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Going For-Profit in Higher Education

August 2, 2010, 08:27 AM ET

Beach Reading 2010: Education Economists Go Global

What would happen if you took a collection of rock-star economists -- from established figures like Harvard University’s Richard Freeman and Duke University’s Charles Clotfelter to rising stars such as Eric Bettinger of Stanford and Sarah Turner of the University of Virginia -- and turned them loose on the hot topic of university globalization? You’d get the closest thing to beach reading for higher ed wonks likely to come out of the National Bureau of Economic Research for some time, a rigorous, wide-ranging and deeply impressive new volume edited by Clotfelter and just published by the University of Chicago press under the title American Universities in a Global Market. (I praise the book, by the way, not because my employer, the Kauffman Foundation, funded the research, nor because I was fortunate enough to attend the autumn Vermont conference at which the working papers were presented. It is just very good.)

It is hard to summarize this collection in a short blog post. Thumbnail sketches of some (but not all) of the chapters give a sense of their scope. Bettinger analyzes the declining propensity of American college students to go on to earn PhDs in math, science, and engineering. Turner and John Bound of the University of Michigan offer a fine-grained look at the growth of foreign enrollment at U.S. universities, demonstrating that much of the increase has occurred in second-tier program and that there is little evidence to suggest that U.S. students are “crowded out” by foreign doctorates. (In fact, in one period that saw a surge in the number of American PhDs awarded to Chinese students outside the top 50 institutions, there was also an increase in PhDs received by U.S. students and those from other nations at these universities.) Grant Black of Indiana University, South Bend, and Paula Stephan of Georgia State scrutinize the role of foreign graduate students and post docs and find that they are far more than worker bees in university laboratories, serving as active collaborators in scientific research and frequently as lead authors.

In other chapters, E. Han Kim and Min Zhu of the Ross School of Business at the University of Michigan present an intriguing analysis of overseas branch campuses of U.S. universities, premised on the notion that universities act like firms. Haizheng Li of Georgia Tech gives a detailed account of China’s campaign to build world-class universities. Devesh Kapur of the University of Pennsylvania reviews the disappointing record of Indian universities. And Ofer Malamud of the University of Chicago examines the role of Europe’s Bologna Process in creating greater world competition for the best faculty and students.

No single lesson typically emerges from a complex volume like this one, but several valuable themes stand out. In his introduction to the collection, Clotfelter summarizes the factors that have led to the global dominance of U.S. higher education as follows: government support, decentralized competition, openness, and first-mover advantage. All must continue for U.S. universities to thrive, he says, yet all bear watching closely. In the midst of the global financial crisis, he notes, “neither government support nor private resources can be taken for granted,” either for American universities or for their foreign competitors. When it comes to decentralized competition, U.S. higher education may in a sense become a victim of its own success if other countries succeed in adapting the kind of institutional autonomy in a competitive marketplace that has been crucial to our meritocratic culture.

Clotfelter counts the prospects for continued openness as good, although he does fret about the difficulties posed, in the post 9-11 era, by measures such as unnecessarily restrictive visa policies. As for our first-mover advantage, he believes it remains significant but is likely to diminish in a world in which physical proximity is less crucial than it once was to innovation. He also warns against complacency by change-averse American universities: “While many processes in other industries have been 're-engineered,' universities continue to do many things in much the same way they were done in the nineteenth century: lecturers employ blackboards, journals are printed and bound, and bachelor’s programs take four years.”

Clotfelter’s overview takes a slight wrong turn, in my view, when he touches briefly on ideological themes in assessing whether the preeminence of U.S. higher education will continue. Tentatively positing a link between global university leadership and a nation’s general standing in the world, he suggests that U.S. leadership broadly writ may be threatened by other nations’ objections to our foreign policy, and he throws in a reference to the “small but telling sign of waning American influence” allegedly to be found in the shrinking number of references to our Supreme Court decisions by other nations’ high courts. Still, Clotfelter concedes that the implications of such developments for U.S. university leadership are unknown. He is far more persuasive when he says that continued American higher education success will rest on sustaining the conditions that have allowed U.S. universities to thrive over the past 50 years.

My favorite chapter in the book is the last one, by Freeman, which offers an optimistic concluding note – a compelling big-picture assessment of the economic and intellectual impact of higher ed globalization (one that has influenced my own writing on this phenomenon). Freeman is clear-eyed about the challenges facing U.S. universities, suggesting that they are unlikely to maintain the sheer dominance that they have enjoyed for decades. And he is forthright about the potential downsides of globalization. He notes that growth in the number of highly educated workers in other parts of the world poses an economic threat to their U.S. counterparts. Educational progress abroad will enhance other nations’ high-tech sectors, increasing their ability to innovate. That in turn will likely reduce the price of U.S. exports in those sectors and harm the prospects of the well-educated American workers who must compete with their less-expensive foreign counterparts in the same fields.

But Freeman emphasizes the positive effect on the U.S. economy of improved educational systems around the world, which create economically valuable scientific progress that all nations can take advantage of. "To the extent that taxpayers in some other country fund research and education," he writes, "we win without paying for it." Moreover, he observes:

the increased number of highly educated workers overseas should raise productivity in foreign countries, which, in turn, should reduce the cost of their exports to the United States. This will benefit all Americans who do not compete in producing those goods. If Romanian scientists and engineers figure out ways to improve the production of shoes, the prices of shoes on the global market will fall, and the United States as a major importer of shoes will benefit.

Freeman’s economic analysis extends to considering a provocative question: whether the United States should actively recruit high-skilled immigrants or whether it would be better off to have the most technologically sophisticated multinational firms offshore their activities to countries where inventors are less expensive. He doesn’t offer a definitive answer, but he does suggest that because so many university-educated immigrants to the United States come here through our own postsecondary institutions, attracting the best foreign students is crucial to attracting the most talented immigrants. And he ends by sketching an appealingly non-alarmist view of how the United States might look on the new era of global university competition:

My guess is that by educating some of the best students in the world, attracting some to stay in the country, and positioning the United States as an open hub of ideas and connections for university graduates worldwide, the country will be able to maintain excellence and leadership in the “empire of the mind” and in the economic world more so than if it views the rapid increase in graduates overseas as a competitive threat.

Freeman’s thoughts, and others in this valuable volume, deserve to be read, discussed, and shared widely – on the beach and beyond.


1. eslombard - August 02, 2010 at 09:53 pm

A perhaps whimsical suggestion might be to encourage a few parents of the very young to facilitate their offspring becoming autodidacts from the earliest stages. Inner city minorities might prove most successful judging from a recent study of divergent thinkers. I think we cripple our children with the notion that they will go to school and be harnessed by nice teachers who will manipulate them, fill them up and hand them on to the next manipulator. This is not a blanket recommendataion but one that might bear some extraordinarily fertile minds. No loss. We can always place them on the assembly line or breeding crate. I believe that Israel and the US are among the least hidebound in child rearing practices and somehow the most scientifically creative societies.

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