannot play a role within individual universities, once their missions are clear and agreed upon. At this point European governments often give mixed messages to universities, namely to engage in activities which are not rewarded in the financing (either as mission – or formula financing). The European labour market asks for a differentiated university system (as is the case for the globalised labour market): block 3a. This is more of less accepted wisdom. But the wisdom has not been translated into reality because universities have not found differentiation to be “safe” while at the same time the pervasive attitude of governments have been one of monism, to bring every type of higher education under the same umbrella and actually put them in the same straightjacket of the legal structure and of formula financing. The safe place for universities is then in the middle, at the head of the beach. The ideology of equality has often been mistaken for sameness in legislation in all relevant aspects (accreditation, organisation, finance). The challenge is to find a path towards sustainable and flexible differentiation. Note that, indeed, a course of differentiation has implications in all respects of university policy, like for accreditation, for organisation, but in particular for finance. The ice cream seller will only ‘sell’ the great special flavours if he/she is paid in doing so and can survive and in doing so, yes, even prosper. All these requirements of a sustainable and flexible differentiation, flexible where a university can move from the head of the beach to a distant location with special bathing guests are a horror for governments that want equal (meaning the same) treatment for all – with notions of justice attached to ‘sameness’ very much in contrast to the idea of justice (Sen, 2009). Any deviation will be punished by parliament or by appeal cases through the courts. Sustainable and flexible differentiation is a true quandary. Yet, it is solvable if the will exists and the urgency is sufficiently clear and subscribed to by the platform partners. Note the arrow between equity and differentiation. Equity is well served by differentiation in terms of the mission of the university (and

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the concomitant public financing). As mentioned before: within a differentiated European landscape one can imagine that in the non-English speaking EU countries only some 10% turn into fully English speakers (and the poles of attraction for non-EU students), rather than that all EU universities start to become a ‘little bit’ English speaking (which, of course, is not an effective option). International openness in a differentiated way could include more ‘branching out’ of some European universities in other parts of the world. But it should also include ‘branching in’ in ensuring that non-European universities can establish branches in Europe (as US universities have done). A related block to differentiation is then the need for some European universities to ‘branch through’ like you see in the woods with branches of different trees embracing each other, to cooperate where win-wins are possible. Joint European degrees should for a small group of European universities be the rule rather than the exception in the master and PhD stage in order to bring intellectual teaching capacity together and give students a full experience in studying in (an)other cultural domain(s) (however, close to that at home). In the bachelor stage it would be wise to move away from ‘exchange’ with many vaguely known partners (acquaintances) towards structural cooperation with a limited number of known partners (friends). The value of ‘exchange’ studies cannot be overestimated as a means to broaden the students’ horizon. However, the value could be even further increased through a deepening of the learning experience during the exchange period. If we imagine that five to ten percent of European universities were ‘branched through’ by 2030, then Europe’s universities would be – as a whole – in a very decent state. A fourth building block is finance. Europe has let its citizens down on the finance of universities by consistently cutting the per-studentbudget, without providing room for earning additional finance. The finance gap with the US is a factor 2.6 in per student terms: in the US, per student expenditures are 2.6 times those of Europe according to OECD figures. Maybe this factor has decreased somewhat due to the decrease of the dollar value relative to the Euro. Yet, this factor remains too high for European universities to be competitive to American ones in terms of quality and its concomitant attraction to talent world wide. Finance encompasses public and private finance, in an, in principle, continuous fashion to distinguish it from the Italian or German practice, where you – as a student – either pay the full tuition fee in private institutions or no tuition fee at all in public institutions which provide exactly the same courses. By the way: Germany now has some, very small tuition fees in some states. The building block on finance should contain views on tuition fees as a necessary counterpart of public finance where the latter is under constant pressure to be lowered (Birkeland and Prescott,

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2006), while the prices of services like higher education of the same quality are constantly on the rise as Baumol (1967) would allege. The finance block is only complete, however, with a view on student grants and loans as one of the drivers of equity. ‘Social’ loan systems which require a payback on the basis of a percentage of earnings rather than the amount borrowed have serious drawbacks insofar as they punish “learning”. Such a quasi or real graduate tax rewards university participation abroad, punishes learning and labour force market participation and encourages residence/employment abroad (as the foreign tax agency will not recoup the loan). Of course, ‘social’ loans that relate required payback to income (with a maximum payback period after which the loan is converted into a grant) are advisable (see Chapter 5.2). The student grants and loan system should be such that it applies to studies Europewide, not just to the country of citizenship or permanent residence if we want to create a level European playing field. The most important trait, however, is that students can pursue higher education without having to combine studies with more working hours than are feasible to do the study well. The fifth building block deals with the organisation of European universities. First, there needs to be (the assurance of) transparency of the quality of education. Accreditation of degrees is part of this process. Common standards on internal quality control are another part. External quality assessment is equally important as a means to audit the universities. Transparency also includes a rating of the degree courses offered by universities. Overriding the individual dimensions of transparency is that it should be Europe-wide and differentiated – not by nations but by relevant categories for the heterogeneous demand of students and of the labour market. European (differentiated) education, European standards for internal and external quality control – that would be part of a long-run view on European universities which are fully utilized, fully exploited by society. Ratings – as are developed by the Centre for Higher Education/ Zentrum für Hochschulforschung and at present used in Germany – could be employed Europe-wide to assess the quality of the degree programs on a number of dimensions. Second in this fifth block are organisational forms which are associated with ‘innovative’. European universities are definitely not achieving more or doing better than Derek Bok’s (2002) “underachieving colleges” in terms of innovation in education and learning. It is not because universities attracted un-innovative people to their staff but simply because the context and organisation does not encourage innovation. Most universities have found a firm place in society and often even pride themselves for ‘doing things the traditional way’. I am not taking issue with the rites and the ceremonies. These are dear to me as they would have been in any organisation. Yet, on learning, it is a different matter. There should be incentives to innovate the education process based on research

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on learning as well as on technological possibilities. A European view on well organised universities would include notions on how to spur innovations in learning based on e-learning, problem based learning, cooperative learning and so on. It is clear that an innovative university takes more risks, spends more of its budget on learning-research and innovation, yet, knows that those actions pay off (if well devised) and that inaction may lead to Schumpeterian ‘creative destruction’. Those notions need be thought through. It should be logical that every year, say, 5% of degree courses cease to exist because they have not innovated, even that whole universities (also traditional ones!) disappear because their education is no longer relevant. I realize that this view of universities makes many university leaders or staff members shudder. Yet, it needs to be part of the discussion of Europe to remain a leading continent in the development of talent. The thriving European university is not organised as the bureaucratic university of many European Union countries where the thinking for the universities is done by politicians and bureaucrats. It is neither a fully private university without any public accountability. Yet, it does combine those ‘private elements’ which engender innovation and ‘market consciousness’ with public accountability. The Dutch structure might in many respects serve as an example. The ‘private elements’ are clear: there is an independent integral governance of the university administration of all components of the ‘production process’: people, infrastructure and other expenditures. The public accountability is in terms of adherence to rules on accreditation and internal and external quality control and in transparency. The board of supervisors is appointed by the minister – and there the political engagement with a particular university starts and stops. The board of supervisors appoints the administration – and leaves the daily administration there. But, even the enlightened Dutch structure is not able to produce the innovation to the maximum degree possible – as a fully utilized European university system would. It simply lacks the financial rewards for innovation, whether in the form of room for higher tuition fees or higher government expenditures. In this way this building block is intrinsically linked to that of finance.

8

Appendix A

Definitions of regions according to the United Nations Population Division: Rich countries are equal to the definition of the more developed regions. They comprise all regions of Europe plus Northern America, Australia/ New Zealand and Japan. Poor countries are equal to the definition of the less developed regions: They comprise all regions of Africa, Asia (excluding Japan), Latin America and the Caribbean plus Melanesia, Micronesia and Polynesia. Definition of the area of Europe: Eastern Europe – Belarus – Bulgaria – Czech Republic – Hungary – Poland – Republic of Moldova – Romania – Russian Federation – Slovakia – Ukraine Northern Europe – Channel Islands – Denmark – Estonia – Faeroe Islands* – Finland – Iceland – Ireland – Isle of Man*

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Latvia Lithuania Norway Sweden United Kingdom of Great Britain and Northern Ireland

Southern Europe – Albania – Andorra* – Bosnia and Herzegovina – Croatia – Gibraltar* – Greece – Holy See [12] * – Italy – Malta – Montenegro – Portugal – San Marino* – Serbia – Slovenia – Spain – The former Yugoslav Republic of Macedonia Western Europe – Austria – Belgium – France – Germany – Liechtenstein* – Luxembourg – Monaco* – Netherlands – Switzerland Countries or areas with a population of less than 100,000 in 2007 are indicated by an asterisk (*). Source: United Nations Population Division (2008a).

9

Appendix B

CHAPTER 3 EDUCATION, VOCATIONAL TRAINING AND YOUTH

Article 149 1. The Community shall contribute to the development of quality education by encouraging cooperation between Member States and, if necessary, by supporting and supplementing their action, while fully respecting the responsibility of the Member States for the content of teaching and the organisation of education systems and their cultural and linguistic diversity. 2. Community action shall be aimed at: – developing the European dimension in education, particularly through the teaching and dissemination of the languages of the Member States, – encouraging mobility of students and teachers, by encouraging inter alia, the academic recognition of diplomas and periods of study, – promoting cooperation between educational establishments, – developing exchanges of information and experience on issues common to the education systems of the Member States, – encouraging the development of youth exchanges and of exchanges of socioeducational instructors, – encouraging the development of distance education. 3. The Community and the Member States shall foster cooperation with third countries and the competent international organisations in the field of education, in particular the Council of Europe. 4. In order to contribute to the achievement of the objectives referred to in this Article, the Council: – acting in accordance with the procedure referred to in Article 251, after consulting the Economic and Social Committee and the Committee of the Regions, shall adopt incentive measures, excluding any harmonisation of the laws and regulations of the Member States, – acting by a qualified majority on a proposal from the Commission, shall adopt recommendations.

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Source: European Union and European Communities (2002). Treaty establishing the European Community (ECT), consolidated text. Official Journal of the European Communities, C325, p. 98

10

Appendix C

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APPENDIX C

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APPENDIX C

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11

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Notes