Globalization, economic crisis and national strategies for higher education development: research papers; Research papers iiep; 2009

Education International
, 18 January 2009 ). Further, an online education 
survey conducted in Berlin in 2008 among education and training professionals indicated that 
the economic crisis boosts e-learning, informal learning, and blended learning, and that the crisis, 
with a shrinking education sector budget, is enlarging the use of technology (On-line Educa Berlin, 
2008). 
Among higher education segments, private and cross-border education may be more severely 
affected by the crisis. Scholarship facilities for students will be on the decline, part-time jobs 
to support their education in the host countries may disappear, student loans for cross-border 
education may dry up, and reduced household income levels may not be able to support the full 
cost of studies abroad. The crisis has affected higher income groups more severely than lower 
income groups; the urban population more than the rural; and 
fi
rm-based more than farm-based 
workers. Therefore, it can be argued that the impact of the crisis will be more severe on higher 
education, especially in the initial stages, and, within higher education, the private and cross-border 
education segment will be more severely affected by the crisis.
Lack of regulation and inadequate state action are cited as reasons for the crisis. This gives us 
an opportunity to think and review the impact of unregulated markets on economic growth and 
educational progress. Deregulation was considered a virtue and a panacea during the height of 
market-friendly reforms and the globalization process. It has become one of the unacceptable 
policies in the present context. 
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25
6
National strategies for the development of higher education
Universities and institutions of higher education traditionally were public institutions. The state 
invested resources to set up universities and was responsible for funding and controlling their 
activities. When governments were in 
fi
nancial dif
fi
culty in the 1980s, the state could not extend 
adequate funding to cope with the increasing demand for higher education. This was an era of 
low state funding and slow expansion of higher education. This encouraged market operations in 
higher education that helped the process of globalization of higher education.
The options open to governments in the context of globalization were: (a) to continue the policy of 
providing higher education through public institutions only, leading to limited access; (b) to expand 
access to higher education through public and private domestic providers only; or, (c) to expand 
access through domestic public and private providers as well as cross-border providers. Given the 
fi
scal state of the economies of the developing world, it was not possible to expand access through 
public institutions. Therefore, most countries opted for option (b), and this encouraged market 
operations in higher education and multiple providers. The choice of this option promoted the 
private sector in higher education. With the expansion of the private sector and market operations 
in higher education, cross-border higher education became a new and viable option (option c). 
Many countries reformed their rules and regulations to encourage transnational providers. All of 
these providers are operating simultaneously in many of the developing countries. Government, 
which enjoyed a monopoly in the sector, needs to play more of a facilitative role than simply a 
fi
nancing and controlling one. This is where the role of the state becomes important. 
There is a need to develop regulatory frameworks at the national, regional and international levels 
for the operation of private and transnational providers. The Code of Good Practice in the Provision 
of Transnational Education, which was established by the Council of Europe in cooperation with 
UNESCO and adopted by the Lisbon Convention, is an example of regional regulations for Europe. 
The code protects students from fraudulent degrees and quali
fi
cations and helps national authorities 
devise regulations for transnational education (Verbik and Jokivirta, 2005). UNESCO and OECD have 
also developed a set of guidelines for quality provision in cross-border higher education (UNESCO/
OECD, 2005). Other guidelines produced jointly by UNESCO and the Commonwealth of Learning 
(Knight, 2006) provide more detailed guidelines for countries entering GATS negotiations. 
Regulations are needed more at the national level to monitor the growth of institutions, both 
private and cross-border. In some countries, regulating private universities is a three-staged 
process – letters of interim authority which give temporary recognition followed by registration 
which recognizes the existence of the university, and 
fi
nally full accreditation. This seems to be a 
good process and procedure. Therefore, it is important to review the process of granting permission 
to open and operate private and transnational institutions. There have been instances of fraudulent 
practices by some of these institutions and public authorities did not act strongly and promptly. 
Governments in some countries insist that only accredited institutions in the home country will 
be permitted to open branch campuses in the host country. Therefore, accreditation in the home 
country becomes a necessary condition for cross-border collaboration or for the starting of a foreign 
branch in another country.
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26
Globalization in higher education: moving across borders
Many a time, cross-border institutions operate through private higher education institutions. In fact, 
domestic private higher education institutions were a way to establish cross-border institutions in 
many countries. There are countries where regulations regarding the operation of private institutions 
are vague and are not strictly adhered to. This has allowed cross-border institutions to collaborate 
with private institutions. This collaboration with a foreign university has given credibility to the new 
private institutions and their courses. It has helped them to offer market-friendly courses, improve 
the employment prospects of graduates, and levy high fees from students. It also allows some 
universities to levy fees in foreign currencies (Varghese, 2007) and some of these initiatives have 
assisted in arresting the out
fl
ow of students to universities abroad. The role of the ministries of 
education/higher education and the process of granting permission need to be clearly identi
fi
ed, 
taking into account the bene
fi
ts and costs of enlarging the cross-border education sector.
In some countries, such as China, cross-border institutions can operate only in collaboration with 
national institutions. The country permits only collaborative arrangements and joint programmes; 
foreign institutions have to act in collaboration with national/domestic institutions (Garrett, 2004). 
This ensures that national policy and regulations are followed by all institutions. In addition, it also 
helps in controlling fraudulent practices and protects students. 
Another issue is the recognition of degrees offered by cross-border institutions in the host countries. 
In India, the regulations are rather strict and do not permit the proliferation of foreign institutions. 
For example, according to the rules, educational institutions in India can be set up only by trusts, 
societies, and charitable companies. Pro
fi
ts, if any, cannot be taken out of the institution, even 
when the higher education institution is registered under the Companies’ Act. Furthermore, higher 
education institutions registered under the Companies’ Act are not recognized by the University 
Grants Commission (UGC) or by the All India Council for Technical Education (AICTE) (Sharma, 2008). 
It is, thus, important to ensure that accreditation of foreign institutions and their programmes are 
done by appropriate agencies in the host country. This is to ensure quality in provisions and also 
in the products on the one hand, and to ensure the recognition of degrees on the other hand. 
Transnational institutions, in general, levy high fees which cover full costs plus a pro
fi
t. There are 
instances where these institutions increase fees frequently and the students are forced to pay 
additional fees every year. Some national authorities attempt to stipulate regulations regarding 
fees. In countries such as China, the cross-border providers are not permitted to raise tuition 
fees without the approval of the national authorities. Since China does not permit independent 
cross-border institutions, implementation of this provision is easy. 
Another example is that of South Africa. The government of South Africa does not regulate fees 
the way China does. The country insists that for-pro
fi
t cross-border universities register under the 
Companies’ Act and not under the Universities’ Act. In 1999, there were 
fi
ve education companies 
owning 43 institutions in South Africa and listed in the Johannesburg Stock Exchange (JSE). By 
2004, only two companies – Advtech and Nasper – were listed in the JSE, accounting for more 
than 70 per cent of private higher education enrolment in South Africa (Mabizela, 2006).
As discussed in this paper, private and cross-border providers offer courses and programmes 
of study only in limited areas. Many transnational institutions offer market-friendly courses to 
cater to the needs of private enterprises – foreign or national. Courses in business administration, 
computer sciences, accounting, marketing, economics and communication are very common in 
such institutions (Varghese, 2009
a
). These courses have also helped meet the skill requirements 
of the evolving production sectors. Such a narrow orientation of cross-border education may lead to 
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National strategies for the development of higher education
27
the lopsided development of higher education, which implies that there is also a need for regulation 
of the contents of the courses on offer. 
The existence of cross-border institutions on a large scale may lead to competition between domestic 
and foreign institutions. The better students who opt for employment-friendly subject areas may 
be absorbed by the cross-border sector. This may weaken national institutions because they may 
become reserves of students who cannot get admission or cannot afford admission to cross-border 
institutions and are forced to follow instruction in the domestic institutions and in subject areas 
which may be less attractive.
Some private and cross-border institutions may have a religious orientation. In many countries, the 
rules regarding such institutions are not always very clear. Public institutions are secular and the 
promotion of religion-based institutions and sectarian viewpoints and values may not be conducive 
to national integration. 
Cross-border education becomes a source of brain drain. Many cross-border students are lost 
to the national system since, as noted in the paper, a good many of them do not return to their 
home countries. Many countries have revised their visa rules to encourage students to stay and 
work in the country of study and we have discussed earlier the H-1B visa which attracts a large 
number of foreigners to the USA and the similar ‘Blue Card’ visa introduced in Europe, which is 
expected to attract a large number of highly skilled workers from developing countries, many of 
them holding degrees from universities abroad. It is feared that these schemes may lead to large 
enough migration to damage the domestic economy of many countries.
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28
7
Concluding 
observations
The paper shows that there is a general argument in favour of increasing investment and expanding 
access to good quality higher education. There is lesser agreement on how funding for expansion 
will be organized and shared between public and private sectors, between domestic and external 
agencies, and between households and government. The market orientation in higher education 
helps to mobilize resources for the expansion of higher education. To what extent market operations 
are going to be extended needs to be carefully examined. 
The government needs to rede
fi
ne its role to suit the changed circumstances. The ideal situation 
would have been full state funding. The state needs to assume other roles that are equally important, 
even when it is not in a position to 
fi
nance all higher education activities. It needs to be more active 
in developing the rules for establishing institutions, the mechanisms to ensure quality, and the 
regulations to ensure equity. The state should assume more of a regulatory and facilitative role 
rather than simply a funding one.
The paper has attempted to analyse the in
fl
uence of globalization on the demand for higher education 
and the trends in the globalization of higher education as re
fl
ected through the cross-border mobility 
of institutions, students and teachers. Private and cross-border education are the fastest growing 
segments of higher education. The general argument of the paper is that there is a need for well 
laid-out regulations and framework to permit multiple providers to operate. The unregulated growth 
of institutions, whether private or cross-border, is not helpful for the long-term development of 
countries. 
Leaving the education sector to markets may imply that the long-term development contributions 
of education to nation building might be lost. Markets can be relied on to enhance ef
fi
ciency. 
However, their role in promoting equity is yet to be proven. Since education is one of the important 
determinants of earning differentials, it can become a source of intergenerational economic and 
social inequality, unless well planned. Furthermore, leaving the sector to international markets 
could lead to a decline in national in
fl
uence on deciding and designing content and curriculum that 
could have a long-standing adverse effect on national concerns and development.
The unplanned and unregulated expansion of higher education may lead to the creation of new 
inequalities and the accentuation of existing ones. This is all the more so when there are multiple 
private and cross-border providers. There is a risk of strati
fi
cation of students based on their 
fee-paying capacity. Given the high fee structures, only those from a better economic background 
will be able to enrol in cross-border and private institutions. This may lead to two types of imbalances 
in the growth of higher education. First, there are increasing inequalities of access to education 
and later to employment. Second, there are regional imbalances. Many of the private and cross-
border education institutions are located in urban areas. Contrary to the general belief that these 
institutions are absorbing excess demand, they may in fact be increasing the access options of 
those who already have access to higher education. 
The impact of the economic crisis on the development of higher education needs to be analysed 
more closely. The possibilities for private sector investment in higher education may stagnate or 
decline. The household response to the crisis is very important. An analysis of the impact of the 
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Concluding observations
29
East Asian economic crisis on higher education (Varghese, 2001) clearly showed two patterns: 
(a) households tend to consume less of everything during a crisis period and this may imply a decline 
in the demand for higher education; and (b) households re-adjust their budget to keep education 
investments intact. This happened in many of the crisis-affected countries of East Asia. 
Universities may be affected by the crisis. In the past, there have been instances of private 
universities becoming debt-ridden. The debt of private universities in the Republic of Korea, for 
example, reached a staggering amount of Won 76 trillion. Many of the private universities faced an 
insolvency situation during the East Asian crisis (Varghese, 2001). Some of the policies adopted 
by the governments of these Asian countries, such as increased support to students to allow them 
pursue their studies irrespective of whether they are enrolled in public or private institutions, may 
still be relevant today. 
Finally, the paper argues for state intervention in higher education rather than leaving the sector 
mainly to the markets. State intervention with funding support is the ideal situation. In the absence 
of the possibility of full public funding for higher education development, the state may better target 
its limited resources to disadvantaged groups and to speci
fi
c subject areas to improve overall equity 
in higher education. However, the lack of resources at the disposal of the government should not be 
a reason for it to be absent from the sector. Even when the state cannot provide funding support, 
it still has an important role in planning and regulating the system.
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30
References
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