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

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International Institute
for Educational Planning
N.V. Varghese
Globalization, economic 
crisis and national 
strategies for higher 
education development
R
esearch papers IIEP

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Globalization, economic crisis and 
national strategies for higher education development

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Globalization, economic crisis and national strategies 
for higher education development
N.V. Varghese
International Institute
for Educational Planning

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The views and opinions expressed in this book are those of the authors and do not necessarily 
represent the views of UNESCO or IIEP. The designations employed and the presentation of material 
throughout this review do not imply the expression of any opinion whatsoever on the part of 
UNESCO or IIEP concerning the legal status of any country, territory, city or area or its authorities, 
or concerning its frontiers or boundaries.
The publication costs of this study have been covered through a grant-in-aid offered by UNESCO 
and by voluntary contributions made by several Member States of UNESCO, the list of which will 
be found at the end of the volume.
Published by: 
International Institute for Educational Planning
7-9 rue Eugène Delacroix, 75116 Paris, France
[e-mail]
www.iiep.unesco.org
Cover design: IIEP
Typesetting: Linéale Production
Printed in IIEP’s printshop
iiep/web/doc/2009/08
© UNESCO 2009

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5
Abstract
Higher education has undergone tremendous expansion in the recent past. The growing employment 
opportunities and the increased skills needed to compete in the global labour market are important 
reasons for the expansion of the sector. This paper argues that higher education in the context 
of globalization has become a market-determined process, replacing the near monopoly enjoyed 
by the state. The growth of private and cross-border higher education re
fl
ects this change. The 
paper discusses cross-border education through three different forms – through the mobility of 
institutions, of students, and of teachers. Cross-border student mobility is encouraged since it is 
a good source of getting future highly skilled workers in certain specialized areas. Institutional 
mobility is very often from the developed to less developed countries. Student mobility, on the 
other hand, is from the less developed to developed countries. The United States of America (USA) 
is the preferred destination for cross-border education and nearly three fourths of all cross-border 
students are hosted by 10 member countries of the Organisation for Economic Co-operation and 
Development (OECD). 
The current economic crisis, although it started from the 
fi
nancial systems of the developed 
countries, is global in its reach as it spreads to both middle- and low-income countries. The initial 
indications are that the crisis will result in heavy losses in employment and in household income 
levels. The crisis may lead to reduced funding for education from all sources – government, private 
sector and households. Many universities with investments in foreign banks have already lost their 
investments. Student support systems, scholarships and student loans will be severely affected. 
Some of the largest providers of student loans have lost heavily during the crisis, and some of them 
have 
fi
led for bankruptcy protection in 2008. The 
fi
nancial crisis may lead to a freeze on recruitment 
and a cut in programmes. The crisis may also lead to reduced aid 
fl
ows. 
This paper points out that leaving the education sector to markets may not be a good option. It 
argues for active state intervention in higher education. There is a need to rede
fi
ne the role of the 
state in the changed circumstances. The ideal situation would have been full state funding but 
it has to be recognized that the state has an important role to play, even when it does not have 
adequate resources to 
fi
nance the higher education sector. The state needs to take responsibility 
for developing rules for establishing private and cross-border institutions, for putting in place 
mechanisms to ensure quality and regulations to ensure equity. Given the limited resources at 
its disposal, the state may better target its limited resources to disadvantaged groups to improve 
overall equity in higher education. 
International Institute for Educational Planning www.iiep.unesco.org

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6
Contents
Abstract
5
Contents 
6
List of abbreviations 
7
1. Introduction 
8
2. Globalization and demand for skilled labour 
11
3. Globalization and market orientation in higher education 
14
4. Globalization of higher education and cross-border mobility 
16
4.1 Cross-border institutional mobility
16
4.2 Cross-border teacher mobility
17
4.3 Cross-border student mobility 
18
5. The economic crisis and its implications for higher education and employment 
22
6. National strategies for the development of higher education 
25
7. Concluding 
observations 
28
References 
30
International Institute for Educational Planning www.iiep.unesco.org

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7
List of abbreviations
AICTE 
All India Council for Technical Education
DFID 
Department for International Development
EFA 
Education for All
FDI 
foreign direct investment
GATS 
General Agreement on Trade in Services
GDP 
gross domestic product
GER 
gross enrolment ratio
IBE 
International Bureau of Education 
IBM GBS 
IBM Global Business Services
ICT 
information and communication technologies
IIEP 
International Institute for Educational Planning
IIM 
Indian Institute of Management
IIT 
Indian Institute of Technology
ILO 
International Labour Of
fi
ce
IMF 
International Monetary Fund
IT Information 
technology
JSE 
Johannesburg Stock Exchange
MNC multinational 
corporation
NUEPA 
National University of Educational Planning and Administration, New Delhi
OECD 
Organisation for Economic Co-operation and Development
R&D 
research and development
RIHED 
Regional Centre for Higher Education and Development
SNU 
Seoul National University
TERI 
The Education Resources Institute 
TOI 
Times of India
UGC 
University Grants Commission
UIS 
UNESCO Institute for Statistics
UNESCO 
United Nations Educational, Scienti
fi
c and Cultural Organization
UK 
United Kingdom of Great Britain and Northern Ireland
USA 
United States of America
USDC 
United States Department of Commerce
International Institute for Educational Planning www.iiep.unesco.org

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8
1
Introduction
The education system has been expanding globally. More people are investing more of their time 
and money in education now than in the past. Although all levels of education have experienced 
expansion, the rate of growth has, perhaps, been greatest at the higher education level. Between 
1991 and 2005, the number of students enrolled in institutions of higher education worldwide 
more than doubled from 68 to 137.9 million students (UNESCO Institute for Statistics – UIS, 2007). 
Gross enrolment ratio (GER) increased from 13.8 to 24 per cent in the same period. The GER 
varies between 5 per cent in the African region to 70 per cent in North America and Western 
Europe. While the target of the member countries of the Organisation for Economic Co-operation 
and Development (OECD) is to achieve the goal of universalizing tertiary education (OECD, 1998), 
many countries, especially in sub-Saharan Africa, still remain at a higher education enrolment level 
of less than 5 per cent and are concentrating their efforts in the struggle to universalize primary 
education. 
While all regions are bene
fi
ciaries of the expansion of higher education, expansion has been uneven 
as shown in