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

Education International
, 18 January 2009). 
The crisis, although felt more severely in the USA in the initial stages, is slowly but steadily spreading 
to all countries. Income and job losses have been the visible forms of the crisis directly affecting 
people. Many companies have declared losses and bankruptcy, and their employees are out on 
the street. Those companies struggling to survive do so by downsizing and job cuts. A recent report 
has shown that jobs are drying up around the world as the global economy enters the downturn. 
“From lawyers in Paris to factory workers in China and bodyguards in Columbia, the ranks of the 
jobless are swelling rapidly” (Schwartz, N. 2009: 1). 
Employers are preparing for what many fear will be a long and painful recession, moving to 
aggressively cut jobs and reduce costs to face the economic crisis. In one week in October 
2008, companies that announced their plans to cut jobs included the Internet company Yahoo 
(1,500 positions), the pharmaceutical company Merck (7,200), National City Bank (4,000) and 
the cable company Comcast (Irwin and Rosewald, 2009). “At least 85,000 new job cuts were 
announced in a single day Monday as the rampant 
fi
nancial crisis hit more workers across the globe 
and brought down Iceland’s government” (European stocks mainly drop, 26 January 2009).
The crisis has already claimed 3.6 million jobs in the USA and millions elsewhere. “The business 
research group on Monday estimated the economy (USA) could lose two million more jobs this year 
on top of the roughly 2.6 million erased in 2008. That would be about 60 per cent higher than the 
average job losses over the past 
fi
ve recessions (roughly two per cent)” (
The Wall Street Journal
, 
January 2009 ). As of February 2009, British companies con
fi
rmed the loss of 91,698 jobs over 
the previous four months, (
Telegraph
, London, 17.02.2009). Further, it is estimated that, globally, 
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The economic crisis and its implications for higher education
23
joblessness may reach 50 million by the end of 2009. The unemployment rate has increased and 
is expected to reach close to double digits by 2010 in many of the developed countries including 
Germany, the UK and the USA. 
Job losses have not been con
fi
ned to developed countries. The job loss between October and 
December 2008 was estimated to be around 0.5 million in India. A recent report indicated that job 
cuts by Microsoft have affected 5,000 Indian employees; nearly 100,000 Indians holding H-1B visas 
are to lose their jobs. The USA stimulus plan contains a conditionality not to extend employment 
opportunities to H-1B visa holders at the cost of workers born in the USA. This will affect workers 
from several developing countries, notably India, who have been the single-largest bene
fi
ciaries 
of the H-1B visa programme over the past several years. A total of 23,485 Filipinos in the country 
and abroad have lost their jobs as a direct result of the global 
fi
nancial crisis – 19,443 workers 
have lost jobs in the Philippines and 4,042 overseas (Trabaho Philippine, 28 January.2009 ). The 
job loss in Laos is around 85,000. In China, too, job creation resulting from FDI is drying up. More 
importantly, a large number of migrant workers are seeking jobs since the companies where they 
were working have closed down. 
There is a silver lining for India: some of the outsourcing 
fi
rms are 
fi
nding alternative measures 
to counter the job losses. B.G. Srinivas, Senior Vice-President and member of Infosys’ Executive 
Council, told the Times of India (TOI) that although there was a 5 per cent budget cut by European 
companies, more European companies were outsourcing jobs to lower-cost countries such as India 
to beat the recession, though the contracts were not large. Infosys and other Indian outsourcers 
are expanding to Africa, Europe, the Middle East, and elsewhere to lower their dependence on the 
United States, their biggest market (Srinivas, 2009 ). This may perhaps help arrest the job losses, 
at least partly. 
Some of the measures taken to counter the crisis at times reverse some of the aspects considered to 
be promoting globalization, namely the cross-border movement of capital and people. For example, 
job losses led to street protests in many countries and some of the protesters in the UK re-invented 
the slogan of ‘British jobs for British workers’. Some of the responses by national governments took 
the form of protectionist policies to protect local workers from foreign workers. The USA stimulus 
plan, too, has shown protectionist trends when it stipulates that 
fi
rms receiving an amount of the 
stimulus plan should not recruit foreign workers under the H-1B visa, replacing USA citizens. These 
policies go against the very concept of globalization that was based on opening up markets and 
encouraging the liberalization policies, strongly propagated by those very same countries.
The crisis has affected education in several ways. First, the crisis has affected the job prospects 
of graduates. A survey of 250 companies in the UK shows that vacancies are expected to decline 
by 5.4 per cent and salaries by 8 per cent. Consequently, many employers are suggesting that 
students take a year off (Spencer, 2009). This may have a negative effect on the demand for 
higher education. 
Second, the 
fi
nancial crisis will lead to reduced funding for education. Governments may 
fi
nd it 
dif
fi
cult to extend the same level of funding in real terms. The private corporations which used to 
invest and contribute to education funds may not be able to do so. The capacity of households to 
invest in the education of their children will be reduced in the context of job losses and reduced 
income levels. 
Third, many universities have lost their investments. For example, many universities had invested 
their savings in banks which have become bankrupt. Universities, such as Oxford and Cambridge, 
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24
Globalization, economic crisis and national strategies for higher education development
lost millions of pounds. Between July 2007 and June 2008, the Ohio State University endowment 
fell by 11 per cent to US$2.03 billion. Other universities are similarly affected (Okoben, 2009). 
Fourth, student support systems will be severely affected. Sallie Mae, the largest provider of student 
loans in the US, lost US$1.6 billion during the crisis and the company is shying away from extending 
student loans (Schwartzmann, 2008). The Education Resources Institute (TERI) the largest insurer 
of student loans in the USA 
fi
led for bankruptcy protection in 2008. The dif
fi
culties in obtaining 
loans may affect enrolment in those universities where fees are high. 
Fifth, there may be a freeze on programmes and staff recruitment. There has already been a freeze 
on recruitment in many universities since 2008. The University of Arizona is planning to amalgamate 
certain departments and close down certain programmes. This means that students may have to 
extend their stay in the universities and they have thus gone on strike (Richard, 2009). 
Sixth, aid to education by bilateral and multi-lateral agencies may decline. The International 
Conference on Education in 2008 noted that there is a collective failure to deliver on aid 
commitments by donor countries (UNESCO/International Bureau of Education, 2008). The economic 
crisis may further worsen the situation and the impact of the global 
fi
nancial crisis on aid, especially 
for developing countries, is threatening development, particularly when it comes to advances in 
education (Elliott, L. 2008) 
On an optimistic note, the World Bank President and IMF Managing Director have argued for 
the inclusion of health and education in the 
fi
scal stimulus plans introduced in developing and 
developed countries (