International perspectives on financing higher education

1 Competing for Public Resources: Higher Education andAcademic Research in Europe – A Cross-Sectoral Marek Kwiek 2 Restructuring of the Higher Educational System in Japan 25 Satoshi Mizo

International Perspectives on Financing Higher Education

Remaining chapters © Contributors 2015

Softcover reprint of the hardcover 1st edition 2015 978-1-137-54913-6 All rights reserved No reproduction, copy or transmission of this

publication may be made without written permission.

No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency,

Saffron House, 6–10 Kirby Street, London EC1N 8TS.

Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages.

The authors have asserted their rights to be identified as the authors

of this work in accordance with the Copyright, Designs and Patents Act 1988 First published 2015 by

PALGRAVE MACMILLAN

Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS.

Palgrave Macmillan in the US is a division of St Martin’s Press LLC,

175 Fifth Avenue, New York, NY 10010.

Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world.

Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries.

ISBN 978-1-349-56388-3 ISBN 978-1-137-54914-3 (eBook)

DOI 10.1057/9781137549143

This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin Library of Congress Cataloging-in-Publication Data

International perspectives on financing higher education / edited by Josef C Brada Professor of Economics, Arizona State University, USA, Masaaki Kuboniwa, Hitotsubashi University, Wojciech Bienkowski, Dean of the Faculty of Economics and Management, Lazarski University, Poland.

1 Education, Higher—Finance 2 Education, Higher—Economic aspects

3 Privatization in education 4 Higher education and state I Brada, Josef C., 1942– editor.

LB2342.I587 2015

378.1'06—dc23 2015019837

1 Competing for Public Resources: Higher Education and

Academic Research in Europe – A Cross-Sectoral

Marek Kwiek

2 Restructuring of the Higher Educational System in Japan 25

Satoshi Mizobata and Masahiko Yoshii

3 Financing Universities and a Plea for Privatization 50

Johan Gooitzen Wissema

4 Student Loans: The Big Debate 68

Karina Ufert

5 The 2012/13 Reforms of Student Finances and

Funding in England: The Implications for the Part-Time

Claire Callender

6 Higher Education Investment Fund: A New Approach for

Dieter Dohmen

7 University-Industry and Business Cooperation: Global

Imperatives and Local Challenges – An Example from

9 Challenges in Research: A Strategic Approach 147

Jan Andersen

Figures

2.2 Status quo of Japanese universities (2013) 282.3 Budgetary revenue of national universities (FY2013) 31

2.6 National operational grants and share in MEXT budget 37

2.8 General revenue: selected national universities 422.9 General expenditures: selected national universities 432.10 General revenue: selected private universities 442.11 General expenditures: selected private universities 453.1 Schematic flow of finance to the Medieval University 563.2 Schematic flow of finance to the Second Generation

3.3 The four flows of finance to present universities 583.4 Schematic flow of finance to the

5.1 Part-time and full-time UK and EU undergraduate

entrants to English higher education institutions and

further education colleges, 2002/03–2013/14 888.1 Structure of an educational module developed by the

8.2 Cooperation between a university and a firm within a

List of Figures and Tables

9.1 The annual budgets of FP7 and Horizon 2020 1569.2 American Association for the Advancement of Science

(AAAS) estimates of the development of government

research funding in the United States 2013–17 1589.3 Countries ranked by growth in number of peer-reviewed

Tables

2.1 Share of students in disciplines (%, 2013) 302.2 World university ranking in economics and

econometrics 31

6.1 Direct expenses for and the returns to an

6.2 Distribution of the rates of return of various

investments in education 104

7.2 R&D expenditure as a percentage of GDP (1982–2012) 1168.1 Potential benefits from university and

business cooperation 1429.1 The growth in EU membership from 1957 to 2013 1519.2 Thematic topics in the first Framework Programme and

The contributions that make up this book were first presented at the

conference “Financing Higher Education: In search of effective solutions based on best practices in North America, Europe, and Asia”, and we are

grateful to all who participated in this conference for their commentsand suggestions during the lively discussions that took place in the course of the conference We are also pleased to express our gratitude

to those who provided financial support for the conference These included:

• Lazarski University

• Bank Pocztowy Poland

• The Kronenberg Foundation at Citi Handlowy

• Autostrada Wielkopolska

• The Foundation for Polish Sciences

• Mr Jacek Giedrojc

The following served as Patrons of the conference:

• Polish Ministry of Finance

• Polish Ministry of Science and Higher Education

• Polish-American Fulbright Commission

• Polish Academy of Sciences

• Perspektywy Foundation

• Harvard Club of Poland

We are also grateful to Mr Adam Figurski, without whose tional and interpersonal skills the conference would not have beenpossible, and to Dr Yoshisada Shida for his capable assistance in the technical preparation of the chapters for publication

organiza-Acknowledgments

Jan Andersen is a senior executive advisor at the University of

Copenhagen His formal training is in Computer Science and Danish Language He is a board member and former president of the European Association of Research Managers and Administrators, and

he has worked with professional development of research tration, serving as board member in Denmark, the Nordic countries,Europe, and globally He is the chair of the COST Targeted Network BESTPRAC

adminis-Josef C Brada is Professor of Economics at Arizona State University

and President of the Association for the Study of East EuropeanEconomies and Cultures He has published extensively on compara-tive economic systems and international economics

Jakub Brdulak is an associate professor in the Department of

Innovation Management at the Warsaw School of Economics (SGH)

He is Head of the Foundation for Quality Assurance in Poland Since

2009, he has been leading postgraduate studies in information rity management at SGH He is the author of publications dedicated

secu-to management, innovation, and higher education

Claire Callender is Professor of Higher Education Studies at the r

Institute of Education and Professor of Higher Education Policy at Birkbeck College, University of London She has written and pub-lished extensively on innovation in, and financing of, higher educa-tion She teaches on the MSc Education, Power and Social Changeprogram at Birkbeck College

Dieter Dohmen is Managing Director of FiBS – Forschungsinstitut

für Bildungs- und Sozialökonomie (Institute for Education andSocioeconomic Research) in Berlin FiBS conducts research and con-sulting on the economics of education and education finance acrossall sectors and in relation to demographic change, labor markets, and innovation, and it has become one of the major educationthink-tanks in Europe He studied Sports and Economics in Cologne

Notes on Contributors xi

and received his PhD in Economics from the Technical University inBerlin; in 1993 he founded FiBS

Tatyana Koryakina is a junior researcher at the Center for Research

in Higher Education Policies (CIPES) She holds a master’s degree in Educational Administration from SUNY Buffalo, USA, and a PhD in Social Sciences from the University of Aveiro, Portugal Her researchinterests focus on topics related to higher education funding policiesand mechanisms, funding diversification, third-stream activities, and entrepreneurial governance

Marek Kwiek is Professor and Director of the Center for Public Policy

Studies and Chairholder, UNESCO Chair in Institutional Research and Higher Education Policy, University of Poznan, Poland His researchinterests include university governance, welfare state, the academic profession, and academic entrepreneurialism He has published

extensively on education, including Knowledge Production in European Universities, States, Markets, and Academic Entrepreneurialism (2013), and The University and the State: A Study into Global Transformation

(2006)

Satoshi Mizobata is a director of and a professor at the Kyoto

Institute of Economic Research and Administrative Council member,Kyoto University, Japan His Institute is designated by MEXT as the International Joint Usage and Joint Research Center of AdvancedEconomic Theory He is also a member of Science Council of Japanand holds an executive position in the European Association for Comparative Economics

Cláudia S Sarrico is Associate Professor of Management at ISEG

Lisbon School of Economics and Management, Universidade deLisboa, and a researcher at CIPES – Centre for Research on Higher Education Policies Her research interests focus on performance man-agement in professional services, with an emphasis on education,higher education, and science

Pedro Nuno Teixeira is Vice Rector for Academic Affairs and

Associate Professor of economics at the University of Porto, Portugal

He is also Director of the Centre for Research on Higher Education Policies (CIPES) at the University of Porto His research interests focus

on the economics of higher education, in particular on the role of

markets and privatization, and on the development and influence of human capital theory.

Karina Ufert is Senior Program Manager at the international

devel-opment NGO SPARK, responsible for program design and tation supervision in the area of agribusiness opportunities creation and enhancement of post-secondary education in Myanmar In 2012–13 Ufert was President of the European Students Union and abureau member of the Steering Committee for Educational Policiesand Practices at the Council of Europe She worked as a consultantwith a number of organizations such as UNESCO, the European Commission, and the Asia-Pacific Quality Network Karina’s researchinterest is in institutional economics

implemen-Johan Gooitzen Wissema is Professor Emeritus at the Technology

University in Delft, the Netherlands He has advised enterprisesand public organizations as well as universities He was on advisory boards on innovation policy in the Netherlands, Poland, Bulgaria,and Kazakhstan He has written 16 books and numerous articles onmanagement and policy issues

Masahiko Yoshii is a professor at the Graduate School of Economics,

Kobe University He was Dean of the Graduate School of Economics

in 2012–14, and he is an adjunct vice president, Kobe University, from April 2015 His research centers on the economies of the Central-Eastern European countries and comparative economicsystems

The funding of higher education faces a rather paradoxical challenge

On the one hand, universities are increasingly seen as the tions of national prosperity and competitiveness, on the other hand,public funding of universities has declined in most developed market economies, as a number of the contributions to this book docu-ment Thus, as government financial support for higher education has declined in Europe, Japan, and the United States, universities

founda-in these countries and elsewhere have been forced to turn to othersources of funding such as higher tuition fees, research cooperationwith the business sector, and philanthropy to make up the differ-ence This book provides comparisons across a number of countries

of how universities are adjusting to these new circumstances What

is clear from these comparisons is that who pays for the output of universities, whether it is education and degrees or research findings,how the amount of their payment is determined and how the fundsactually reach the recipient universities is critical to how the highereducation system functions

In part, the issue of university funding is tied up in conflicting views of what the higher education system is expected to do and thedistribution of the benefits of higher education On the one hand,there is the belief that more citizens should have a university educa-tion The European Union holds the ambitious goal that 40 percent

of the European Union’s 30–40-year olds have a university tion by 2020 Obviously the European Union’s leaders believe that

educa-an increased share of university graduates in the population hasimportant positive consequences for European economic growth,Introduction

Josef C Brada

social development, and political cohesion Some contributors tothis volume, such as Marek Kwiek in Chapter 1, stress the private benefits from higher education, emphasizing the higher incomes, greater social prestige and political power, better health outcomes,and other benefits that accrue to university graduates These privatebenefits are widely used to attract students to study at universitiesand to encourage parents, governments, and philanthropic founda-tions to support higher education Undoubtedly, emphasis on theexternalities of the higher education sector suggests greater public support while emphasis on the private benefits calls for shifting thecosts of higher education from society to the students who are the beneficiaries of the higher incomes their degrees will provide.Unfortunately, neither the social nor the private benefits of highereducation can be measured in isolation from the economy and the society in which they function A number of contributors to this volume mention the need for university graduates with the requi-site skills of the new information-based economy Others, however, point to the difficulty of graduates obtaining appropriate jobs aftergraduation The problem seems worst in Europe where youth unem-ployment levels are at historic highs, where university graduatesdrift from one short-term contract to another in the, often vain,hope of eventually finding a permanent position and where stud-ies show high rates of worker over qualification Evidence suggeststhat this situation is also emerging on labor markets in Japan and the United States The question, of course, is whether these unsat-isfactory outcomes are the fault of the universities or whether theyreflect problems with the labor market Perhaps rather than advocat-ing university reforms to make study programs more “relevant” orgeared to employer needs, it is reforms of the labor market to makehiring workers more attractive, to promote greater flexibility for bothemployers and employees, and to stimulate aggregate demand thatare needed to realize both the social and private benefits that higher education has to offer.

The higher education system has, in fact, undergone considerablechange in the past half century from so-called elite education, where

a very small fraction of the population was trained for the law, as clergy or for medicine With the coming of the industrial revolution,there was a greatly expended need for engineers and managers, turn-ing universities into institutions of mass education Massification,

Introduction 3

by its very nature, meant that the type of students participating

in higher education would also have to change This is showngraphically by Claire Callender in Chapter 5 where she compares the characteristics of full-time and part-time students in England

A key question for the financing of higher education is whether such a broadening of student characteristics, interests and abilities also calls for a wider range of higher education institutions, some research-oriented, others with a stronger pedagogical focus If so, twofurther questions immediately arise The first is whether the higher education establishment will accept such new institutions, which are likely to siphon off some of the government funding from existing institutions of higher education The second question is whether a broader range of higher education institutions will require a widerrange of tuition- and government-funding options As a number of contributors propose, universities should seek research partnerships with business in order to supplement tuition revenues and govern-ment grants However, such recommendations take a rather tradi-tional view of the university as an institution that undertakes both high-quality teaching and cutting-edge research This view ignores the fact that massification challenges this model of the university by throwing up a large number of students who do not need a research-intensive environment and who require an institution devoted only

or mainly to pedagogy Such institutions are unlikely to be able

to form profitable contacts with businesses to undertake fundedresearch, and the returns to education for students at these institu-tions are likely to differ from the social and private benefits accruing

to their peers at elite institutions This raises the question of whetherand how government funding for, and tuition fees at, such massifiedinstitutions should differ from those at elite institutions

The fact that higher education produces both private and lic benefits has led to multiple sources of support for universities.Some funds are provided by students who pay tuition fees, some are provided by the government, some by the business community,and some by philanthropic foundations The upshot of these mul-tiple sources of funding is that all those who make use of universityresources receive some sort of subsidy, and a question left unan-swered by most of the various arguments about university funding is who should be the beneficiary of these subsidies and what the size of the subsidies should be Should the design of these subsidies seek to

pub-overcome inequalities of opportunity in the population, or to come capital market failures that limit lower-income students’ access

over-to higher education or over-to account for the social externalities of versity education? Alternatively, perhaps subsidies should attempt tomaximize the economic benefits of the higher education sector, asdetermined by either government policy or by market forces

uni-For example, it is quite clear that student tuition fees, where they exist, do not cover the full cost of instruction at the university, so university students are subsidized In the United States, somewhatparadoxically, the largest subsidies go to students at elite universities.Indeed, tuition fees at these universities are high, but they cover amuch smaller percentage of the costs of education at these institu-tions than do tuition fees at less prestigious universities where thecosts of instruction are lower At the latter institutions, students pay a smaller amount in dollar terms, but this represents a higher percent-age of the total costs of their education Whether it is economicallyefficient or socially desirable to provide larger subsidies to students from well-off families at elite institutions is open to debate Alsorarely mentioned in the discussion of university-business relations isthe question of the size and distribution of the subsidies that accrue

to business from research cooperation with universities A ber of chapters, especially those by Marek Kwiek, Dieter Dohmen,Koryakina et al., and Jakub Brdulak, stress that university-business cooperation in research provides research results to cooperating firmsfor less than their full costs Thus, like students who pay less thanfull tuition fees, cooperating firms also pay less than the full cost of research findings While such a situation may be a “win-win” forboth the university and the firm, there is again a question of whetherthe distribution of subsidies to the business sector is economically efficient and socially desirable For example, in Chapter 8 JakubBrdulak describes one example of such cooperation between a uni-versity and two large consulting firms Reading his description of the cooperation arrangement, it becomes rather clear that such business-university cooperation is almost exclusively possible for very largefirms Jan Andersen, in Chapter 9, confirms this when he mentionsthe pro forma need to include small firms in research-funding pro-posals, which suggests that they would be entirely absent from the process were there not some regulations requiring it

num-Introduction 5

Also left unanswered in the discussion of subsidies to highereducation is the issue of tuition fees and students’ ability to pay for auniversity education In Chapter 4 Karina Ufert suggest that perhaps higher education should be seen as a “right” and students should

be entitled to access to higher education at no cost Certainly in aneconomic and technological environment where a university degree

is increasingly seen as necessary for success in the economy labor market of today in much the same way that literacy and numeracy were seen as necessary for success in the labor market

information-a hundred yeinformation-ars information-ago, it seems rinformation-ather information-archinformation-aic to drinformation-aw information-a distinction between the public funding of elementary and secondary educa-tion based on the labor market needs of the eve of the industrialrevolution and the refusal for full government funding of tertiaryeducation in today’s information-driven economy

Indeed, as Ufert notes, the costs of university education have been pushed on to students, often in the form of student loans The expan-sion of such student lending has a number of pernicious effects Themost obvious is that it induces young people, who have little finan-cial literacy and no labor market experience, to take out sometimesvery large loans that in many cases become a permanent burdenover much of their working lives That such loans are unattractive to mature students who have greater financial sense and more experi-ence with the realities of the labor market is amply demonstrated by Claire Callender in Chapter 5 where she demonstrates the reluctance

of these students to participate in student loan schemes introduced

in England Perhaps a better solution is offered by Dieter Dohmen inChapter 6, where he proposes that the government finance higher education by capitalizing the higher tax revenues that will accrue from an increase in university graduates

This book brings together studies that examine these and other issues related to the financing of higher education from different philosophical perspectives and that consider the experiences of anumber of different countries, each with different social values, institutions for the support of higher education, and organization

of higher education The studies all point to similar problems in the funding of higher education, but the diversity of proposed solutions should help develop better solutions to ensure the future of the uni-versity as both a repository and a creator of knowledge

of the welfare state in general We are witnessing massification cesses in higher education and far-reaching restructuring processes

pro-of welfare states The major implication is the fierce competition for public resources, studied in this chapter from a cross-sectoralperspective, in which the future levels of public funding for highereducation in tax-based European systems are highly dependent on social attitudes toward what higher education brings to society andthe economy, relative to what other claimants to the public pursecan bring to them

1

Competing for Public Resources: Higher Education and Academic Research in Europe – A Cross-

Sectoral Perspective

Marek Kwiek

Competing for Public Resources 7

1.1.1 Reconfigurations of knowledge production:

a larger context

Knowledge production in European universities is undergoing a significant reconfiguration, both in its governance and authority relationships (Whitley et al., 2010) and in its funding modes (Martinand Etzkowitz, 2000) The combination of ever-increasing costs of academic research and the decreasing willingness and/or ability of European governments to finance academic research from the publicpurse (Aghion et al., 2008; Geuna and Muscio, 2009) leads to grow-ing emphasis in both national and European-level policy thinking

on seeking new revenue sources for research universities (Alexanderand Ehrenberg, 2003; Mazza et al., 2008) New sources may include increased fees for the teaching mission and increasing reliance on various forms of third-stream activities leading to more noncore nonstate income for the research mission (Geuna, 1999; Shattock, 2009; Temple, 2012)

The inter-sectoral national competition for tax-based public ing has been on the rise in the last two decades, following the risingcosts of all major public services, especially health care and pensions (Kwiek, 2006; Powell and Hendricks, 2009; Salter and Martin, 2001)

fund-At the same time, both the ability and the willingness of nationalgovernments to fund growing costs of both higher education and academic research may be reduced even more for reasons such as

a shrinking tax base (Tanzi, 2011), financial austerity (Blyth, 2013;Schäfer and Streeck, 2013), escalating costs of maintaining the tra-ditional European welfare state model and economic challenges resulting from global economic integration, and the transition to knowledge-based capitalism, as well as the overall social climate in which, in the opinion of both the population at large and policy-makers, the promises of science are not being delivered by public universities.1

Institutions often do not undergo their transformations in tion: they operate in parallel, and in parallel they often change, asAldrich (2008), March and Olsen (1989), and Brunsson and Olsen(1993) argued There is thus a complex interplay of influences between institutions and their environments, and European univer-sities are perfect examples of the powerful connectedness betweenchanges in institutions and changes in the outside world from which

isola-they draw their resources, founding ideas, and social legitimacy The institution of the university in Europe, we assume here, may beundergoing a fundamental transformation, along with the institu-tion of the state itself and the welfare state in particular Institutions change over time, but so do social attitudes toward institutions.

1.2 The increasing competition for public resources

In very general terms, public expenditures for all publicly funded public services can be studied in the context of a zero-sum game Higher expenditures in one sector of public services, for instance,public pensions for the aged or public higher education, occur atthe expense of expenditures in other sectors of public services,for instance, public healthcare, or public infrastructure such as roads and railroad systems, law and order, and so on, unless publicresources are increasing along with expenditures and the pie to beshared is bigger Such a zero-sum game in public expenditures was evident in European post-communist transition countries, especially immediately following the collapse of communist regimes in 1989 and throughout the 1990s Public policy choices were hard, priori-ties in expenditures were hotly debated political issues; higher edu-cation and academic research, certainly, have not been on the top

of the list of public priorities Carlo Salerno (2007, p 121) arguesthat the ‘marketization’ of higher education recasts the problem of priority-setting in public spending in terms of the resources avail-able to achieve them: ‘Society values what the University produces

relative to how those resources could be used elsewhere’ (Salerno, 2007,

p 121, emphasis added) The present chapter focuses on the idea of the current ever-increasing competition for public resources between the three major claimants to the public purse in Europe, higher edu-cation, old-age pensions and healthcare services, and the increasinginstability combined with growing conditionality of all public-sector funding (in much more detail, see Kwiek, 2015)

The traditional social obligations of the state are under sustained,fundamental revisions, and some activities and objectives viewed today as basic could be redefined as being outside of traditional governmental duties (Hovey, 1999, p 60) The higher educationsector has to compete permanently with a whole array of othersocially attractive and socially useful forms of public expenditures

Competing for Public Resources 9

The sector, to win the competition for public funding with othersegments of social and welfare programs, has to be more com-petitive in its national offers compared with other claimants to thepublic purse State-funded services and programs have traditionally included healthcare, pensions, and education, but today the costs of healthcare and pensions are expected to escalate in aging Westernsocieties while higher education is increasingly expected to show its

‘value for money’ It may be expected both to reduce some of its costsand to draw ever more noncore nonstate funding on the revenue side(CHEPS, 2010; Shattock, 2009)

Transformations in public-sector services in general, and in higher education in particular, are expected to be gradual and long-term rather than abrupt and short-term The construction of public highereducation architectures, especially those of governance and funding,

in postwar Europe took decades, and their transformation will take decades too What may increase in the future is the role of the accu-mulation of small, subtle, gradual, but nevertheless transformative changes (Mahoney and Thelen eds, 2010).2 The welfare state after its ‘Golden Age’ in the 1960s and 1970s in Europe entered an era of austerity that forced it ‘off the path of ever-increasing social spend-ing and ever-expanding state responsibilities’ (Leibfried and Mau,

2008, p xiii) Similarly, public higher education and research sectors

in Europe also stopped being a permanent ‘growth industry’ (Ziman,1994), with ever-increasing numbers of institutions and faculty andever-expanding public research funding available The transforma-tion paths of the welfare state and of higher education over the lasthalf-century show similarities, with the age of expansion and mas-sification and the age of austerity experienced during similar periods across Europe

The scale of operations and funding of universities, includingboth university teaching and university-based research, remain historically unprecedented Never before has the functioning of universities brought so many diverse, both explicitly public andexplicitly private, benefits But, also never in postwar history were all aspects of their functioning analyzed in such a detailed manner from international comparative perspectives, and, indirectly, care-fully assessed by international organizations (Martens et al., 2010) Measuring the economic competitiveness of nations increasingly

means, inter alia, measuring both the potential and the output of

their higher education and research, development and innovationsystems (Kwiek, 2011, 2013a) Therefore, higher education can expect

to be under ever more national and international scrutiny The ditional post-Second World War rationale for allocating resources

tra-to universities has been shifting tra-to a ‘competitive approach’ tra-to versity behavior and funding (Geuna, 1999) Higher education andacademic research have been exposed to market rules

uni-1.2.1 The market perspective and increasing

financial austerity

The growing relevance of the market perspective in, and ing financial austerity for, all public services, accompanied by thegrowing competition in all public expenditures, both services andinfrastructure, is strengthened by several factors They include globalization and the internationalization processes, the recentfinancial crisis, as well as changing demographics and their implica-tions for social and public expenditures European higher educationinstitutions may be responding to increasingly unfriendly and cross-sectorally competitive financial settings by either cost-side or reve-nue-side solutions (Johnstone, 2006) A more probable institutional response to possibly worsening financial environments in whichhigher education institutions will operate is through revenue-side solutions: seeking new sources of income, largely nonstate, noncore,and nontraditional to most European systems, ‘external income gen-eration’ leading to more ‘earned income’, as Gareth Williams termed

increas-it in Changing Patterns of Finance in Higher Education wincreas-ith reference

to British universities already two decades ago (Williams, 1992,

pp 39–50; also see Kwiek, 2008; Kwiek, 2012b; Shattock, 2009).New sources of income may thus include various forms of aca-demic entrepreneurialism in research such as consulting, contracts with industry, research-based short-term courses, and so on, and various forms and levels of cost-sharing in teaching including tui-tion fees at any or all study levels from undergraduate to graduate to postgraduate studies, depending on national academic traditions, aswell as systems of incentives for institutions and for entrepreneurial-minded academics and their research groups within institutions In general, noncore income of academic institutions includes six items: gifts, investments, research grants, research contracts, consultancy,and student fees (Williams, 1992, p 39) What also counts, and

Competing for Public Resources 11

determines the level of cross-country variations in Europe, is therelative scale of current underfunding in higher education Most underfunded systems, such as, for instance, some systems in Centraland Eastern Europe, may be more willing to accept new funding patterns than are Western European systems with traditionally morelavish state funding ‘Academic entrepreneurialism’ and variousforms of ‘third mission activities’ seem to have attracted ever morepolicy attention at both the national and EU levels in the last fewyears (Kwiek, 2013a)

Higher education in general, and top research-intensive ties in particular, as opposed to healthcare and pensions sectors, areperceived by European societies as being able to generate their own additional income through, for example, various forms of entrepre-neurialism and third-mission activities or cost-sharing mechanisms where fees are legally possible Ironically, the more financially suc-cessful public entrepreneurial universities are today, the bigger the chances that their financial self-reliance will become an expectation

universi-in the future; universities may actually be ‘punished’ for their rent ability to cope in hard times Along with the efforts to intro-duce market mechanisms such as multi-pillar schemes instead of pay-as-you-go ones in pension systems and privatized systems based

cur-on additicur-onal, private, individual insurance policies in healthcaresystems, especially but not exclusively in European transition econo-mies, the most far-reaching consequences of this marketization andprivatization trend can be expected for public funding for higher education and research As William Zumeta stressed in a US context

a decade ago, ‘unlike most of the other state budget components, higher education has other substantial sources of funds that policy-makers feel can be tapped if institutions need to cope with deep budget cuts’ (Zumeta, 2004, p 85)

Privatization and marketization processes can change the very nature of educational institutions, apart from having a direct impact

on their financial situation Williams (2003, p 6) asked in the text of ‘enterprising universities’ emergent in Anglo-Saxon countries

con-at the end of last century: ‘when does a new stimulant become sopowerful, or so addictive, that the organism itself changes its nature?

If it does, is the change evolution or decay’ and to what extent, is

‘an enterprising “operational mode” beginning to dictate the driven “normative mode” of universities?’ Changes in funding

value-modes may thus introduce changes in core university values, and,therefore, the increasing cross-sectorial competition for resources

is more than merely a change in Becher and Kogan’s (1992) tional mode’ of universities

‘opera-1.3 New university-society contracts

Europe can thus expect, as a mostly new policy solution to thecurrent problem of the underfunding of European universities, a growing policy emphasis on a more substantial inflow of privateresearch funds from the business sector and of more private teaching funds from student fees With different speeds of change in different national systems, and with a possibility that more radical changescan be expected in more underfunded systems and less radicalchanges in more affluent systems

In policy terms, the European Commission is becoming muchmore positive toward student fees than ever before (Aghion, 2008,

p 226) Trends in European demographics, especially the aging of European societies, will directly affect the functioning of the welfare state in general, but only indirectly, through the growing pressures

on all public expenditures in general, will it affect universities Eachshift in priorities toward social assistance can automatically bringabout negative financial consequences for public universities due to

a limited pool of funds that can be allocated to public services as a whole

There is a clear paradox: higher education is seen as more tant than ever before in terms of the competitiveness betweennations, but though the importance of knowledge in our societies

impor-is greater than ever, at the same time, along with the pressures to

reform current welfare state systems, the capacity,yy and often the willingness, of national governments to finance higher educationand academic research and development is weaker than in previousdecades Knowledge, although not basic knowledge, to use a some-what outdated distinction between basic and applied research, is increasingly produced by the business sector rather than by highereducation and increasingly funded by the business sector In the OECD (Organisation for Economic Cooperation and Development)area, the share of research and development performed by the busi-ness sector in total research and development performed has been

Competing for Public Resources 13

increasing steadily over the past two decades The tension between the general attitude of governments and populations, with educa-tion perceived as perhaps the primary asset of the individual, on the one hand, and the inability or unwillingness of the very samegovernments to increase current levels of public funding for highereducation and research in public universities is stronger than ever

1.3.1 Social, political, and economic contexts

The concentration of research funding in an ever smaller number of top institutions is observed throughout European higher educationand research systems; there are gainers and losers of these processes

of the allocation of financial resources, in accordance with Robert K Merton’s ‘Mathew effect’ in science referred to individual academics(‘the richer get richer at a rate that makes the poor relatively poorer’,Merton, 1973, p 457) At the same time, there seem to be limits to growth in science after a long period of continuous expansion, dis-cussed for the first time by Ziman (1994) in the context of a ‘dynamic steady state’

Following transformations of other public sector institutions,universities in Europe, traditionally publicly funded and tradition-ally specializing in both teaching and research, may soon be underpowerful pressures to review their missions in view of permanentlycoping with financial austerity in all public sector services (Pierson, 2001) Universities may soon be under pressures to compete more fiercely for financial resources with other public services that are alsoheavily reliant on the public purse Public priorities are changing throughout the world, and education policy depends heavily on the

‘allocation of values’ (Rizvi and Lingard, 2010, p 71), and new ing patterns and funding mechanisms can be considered CentralEurope, Poland included, has long been experimenting with variousforms of privatization of all public services (Kwiek, 2010; Kwiek,2012a) Also, the rationale for European university research fundinghas been changing throughout the last two decades (Geuna, 2001).Public priorities are changing throughout the world What iscrucial for universities is the process of aging of Europe because inthe next few decades the majority of electorates will be either in advanced working age or retired Priorities of older generations of Europeans in emergent new, possibly increasingly commercialized,pension systems and increasingly privatized healthcare systems,

fund-may look radically different from the priorities historically adopted

in contemporary societies in the past half-century In the context

of human capital theories and the research on private benefits from higher education, the channeling of more public funds away fromhigher education systems and filling the gap in university incomesthrough cost-sharing in favor of healthcare systems and pensionschemes is more probable than ever before Graying European socie-ties in the coming decades do not have to continue locating higher education institutions high on their lists of publicly funded priorities

1.3.2 Financial pressures, ideological pressures

Western liberal democracies are reforming or trying to reform alltheir welfare state institutions, and the modern university, as a signif-icant claimant to public resources, is a significant part of the publicsector If we take an extended view of the welfare state, then highereducation and its contribution to the reduction of economic inequal-ity and lowering economic insecurity through education and skills

is a very expensive component of the modern welfare state AcrossEurope, the costs of both teaching and research are escalating, as arethe costs of maintaining advanced healthcare systems (Rothgang

et al., 2010) and pension systems for aging European populations Now all segments of the welfare state are under new, mostly hithertounheard of, financial pressures Tax-based European higher educa-tion systems are not an exception; the difference is that they can still rely on an increasing share of private funding through either intro-duced or increased fees Europe is the major counter-example to theglobal trend in which the costs of higher education credentials are covered predominantly by graduates rather than by the state Thistradition of tax-funded higher education is especially strong in post-communist countries where there were no fees at all until 1989 How

to publicly fund not only mass but also universal higher education, with gross enrollment rates exceeding 50 percent, is a major policyissue across the region Poland, with a universal and contractinghigher education system due to a heavily declining population, is a potential trend-setter for smaller systems in the region, with still nouniversal fees at the moment, limited chances of their introduction

in the coming years, and possibly with increasing de-privatization processes driven by declining demographics (Kwiek, 2014)

Competing for Public Resources 15

In addition to financial pressures, there are also ideological sures that come mainly from global financial institutions and inter-national organizations involved in the analysis of broader public sector services They tend to disseminate the view, in different coun-tries to different degrees, that the public sector in general is less effi-cient than the private sector; that its maintenance costs exceed the social benefits brought by it; and, finally, that it deserves less uncon-ditional social trust and less unconditional public funding This lack

pres-of confidence in the public sector in general is observed in studies

on social trust in the representatives of that sector, in the research onthe willingness of European electorates to raise the level of personaltaxation, and in the research on the level of satisfaction with public services provided by the public sector So, alongside undoubtedlyfinancial pressures, universities have to simultaneously deal with the effects of changes in the beliefs of European electorates, of key importance for changes in the positions of political parties As Fritz

W Scharpf and Vivien A Schmidt (2000) summarized over a decadeago, their studies on the welfare state subjected to the pressures of economic competitiveness, political choice still plays the key role in any welfare state transformations:

Welfare states remain internationally viable only if their systems

of taxation and regulation do not reduce the competitiveness of their economies in open product and capital markets … Within these economic constraints, however, the overall size of the welfare state and the extent of redistribution remain a matter of political choice (Scharpf and Schmidt, 2000, p 336)

1.4 Public funding for higher education and

increasing intergenerational conflicts

The negative impact on public subsidies for higher education maythus also be exerted by demographic processes such as the increasing dependence rate in the economy, the aging of European societies, the growing population in retirement and, finally, perhaps, changes

in political thinking associated with the growing political role of theelderly because the electorates in European societies will be grayingsteadily The different age structure of the electorate in the coming

decades could in a natural way downgrade any other social ties and upgrade pensions and healthcare, leaving traditional higher education with increasingly fewer public subsidies and ever moreprivate funding As Dumas and Turner (2009) argue in their study

priori-of aging in postindustrial societies and intergenerational conflicts, the elderly can use their political influence ‘to steer resources toward pensions and health care and away from educational investmentsfor younger generations As age conflict increases, the possibilities for age integration decline’ While general education does not seem to

be an issue today, higher education can certainly be an issue sharing ideas in higher education policy can therefore become morepopular than ever before, for both financial and ideological reasons (see Johnstone, 2006; Johnstone and Marcucci, 2007, and these ideas

Cost-as initially formulated in Johnstone, 1986)

In the rapidly evolving contemporary world, one cannot exclude

in principle any future developments Effects of the evolution

of social priorities may be different in different countries, but inEuropean transition countries they may mean the introduction of cost-sharing in public higher education, following the example of England in Europe and, above all, that of non-European Anglo-Saxon countries, with United States, New Zealand, and Australia

at the forefront One can therefore expect a gradual introduction

of universal, perhaps deferred rather than upfront, tuition fees andsophisticated student loan and scholarships systems in the nextdecade, despite still existing constitutional limitations throughoutCentral and Eastern Europe The rationales behind universal fees areboth financial and ideological, and they have to refer to increasing,

or decreasing, equitable access to higher education (Kwiek, 2013b)

1.4.1 Constraints on public revenues

Thus, although it is possible to argue for substantial increases in theshare of gross domestic product of public funds spent on nationalpublic higher education systems using the ‘knowledge economy’ and

‘human capital upgrading’ arguments, in practice it has not worked

in any of the major OECD countries or European transition countries

so far According to the recent data collected by CHEPS (Center for Higher Education Policy Studies at Twente University, Enschede),

in the years 1995–2008, the share of basic state funding in sity funding declined almost everywhere, its average share dropped

univer-Competing for Public Resources 17

significantly in 31 European countries, to the level of 67 percent, while the share of university revenues from tuition fees and researchcontracts and grants raised in the same period by 50 percent (CHEPS,2010) Higher levels of public funding for higher education requiresraising taxes to improve the standards of welfare service provision; even though transition countries would like to have better public universities, their citizens do not seem to be willing to pay higher taxes for this reason This is in contrast to the generally supportiveattitude toward welfare All Central European economies except Poland introduced a relatively low flat rate of personal income in the past few years Most OECD countries are currently experiencing

a shrinking tax base; as Pierre Pestieau put it, ‘the share of regular,steady salaried labor is declining in a large number of countries, and thus the share of payroll tax base in the GDP is shrinking’ (Pestieau,

2006, p 35) The constraints on public revenues are combined withgrowing social needs under the pressures of economic globalization and the passage to post-industrial societies The synopsis of externaland internal challenges to mature welfare states as well as to emerg-ing welfare states in Central and Eastern Europe can be the following:

‘The shift to a predominantly service economy and economic globalization entails tighter constraints on public revenues, whilesocietal modernization and changes in the economic structure pro-duce mounting social needs, new risk patterns, and new prioritiesfor social policy intervention, with education and social service pro-vision on top of the list Moreover, shrinking public revenues and rising pressures on public expenditure constitute a situation of whatPaul Pierson calls permanent austerity’’, which must be managed

by nation-states whose sovereignty and autonomy have declined significantly in the wake of globalization and European integration,without international authorities able to pick up the slack (Castles

et al., 2010, p 14)

The option of more public funding for higher education or for academic research and development in Europe in the future is explic-itly questioned even by the European Commission, which suggests substantially more private funding, both for teaching through feesand for research from private companies In general terms, ongoing,and envisaged for the future, reformulations of the welfare state inEuropean economies, no matter whether related only to globaliza-tion and economic integration, or only to domestic national factors

related to demographic change, or finally related to both, at the moment do not provide promising grounds for policies treatinghigher education as public investment.

This may have fundamental effects on both students and ics; fee-paying students increasingly view themselves as customers

academ-of services provided by academics (Molesworth et al., 2011) and asclients of university services; there may also be more managerialism and stronger business orientation in academic units less reliant oncore state public subsidies, more market ideology, and sets of prac-tices drawn from the world of business, more reliance on marketforces and noncore nonstate, ‘earned’ rather than ‘received’, income,and the intensification of work of the increasingly contracted rather than tenured academic staff, and so on Higher education is increas-ingly viewed as public cost/public burden and as a private, rather than public, and individual, rather than collective, good But welfaretransfers still, under strong globalization-related pressures, remain apolitical choice (Gizelis, 2005, p 159) and the role of electorates in democratic systems is fundamental in determining the depth andcharacter of welfare state restructuring (Pestieau, 2006, p 30; Swank,

2001, p 198; Swank, 2010); electorates still have ‘welfare attitudes’that might determine the future level of public support for welfare(Oorschot and Meulman, 2012) In a similar vein, also attitudesshared by European electorates are crucial for further strong public subsidization of higher education systems

While one can predict that, for this reason, reforming financialfoundations of the pension and healthcare sectors, for example,toward various forms of privatization and toward individuals shar-ing bigger responsibility, including financial responsibility, may

be weaker than expected, reforming the financial foundations of higher education might be stronger than is generally predicted today.While in the rich OECD economies this could mean a lack of further growth of currently high state subsidies, in the majority of relativelypoorer economies in Central and Eastern Europe, this may mean noincreases in currently low state subsidies, hitting especially the func-tioning of public research universities

1.5 Final thoughts

How could public funding for higher education as part of ditures within welfare states undergoing thorough restructuring in

expen-Competing for Public Resources 19

Europe be seen as an investment rather than a cost, and why should

it be seen that way? Paradoxically, the unwillingness or inability of the state to increase the level of public funding for higher education

is accompanied by a clear realization that, in the new global era, higher education is more important for social and economic devel-opment than ever before

A good argument for increasing public funding for the higher cation sector, based on human capital theories, is that investments

edu-in higher education are long-term edu-investments edu-in skills and tences of the workforce; but in the logic of the cycles of elections,this means that their weight for most political parties in Europeansystems decreases rather than increases over time Long-term invest-ments are much less tempting to political parties and for electoratesthan are short-term investments This short-termism in selecting pri-orities for public spending may have a far-reaching negative impact

compe-on increases in public subsidizaticompe-on of higher educaticompe-on instituticompe-ons.The competition between different claimants to public resources hasbecome fiercer since wholesale reforms of the public sector in generalstarted some two or three decades ago Each component of the public sector is expected to show its advantage over other competitors, andall public sector components need to show their advantage over such other competitors as spending on general infrastructure, the military,

or law and order New Public Management has been introducingcorporate, competition-focused styles of thinking into traditionallypublic, noncompetitive areas, with unpredictable implications forfuture levels of public subsidization of higher education

New ideas about the state indirectly give life to new ideas about universities, and especially their governance and funding, which inContinental Europe have traditionally been heavily dependent onthe public purse in the postwar period One can say briefly aboutEuropean welfare states: things will never be the same (resulting from

‘a long good-bye to Bismarck’, Palier, 2010) Presumably, things willnever be the same in European universities, with all caveats: keeping

in mind the multidimensionality of ongoing transformations, theirpowerful embodiment in cultural traditions of particular nation states, their strong dependence on the pace of changes across the whole public sector, and long-term financial projections for this sector.However, never in their history have European universities been

so well-funded They have never been so closely linked to the omy and been such an important economic player, investor, and

econ-large-scale employer Never in their history have European ties been analyzed in so much detail and compared, on national,regional, and global, scales Never before have they also raised such asustained public interest, often combined with sustained public criti-cism Consequently, the academic community must unconditionallybelieve that, despite the current turmoil, the university as a highly resilient and adaptive institution can be even stronger in the futurewithout losing its traditional mission But, on the other hand, the aca-demic community should not believe that, in the face of a radically changing social world and its public and private institutional arrange-ments, only one institution, the European university in its differentnational embodiments, will remain merely marginally reformed.

universi-Acknowledgements

The author gratefully acknowledges the support of the National Research Council (NCN) through its MAESTRO grant DEC-2011/02/A/HS6/00183(2012–2017)

Notes

1 See especially Martin and Etzkowitz (2000, pp 6–8) on the ‘changingsocial contract’ between science and the university, and between society and the state; Guston (2000) and Guston and Keniston (1994) on the emergent ‘fragile contract’ with science in the context of Vannevar Bush’s

Science: the Endless Frontier; Ziman (1994) on science under ‘steady state r

conditions’; and Kwiek (2005, 2006) on the changing social contract ing universities, nation-states, and welfare states

link-2 One of the most promising avenues in recent comparative research on the evolution of the European welfare state is through conceptual toolsprovided by historical institutionalism, particularly through the con-cept of ‘gradual transformative change’ developed by Streeck, Thelen,and Mahoney (Streeck and Thelen eds, 2005; Mahoney and Thelen eds,2010) There are three recent large-scale comparative studies based on

this concept: A Long Goodbye to Bismarck? The Politics of Welfare Reforms in

Continental Europe (Palier ed., 2010), The Politics of Welfare State Reform in Continental Europe: Modernization in Hard Times (Häusermann, 2010), and Post-Communist Welfare Pathways: Theorizing Social Policy Transformations

in Central and Eastern Europe (Cerami and Vanhuysse eds, 2009) For direct

applications, see especially Palier (2010 ed., pp 21–34), Häusermann(2010, pp 8–12), and Cerami and Vanhuysse eds (2009, pp 36–44) Thesame conceptual tools can be used to comparatively study the gradual change in European higher education

Competing for Public Resources 21

References

P Aghion (2008) ‘Growth and the Financing and Governance of Education’

in Proceedings of the International Conference: Privatization in Higher Education.

The Samuel Neaman Institute – Israel Institute of Technology, Haifa, Israel,7–8 January 2008

P Aghion, M Dewatripont, C Hoxby, A Mas-Colell, André Sapir (2008)

Higher Aspirations: An Agenda for Reforming European Universities (Brussels:

New Directions for Institutional Research, Special Issue, 2003 (119), 1–90.

T Becher and M Kogan (1992) Process and Structure in Higher Education, 2nd

ed (London: Routledge)

M Blyth (2013) Austerity The History of a Dangerous Idea (Oxford: Oxford

University Press)

N Brunsson and J P Olsen (1993) The Reforming Organization (Copenhagen:

Fagbokforlaget)

F G Castles, S Leibfried, J Lewis, H Obinger, and C Pierson (2010)

‘Introduction’ in F G Castles, S Leibfried, J Lewis, H Obinger, C Pierson

(eds) The Oxford Handbook of the Welfare State (New York: Oxford University

Press), pp 1–15

CHEPS (2010) Progress in Higher Education Reform across Europe Funding Reform

Volume 1: Executive Summary and Main Report (Enschede: CHEPS) t

A Dumas and B S Turner (2009) ‘Aging in Post-Industrial Societies:Intergenerational Conflict and Solidarity’ in J Powell and J Hendricks (eds)

The Welfare State and Post-Industrial Society: A Global Analysis (New York:

Springer), pp 41–56

A Geuna (1999) The Economics of Knowledge Production: Funding and the

Structure of University Research (Cheltenham: Edward Elgar).

A Geuna (2001) ‘The Changing Rational for European University Research

Funding: Are There Negative Unintended Consequences?’ Journal of

Economic Issues, 35 (3), 607–32.

A Geuna and A Muscio (2009) ‘The Governance of University Knowledge

Transfer: A Critical Review of the Literature’, Minerva, 47 (1), 93–114.

T I Gizelis (2005) ‘Globalization, Integration, and the European Welfare

State’, International Interactions, 31 (2), 139–62.

H Hovey (1999) ‘State Spending for Higher Education in the Next Decade:The Battle to Sustain Current Support’, Report for the National Center for Public Policy and Higher Education, No 99–3 San Jose, CA

D B Johnstone (1986) Sharing the Costs of Higher Education: Student Financial

Assistance in the United Kingdom, the Federal Republic of Germany, France, Sweden, and the United States (New York: College Entrance Examination Board)

D B Johnstone (2006) Financing Higher Education Cost-Sharing in International

Perspective (Boston: College Center for International Higher Education).

D B Johnstone and P Marcucci (2007) Worldwide Trends in Higher Education

Finance: Cost-Sharing, Student Loans, and the Support of Academic Research.

Prepared as part of UNESCO’s Higher Education Commissioned Paper Series

(Paris, France: UNESCO), http://gse.buffalo.edu/org/inthigheredfinance/files/Publications/foundation_papers/(2007)_Worldwide_Trends_in_Higher_Education_Finance_Cost-Sharing_%20Student%20Loans.pdf, dateaccessed 19 February 2015

M Kogan, M Bauer, I Bleiklie, and M Henkel (eds) (2000) Transforming

Higher Education: A Comparative Study (London: Jessica Kingsley Publishers) y

M Kogan and S Hanney (2000) Reforming Higher Education (London: Jessica

Kingsley Publishers)

M Kwiek (2005) ‘The University and the State in a Global Age: Renegotiating

the Traditional Social Contract?’ European Educational Research Journal, 4

(4), 324–41

M Kwiek (2006) The University and the State A Study into Global Transformations

(Frankfurt am Main and New York: Peter Lang)

M Kwiek (2008) ‘Academic Entrepreneurship vs Changing Governance

and Institutional Management Structures at European Universities’, Policy

Futures in Education, 6 (6), 757–70.

M Kwiek (2010) ‘Creeping Marketization: Where Polish Private and Public

Higher Education Sectors Meet’ in R Brown (ed.) Higher Education and the

Market (New York: Routledge), pp 135–46 t

M Kwiek (2011) ‘Universities and Knowledge Production in Central Europe’

in P Temple (ed.) Universities in the Knowledge Economy: Higher Education

Organisation and Global Change (London and New York: Routledge),

pp 176–95

M Kwiek (2012a) ‘Changing Higher Education Policies: From the Deinstitutionalization to the Deinstitutionalization of the Research Mission

in Polish Universities’, Science and Public Policy, 39 (5), 641–54.

M Kwiek (2012b) ‘The Growing Complexity of the Academic Enterprise in

Europe: A Panoramic View’, European Journal of Higher Education, 2 (2–3),

112–31

M Kwiek (2013a) Knowledge Production in European Universities: States, Markets,

and Academic Entrepreneurialism (Frankfurt am Main and New York: Peter

Lang)

M Kwiek (2013b) ‘From System Expansion to System Contraction: Access to

Higher Education in Poland’, Comparative Education Review, 57 (3), 553–76.

M Kwiek (2014) ‘Structural Changes in the Polish Higher Education System

(1990–2010): A synthetic View’, European Journal of Higher Education, 4 (3),

266–280

M Kwiek (2015) ‘Reforming European Universities in the Context of Welfare State Reforms’ in P Zgaga, U Teichler, A Wolter and H G Schuetze (eds)

Higher Education Reform: Looking Back – Looking Forward (Frankfurt and

New York: Peter Lang)

Competing for Public Resources 23

S Leibfried and S Mau (eds) (2008) Welfare States: Construction, Deconstruction,

Reconstruction (Cheltenham: Edward Elgar).

J Mahoney and K Thelen (eds) (2010) Explaining Institutional Change

Ambiguity, Agency, and Power (Cambridge: Cambridge University Press) r

K Martens, A K Nagel, M Windzio, A Weymann (eds) (2010) Transformation

of Education Policy (Basingstoke: Palgrave Macmillan).

B Martin and H Etzkowitz (2000) “The Origin and Evolution of the University

System” SPRU Electronic Working Paper Series No 59 December https://

www.sussex.ac.uk/webteam/gateway/file.php?name=absewp59&site=25 Accessed June 16, 2015

C Mazza, P Quattrone, and A Riccaboni (eds) (2008) European Universities in

Transition: Issues, Models and Cases (Cheltenham: Edward Elgar).

R K Merton (1973) The Sociology of Science: Theoretical and Empirical

Investigations (Chicago: University of Chicago Press).

M Molesworth, R Scullion, E Nixon (eds) (2011) The Marketisation of Higher

Education and the Student as Consumer (London: Routledge) r

B Palier (ed.) (2010) A Long Goodbye to Bismarck? The Politics of Welfare Reform

in Continental Europe (Amsterdam: Amsterdam University Press).

P Pestieau (2006) The Welfare State in the European Union: Economic and Social

Perspectives (Oxford: Oxford University Press).

P Pierson (2001) ‘Coping with Permanent Austerity: Welfare State Restructuring

in Affluent Democracies’ in P Pierson (ed.) The New Politics of the Welfare

State (Oxford: Oxford University Press).

J Powell and J Hendricks (eds) (2009) The Welfare State in Post-Industrial

Society A Global Perspective (Dordrecht: Springer).

F Rizvi and B Lingard (2010) Globalizing Educational Policy (London: y

Routledge)

H Rothgang, M Cacace, L Frisina, S Grimmeisen, A Schmid, and C Wendt

(2010) The State and Healthcare: Comparing OECD Countries (Basingstoke:

Palgrave Macmillan)

C Salerno (2007) ‘A Service Enterprise: The Market Vision’ in: P Maassen and

J P Olsen (eds), University Dynamics and European Integration (Dordrecht:

Springer), pp 119–32

A J Salter and B R Martin (2001) ‘The Economic Benefits of Publicly Funded

Basic Research: A Critical Review’, Research Policy 30 (3), 509–32 y

F W Scharpf and V A Schmidt (eds) (2000) Welfare and Work in the Open

Economy Volume 1 From Vulnerability to Competitiveness (Oxford: Oxford

University Press)

A Schäfer and W Streeck (eds) (2013) Politics in the Age of Austerity (Cambridge: y

Polity Press)

M Shattock (2009) Entrepreneurialism in Universities and the Knowledge

Economy: Diversification and Organizational Change in European Higher Education (Maidenhead: Open University Press and Society for Research

into Higher Education)

D Swank (2001) ‘Political Institutions and Welfare State Restructuring: The Impact of Institutions on Social Policy Change in Developed Democracies’

in P Pierson (ed.) The New Politics of the Welfare State (Oxford: Oxford

University Press)

D Swank (2010) ‘Globalization’ in: F G Castles, S Leibfried, J Lewis, H

Obinger, C Pierson (eds) The Oxford Handbook of the Welfare State (New

York: Oxford University Press), pp 318–30

V Tanzi (2011) Government versus Market: The Changing Economic Role of the

State (Cambridge: Cambridge University Press).

P Temple (ed.) (2012) Universities in the Knowledge Economy: Higher Education

Organisation and Global Change (London and New York: Routledge).

W Van Oorschot and B Meuleman (2012) ‘Welfare Performance and Welfare

Support’ in S Svallfors (ed.) Contested Welfare States: Welfare Attitudes in

Europe and Beyond (Stanford: Stanford University Press), pp 25–57 d

R Whitley, J Gläser, and L Engwall (eds) (2010) Reconfiguring Knowledge

Production: Changing Authority Relationships in the Sciences and Their Consequences for Intellectual Innovation (Oxford: Oxford University Press).

G Williams (1992) Changing Patterns of Finance in Higher Education

(Buckingham: Open University Press)

G Williams (ed.) (2003) The Enterprising University: Reform, Excellence and

Equity (Buckingham: Society for Research into Higher Education and Open y

University Press)

J Ziman (1994) Prometheus Bound: Science in a Dynamic Steady State (Cambridge:

Cambridge University Press)

W Zumeta (2004) ‘State Higher Education Financing: Demand ImperativesMeet Structural, Cyclical and Political Constraints’ in E P St John and M

D Parsons (eds) Public Funding of Higher Education: Changing Contexts and

New Rationales (Baltimore: Johns Hopkins University Press).</REF>

2.1 Introduction

The higher educational system in Japan dates back to the first years

of the Meiji Restoration, and it developed rapidly as the Japanese economy began to grow Nevertheless, before World War II, univer-sities and other institutions of higher education remained institu-tions that were intended for the education of a relatively small elite After World War II, the higher educational system was reformedcompletely, and it grew rapidly in terms of quantity as well as of quality Today, Japanese universities face serious challenges because

of the decreasing number of college-age students in the population;the increasing competition with the globalized world; and the dete-riorating fiscal situation of the Japanese government This chapter summarizes how the higher educational system in Japan has been reformed over the last 20 years and in which direction the reform is now oriented

In Section 2.2, the history of the Japanese higher educationalsystem from the Meiji era is summarized Private universities play amajor role in the bachelor-level education, especially in the field of human and social sciences, but national universities play a biggerrole in postgraduate education, especially in the fields of natural sci-ence In Section 2.3, the reform process of the Japanese higher edu-cational system since the 1990s and the status quo of universities inJapan are summarized Although the deregulation movement of the 1980s and 1990s and the deteriorating Japanese fiscal position led touniversity reforms, the Ministry of Education has not lost its ability

2

Restructuring of the Higher

Educational System in Japan

Satoshi Mizobata and Masahiko Yoshii

to guide universities in Japan toward the Ministry’s educationaltargets In the fourth section the results of the university reformsare confirmed through an examination of the budgetary situation of universities, especially by comparing four top universities in Japan.Finally, the future of the Japanese higher educational institutions is briefly described.

2.2 The higher educational system in Japan

2.2.1 History

Japan started her modernization in 1868, known as the year of Meiji Restoration when the imperial rule was restored under theMeiji Emperor The literacy rate of 43 percent for men and about

10 percent for women even before the Meiji Restoration in Japan wasrelatively high in the world (Nakamura, 1993, p 56), because not

only children of warriors went to clan schools, hankou, but also

chil-dren of the common people went to private schools run by temples,

terakoya More than 80 percent of men in the urban areas had a basic

knowledge of reading and arithmetic The Meiji government, ing the importance of education, introduced compulsory education

realiz-of four years in 1872, just four years after the Meiji Restoration, and

it began to establish both the elementary and secondary education systems

As to the higher educational system, the Meiji government

estab-lished Tokyo University in 1877 by merging the Kaisei School and

Tokyo Medical School, both of which were successor schools to those established by the Tokugawa Shogunate The Meiji government issued

a decree on the Imperial University in 1886, and Tokyo University

was reorganized as the Imperial University, Teikoku Daigaku It should

be mentioned that many state and public vocational colleges and private colleges were also established during the Meiji era Human resources developed by these higher educational institutes definitelycontributed to developing the embryonic Japanese industry Thefounding of a second Imperial University, today’s Kyoto University,

in 18971 was an impulse fled to efforts to raise the status of thesestate, public, and private colleges to universities Based on the Decree

on the University enacted in 1919, some state and public vocationalcolleges and private colleges were promoted to universities in the

Restructuring Higher Education in Japan 27

1920s.2 In addition, other Imperial Universities was establishedaround Japan.3 Despite this, before World War II, the number of uni-versities and other higher educational institutions was very limitedrelative to the size of the population, and they remained institutions

to educate the elite

After World War II, the Fundamental Law on Education wasenacted in 1947, which caused a total restructuring of the Japaneseeducational system Compulsory education was prolonged to nineyears, consisting of six years for elementary school and three yearsfor junior high school, from which then students could continuewith noncompulsory education consisting of three years for high school4 and two-to-four years for college or university (Figure 2.1) The so-called 6–3–3–4 educational system has survived without major changes for almost 70 years

As to the higher educational system, two major changes took place First, the educational model was rather simplified, and the aca-demic years of universities were prolonged from three to four years.Second, the number of universities increased dramatically because many higher educational institutes that had not been promoted

to university status under the old regime were able to change their status to universities, and new, especially private, universities were established like so many mushrooms after a rain

Figure 2.1 Japanese educational system

Age Degree

23-24 Master GraduateSchool:

Master

National Academy:

Master 21-22 Bachelor

Medical School:

Undergraduate (Dentistry, Veterinary, Pharmaceutical School) University:

Undergraduate

Technical College High School (General, Technical, Commerce, and others)