Higher Education in the New Millennium: Breaking Boundaries Bernard Hugonnier

1. Annual Conference of the Canadian Association of University Business OfficersIn Tune with the WorldMontreal, June 19-22 2006 Higher Education in the New Millennium: Breaking Boundaries Bernard Hugonnier OECD Deputy Director for Education

2. Outline • Governance • Financing • Quality • Internationalisation

3. I- Governance: main challenges for higher education institutions (HEIs) • HEIs have to: • Adjust from an elite to a mass education • Diversify themselves as education needs (society, economy, individual) diversify • Find the right balance between their various missions: • Conserving and transmitting knowledge • Forming students, future teachers and professors • Contributing to basic and applied research • Contributing to local development • Contributing to enlighten moral and ethical issues • Contributing to the development and deepening of democracy • Ensure quality while higher education is massifying • Find the appropriate financing resources while public funding is getting limited • Modernise their governance and management (notably as regards human resources) • Respond to the challenges of internationalisation • To face world competition and changing environment

4. Governance: two main trends • A widespread shift towards more autonomy and entrepreneurship • A strong demand for better public governance • The principal components of good public governance are: • Autonomy, accountability an transparency • Efficiency and effectiveness • Responsiveness and forward vision • Higher education institutions are and will increasingly be asked to implement these principles

5. Management of human resources • High-quality human resources are essential to the teaching, research and public service missions of higher education systems . • Several conditions have to be met: • Attracting top talent requires good standards, fairness in hiring, good working conditions and good institutional leadership. • Issues regarding the ability to engage in outside consultation, intellectual property rights, working hours, parental leave, childcare, gender and minority inequities in faculty hiring needs to be addressed. • The exchange of knowledge between the public and private sectors, through the movement of human resources, is to be promoted • Regulations on dual employment or restrictions on participation in entrepreneurial activities by public researchers should be removed • Centres of excellence and fellowships should be further developed to foster the mobility of researchers across research institutions and between them and firms.

6. International environment and competition • Domestic higher education systems increasingly face international pressures and competition: • Under voluntary harmonisation agendas (e.g. the Bologna process in Europe, which has led to similar initiatives at a smaller scale in Latin America and Asia) • Under the pressures of international comparison, manifested by quality labels, ranking efforts and consumer choice • As a result of the increasing frequency of partnerships and recognition agreements • Like the older-established research universities, higher education institutions of all types increasingly see themselves: • More as actors in a global market • Than actors restricted to a domestic role or agenda.

7. Governance: main challenges for governments • Governments have to reassess how best to align the activities of higher education institutions to national purposes: • Many countries, such as Japan, have chosen to devise new structures of governance, permitting higher education institutions to exercise wider autonomy over their own finances and management • Other countries, such as New Zealand, have opted to make institutions more accountable for the accomplishment of public purposes through • the control of their performance or outputs • the establishment of performance reporting, performance contracts or similar tools of governance

8. Governance: main challenges for governments • Governments have to they ensure that: • Increasingly autonomous institutions will deliver the government’s education and social policy agenda • The public interest is adequately represented • Financial incentives introduced for policy purposes do not cause HEIs to act sub-optimally – reducing diversity and responsibility and perhaps threatening their own financial sustainability • The risk will be minimized that a more autonomous and market driven university system will become financially unstable* * On the Edge: Securing a Sustainable Future for Higher Education, OECD, 2004.

9. II- Financing • As higher education participation and total outlays rise, the sustainability of a heavily publicly subsidised model of finance is coming under pressure

10. The growth in university-level qualifications have been continuedApproximated by the percentage of persons with ISCED 5A/6 qualification in the age groups 55-64, 45-55, 45-44 und 25-34 years (2003) 2 3 10 15 23 16 14 9 21 1 A1.3a

11. Current entry rates suggestthat the growth will continueSum of net entry rates for single year of age in University (2002) % A3.1

12. Higher tertiary participation is becoming visible in the qualification of the workforcePercentage of 25-64-year-olds with academic or vocational tertiary qualification (10 countries with steepest growth) A3.4

13. Financing • Public authorities provide the bulk 80 % or more of expenditure on educational institutions in half of all OECD countries • In four countries (Australia, Japan, Korea and the United States), public authorities pay less than half

14. Investment in high-level qualificationsExpenditure on tertiary educational institutions as a percentage of GDP (2002) B2.1

15. Financing • In more than two-thirds of the countries for which data are available, increased participation was possible because growth in the private share of expenditure outpaced growth in public expenditure • In four out of the five countries in which the public share of expenditure increased, the increases were manageable only because growth in overall enrolments was low

16. Changes in spending per student in tertiary education(1995=100, 2001 constant prices ) B1

17. How much student should contribute and what is the consequence on equity? • The financial pressure on public spending due to rising participation in tertiary education will increase unless • Individuals finance a larger share of costs • Overall costs are reduced, through reductions in total numbers of students linked to population decreases • And/or through improved efficiency of provision • Historically, participation in higher education has been strongly correlated with family socioeconomic status and the educational attainment of parents. • Recent expansion of access to higher education has done little to alter this pattern, tending to benefit the least advantaged socioeconomic groups less than others.

18. How much student should contribute and what is the consequence on equity? • In countries where higher education is heavily dependent on public finance, this inequity in access and participation carries the risk of adverse distributional consequences (the less well-off subsidising education for the elite) unless income tax systems are highly progressive • The pattern of participation or non-participation appears unrelated to the presence or absence of tuition fees • This suggests that other factors (foregone earnings, cost of living during studies) as well as social factors play a role in influencing participation • This also suggests that a change in the proportion of public versus private funding will not itself produce inequity so long as • Adequate financing exists from whatever source • Concerted efforts are made to make higher education more accessible

19. Who benefits from higher education? • International evidence suggests that individuals who acquire higher education qualifications enjoy substantial private benefits

20. The returns on high level qualificationsPrivate internal rates of return (RoR) for an individual obtaining a university-level degree (ISCED 5/6) from an upper secondary and post-secondary non-tertiary level of education (ISCED 3/4), MALES

21. Who benefits from higher education? • Adults with higher education, on average, earn a third to three-quarters more than persons with just an upper secondary education, are a third less likely to be unemployed, and four-fifths more likely to participate in formal or non-formal education and training.

22. III- Quality • Improving quality of higher education is becoming a major concern as a result of the increasing participation rate • Higher education institutions, governments, and employers aim at different objectives: • Institutions seek to improve teaching and look for localized and detailed information that can lead to such improvement. They also seek to improve student performance (e.g. limiting dropping rate) and this implies improved selection and career guidance processes and more autonomy • Governments want to improve resource allocation and look for data about systems that enable them to make decisions in this areas, notably information on the impact of teaching and research, whether measured by student completion rates, graduate employment rates and earnings, or patents obtained. • Employers want assurance that the graduates of higher education programs are well-prepared for working life • These divergent orientations make the improvement and measurement of quality difficult

23. Quality • The growth of cross-border education has focussed attention on the international dimension. • The guidelines developed by the OECD and UNESCO seek to address the consumer protection issue, an objective shared by governments and legitimate cross-border providers who want to protect the brand image of their higher education systems and services. • A rogue provider can damage these reputations and exploit eager students, while overly strict barriers can deny students the benefit of program options that are locally unavailable, and create incentives for the emergence of unscrupulous providers • Cooperation between sending and receiving countries and quality assurance and qualifications recognition institutions is thus necessary

24. Quality: the international ranking of universities • The expansion of governmental schemes for quality has been accompanied by a proliferation of nongovernmental rankings or league tables, national and international • These league tables are often criticised for the selection and weighting of their quality criteria or the appropriateness of ranking entire institutions rather than faculties or programmes • However, they seem to be shaping the behaviour of institutions • What is unclear is: • The extent to which rankings are shaping students decisions, institutional strategies, and governmental and employer choices • Whether the changes they induce improve or diminish the quality, equity and efficiency of higher education systems • The OECD might be asked by Ministers to develop a methodology to carry out an international ranking of universities

25. IV- Internationalisation of educationForeign students in tertiary educationby country of study (2002) C3.6

26. Internationalisation of education:Foreign students in tertiary education (2002)Percentage of foreign students to total enrolment in tertiary education % 9 8 7 6 5 4 3 2 1 C3.6

27. Internationalisation of education and the developing world • Internationalisation and trade of higher education (ITHE) contribute to the wealth of developing nations in the following areas: • Development, modernisation and quality improvement of higher education through • The development of trained professionals • Updating programmes and curricula • Creation of new institutions • Enhancing competition between institutions • Development of quality assurance and qualification recognition agencies • Absorption capacity of tertiary education • University research capacity • Knowledge accumulation and technology transfer • Human capital (skilled workers) • Modernisation of the economy and society • Enhancing trade and international direct investment • Migration of high skilled labor • Capacity in trade in H.E. Internationalisation and Trade in higher Education, Opportunities and Challenges, OECD 2004

28. Internationalisation of education and the developing world • Internationalisation and trade of higher education (ITHE) contribute to the wealth of developing nations provided that: • Foreign provision meet the needs of the importing country (economic, social and cultural needs) • The brain drain risk is minimised • The education gap between the least developed countries and the other developing countries is mitigated thanks to appropriate development aid in education • Learners are protected from low-quality provision and qualifications • Strong quality assurance and accreditation systems exist • High international validity and portability of qualifications prevail • International co-operation among national quality assurance and accreditation agencies is increased • The risk for the stability and continuity of the education system is limited

29. Internationalisation of education and the developing worldThe brain drain issue • Ageing population and the shortage of some skills in developed countries might lead to some brain drain from developing countries • This might have a negative impact on the development, education capacity and health conditions in the latter unless actions are taken to transform brain drain into a mutual brain gain. *

30. For instance: American hospitals had in April 2006 118,000 vacancies for registered nurses. Yet, there are many more Americans seeking to be nurses than places to educate them. In 2005, American nursing school rejected almost 150,000 application from qualified people (mostly because of lack of faculty, mostly because professor of nursing earn less than practicing nurses, and the gap is increasing as the demand for nurses is increasing)*. The Federal Government predicted in 2002 that the shortfall of nurses would reach 800,000 by 2020. The US Senate is hence considering to remove the limit on the number of nurses who can immigrate. This would have a direct impact on health care in developing countries notably India and Philippines which are sending thousands of nurses to the US every year. A nurse in Philippines earns $2,000 a year compared with at least $36,000 in the US. 80% of government doctors in Philippines have become nurses hoping for an American green card At present 12,000 to 14,000 nurses immigrate every year to the US. This number could grow 5 to 10 percent a year with the new legislation. Should not the Congress instead provides appropriations for domestic nursing programs? Should not it be more beneficial for both the US domestic work force and developing countries? * (Source New York Times, U.S. Plan to lure nurses may hurt poor countries, by Celia W. Dugger, May 24, 2006) Internationalisation of education and the developing world : the brain drain issue

31. Conclusions • A new world needs new higher education institutions • Boundaries need to be broken for HEIs to adjust and better integrate themselves into the society and the economy • Many reforms are still needed as regards governance and management, financing, quality and internationalisation.

32. Thank you • www.oecd.org • bernard.hugonnier@oecd.org