Economic Shocks and Higher Education Reform: People's Republic of China, Mongolia, and Viet Nam

People's Republic of China

The global recession continues to take its toll. Even in the PRC, where government measures have been effective in easing the effects of the recession, up to 41 million workers lost their jobs (40% of total global layoffs), and 23 million remained out of work as of October 2009 (Cai, Wang, and Wang 2010). However, the PRC is adhering to its human resource blueprint (that by 2020 young people will average 12.8 years of education), which means that enrollment in higher education will not be cut back (6 million were admitted last year), despite the fact that expansion has resulted in increased unemployment among colleges and universities graduates. By July 2009, 68 percent of 6.11 million university graduates had found jobs, leaving nearly two million still unemployed.

Measures have been instituted to expand opportunities and find work for graduates. There is also a renewed focus on postsecondary-level vocational and technical colleges, especially as more households drop the traditional emphasis on academic higher education. This is occurring as vocational–technical and community colleges align themselves more closely with the needs of the labor market. In the PRC's case, as well as for other countries in Asia, demography has become a key factor in higher education planning. By 2020, the number of students in primary and junior secondary education will drop by 18 million. With a rising aging population and a decline in the school-age population, a shift of resources toward basic education and away from higher education could have unfavorable long-term implications.

The PRC's higher education institutions expanded rapidly in 1999. Since then, about 5 million students have been admitted annually. Universities resorted to banks for loans to support capital construction costs, resulting in high levels of debt. Such pressures make it difficult for universities to focus on teaching and research, thus compromising the quality of higher education. Low quality also contributed to the high level of graduate unemployment. According to one report, only about 7% of the students about to graduate in July 2009 had managed to secure jobs by March 2009. This is down about 50% from the same period the year before. In fact, the demand for graduates seems to have dipped by 20%, due largely to the global economic slowdown (Qiwen 2009). The PRC's Ministry of Education reported in 2009 that the number of graduates had topped 6 million, a figure far beyond the 1.45 million who graduated in 2002. The global recession has not alleviated the pressure on the close to 2 million graduates who still need jobs (Zhou and Lin 2009). In January 2010, Chinese Premier Wen Jiabao warned that university graduates face a grim job market as the global slowdown takes hold of the economy (Reuters 2010).

There is an increasingly popular view that graduates in the PRC simply lack certain skills that are relevant to the needs of the labor market. For example, international companies often complain about the lack of appropriately skilled PRC graduates. Companies have to invest in training their new college-educated staff in order to bring them up to par with the standards required for international companies.

It is not only foreign companies that struggle to find skilled graduates. At a job fair in Beijing, local employers expressed concern about the quality of graduates (Patton 2009). Domestic companies often indicate a mismatch between their needs and what graduates possess. The global slowdown has put pressure on Beijing to address the shrinking number of jobs available for young graduates.

With the aim of raising quality, the PRC has moved quickly to capitalize on PRC-foreign collaboration in higher education. While one of the major reasons for PRC-foreign partnerships has been to raise the quality of education in the PRC, many believe that educational quality has remained unsatisfactory because partnerships are driven more by commercial benefits than academic motives. The lack of internal governance and quality monitoring by partners has not helped to alleviate the problem. Yet the view remains that to cut transnational partnerships in higher education would be a profound mistake, especially in anticipation of the global economic recovery (Hvistendahl 2009). For countries like the PRC, the view is that higher education has become more important because of the global financial crisis.

Mongolia

Despite the global recession, Mongolia is determined to move ahead in restructuring its higher education system (Postiglione forthcoming a). Selected key education indicators rival those of its neighbors in northeast Asia—the PRC, Republic of Korea (hereafter Korea), and Japan. It has a literate population, a popularized school system, and a higher education enrollment rate that has ballooned within a few short years to nearly 80%. This enrollment rate includes a thriving sector of vocational–technical higher education. Since 1990, when the country moved from a planned to a market economy, the private higher education sector has grown to encompass a third of all enrollments. Most colleges and universities are in the capital city, where 40% of the national population resides. The rest of the population, also literate and schooled, adheres to a nomadic lifestyle. English has replaced Russian as the official second language of this land of 2.8 million people, the largest landlocked country in the world. Historical circumstance has made Mongolia the most Europeanized state in East Asia. However, its people retained the Asian value of acquiring as much education as possible.

Mongolia ranks seventh internationally in the share of GDP (9.0%) allocated to education, and its education law guarantees that at least 20% of the government budget is spent on education (Government of Mongolia 2006). Yet higher education receives only 12% of that amount. This made sense for a developing country in transition. However, the time is ripe for a rethink of the higher education system, including its funding structure. State universities obtain government funds for heating and lighting, but little else. One university leader pointed out that 80% of academic staff salaries come from student fees. A national fund for higher education provides coverage to one child from each civil servant's family, and support is also provided for outstanding students from poor families. However, there is also a view that higher education is a source of poverty because 67% of the personal loans taken by countryside cattle-rancher families is spent on the higher education of their children.

With such high literacy, school attendance, and higher education enrollment rates, as well as a sustained Asian value toward education, Mongolia would seem to be in a good position to provide more equitable access to poor groups and to move ahead with higher education reform and restructuring that would bring the standard of teaching and research to internationally recognized levels. Nevertheless, the global recession has created severe limits on reform for the time being.

Mongolia faces several daunting challenges. First, government spending on higher education is severely limited in comparison to other regional players. For example, the two economies of Malaysia and Hong Kong, China overshadow most Asian countries with respect to per student expenditure as a share of GDP. Mongolia's transition to a market-oriented system included introducing fees for higher education. However, unlike governments in the PRC, Japan, or Korea, Mongolia's can not make the same investment in its top universities. The evidence suggests that the amount of government investment in higher education does matter, not only to the quality of teaching and research but also to ensuring access to all who meet the criteria for admission. Hong Kong, China spends about 30% of its education budget on higher education and has the highest concentration of top-rated universities, all government funded, in one city in Asia. Moreover, government ensures that loans are available to university students that need them. While there are also some Asian governments that allocate a smaller slice of the pie to higher education, improving access for poor populations and raising the quality are difficult to achieve with a 12% slice of the education budget for higher education.

Second, the quality of private higher education has yet to surpass that of public institutions. Despite their short history, private institutions are catching up and some offer programs competitive with those at the public institutions. One view is that state institutions receive such a small portion of funding that they actually operate with state titles but in private mode. However, heads of private sector institutions would like more support from the government. Some would approve of a scheme that placed one third of tertiary students in state institutions with the private institutions enrolling the rest. In Indonesia, Japan, Korea, Philippines, and Taipei,China, private universities enroll the majority of students—in some cases more than 80%. Mongolia's private institutions enroll 34% of all students and do not believe that the playing field is level.

Third, while the massification of higher education has helped expand access, there are also far too many institutions of higher education in Mongolia. With 162 institutions, the average number of students at each is about 900; a figure that do not permit attaining an economy of scale. Consolidation has been used to address this problem elsewhere. For example, the average number of students in the PRC's institutions was 3,112 in 1990, up from 1,919 in 1980, when about 80% of higher education institutions had fewer than 4,000 students and 60% had fewer than 3,000 students. However, by 2000, 612 colleges and universities were consolidated into 250, and several universities now have over 50,000 students. Other countries are dealing with similar problems, especially at the outset of privatization when many small colleges—sometimes with poor quality instruction—were established. After the initial phase of privatization, the need for quality assurance often ends in the closure and consolidation of many institutions.

Mongolia is a developing country that aspires, as do its neighbors in northeast Asia (the PRC, Japan, and the Republic of Korea), to have internationally recognized research universities. The intention to establish highly recognized research universities has to be matched by a national budget that does not skimp on funds for research and development. Some continue to argue that making a direct association between R&D budgets and research productivity is risky. (The research and development [R&D] budget for Hong Kong, China is only 0.7% of GDP, but the economy has a very high per capita rate of research output). Regardless, Mongolia's R&D budget of 0.28% of GDP places it 70th in the world (Hong Kong, China ranks 50th). Colleges and universities in Mongolia spend about 1.5% of their institutional funds on research. Those in the United Kingdom spend about 7–10%. Therefore, Mongolia's research universities will remain hard pressed without a larger national R&D budget.

The academic profession in Mongolia has to find better ways to retain top scholars. Meager salaries are an obstacle to improving quality. It is not unusual for faculty to leave universities to enter the business sector where they can earn higher wages. At present, part-time staff who have to work elsewhere to supplement their income account for 18% of all academic staff in public and 44% in private institutions. Attracting and retaining the best academic staff has to be a priority, but the state of the economy greatly inhibits the ability of colleges and universities to do this.

While the discovery of large mineral deposits means that a promising economic future awaits Mongolia, the global recession has put most higher education reform on hold. In the meantime, the economy is too weak to support its large number of university graduates and many seek employment elsewhere. The reason has a great deal to do with the quality of higher education, where major reforms are critically needed. If the above challenges facing higher education are urgently addressed, Mongolia will find itself better prepared to take advantage of the opportunities on its horizon.

Viet Nam

Since 1989, Viet Nam has had one of the fastest-growing economies in the world, with access to education increasing at all levels. This includes growth in access to primary and junior secondary education, with a renewed focus on ethnic minority-populated areas.

Viet Nam's General Statistics Office indicated in 2008 that GDP had passed US$1,000 per capita. Although low within the Association of Southeast Asian Nations (ASEAN), incomes have risen almost fourfold since 1989. Those living on less than US$1 per day have fallen from 60% to below 12% (World Bank 2008a). Viet Nam experienced two decades of rapid economic growth at an average of 7.4% a year between 1989 and 2008. However, export growth slowed as the global recession took hold and inward investment declined (Picus 2009).

Rural populations, particularly women and minorities, were the first victims of the economic downturn with a rise in jobless rates. Over 20% of migrant workers have returned to their home provinces since the beginning of 2009, having lost their jobs in industrialized areas. The country implemented an economic stimulus package of more than US$8 billion to address the crisis. With many migrant workers and extensive remote regions populated by ethnic minority groups, more support for basic education and pipeline programs that widen the pathways to higher education for these groups are needed. The recession is an opportunity for Viet Nam to focus more intensively on the socioeconomic development of these poor and vulnerable populations.

The rapid period of economic development that preceded the global recession saw increased educational opportunities across diverse populations. The recession threatens a setback in socioeconomic development and access to higher education at a time when Viet Nam has been working to improve the quality of its higher education system.

Viet Nam aims to continue in its aim to reach the Millennium Development Goal of Education for All, including for its diverse ethnic minority population, by 2015. However, it also plans to move ahead with its bold plans for development and reform of higher education. This includes a major upgrading of the quality of its universities, which it sees as central to its economic rise and regional integration. As Huong and Fry (2004: 301) note: “The country's success in realizing its intellectual potential will depend on improving both the quality and efficiency of its university system.” Viet Nam has rapidly expanded an indigenous system of higher education that aims to strengthen a knowledge economy with graduates that can adapt to new technologies and flexible labor markets. The continued reform and development of universities in Viet Nam is essential for it to become “a major player on the world scene economically, culturally, and intellectually” (Huong and Fry 2004: 329).

Viet Nam plans to open a new science university in 2010. The Hanoi University of Science and Technology (HUST) aims to have a 10% intake of foreign students. The recruitment of academic staff will include half of whom can be considered as having attained an international standard of excellence, as indicated by the publication of research papers in top international journals. HUST would be part of a national plan to establish four world-class research universities by 2020. The other three universities include the Viet Nam-Germany University. opened in 2008 in Ho Chi Minh City, and two other institutions, including the planned American International University (Down 2009, World Bank 2009b).

The Higher Education Development Policy Program, along with the Second Higher Education Project and the New-Model Universities Project, supports the Government's Socio-Economic Development Plan 2006–2010 and its Higher Education Reform Agenda.

These programs aim to strengthen governance, rationalize financing, improve the quality of teaching and research, improve accountability for performance, and enhance transparency in financial management within the higher education sector (World Bank 2009c).

Like Mongolia, Viet Nam also has a thriving sector of vocational-technical education. This growth in postsecondary education does not only include universities. Viet Nam has established a network of community colleges that provide a vocational and technical education within a flexible structure of instructional service. Such institutions tend to be more resilient during a recession. Reforms in higher education that involve the establishment of a system of community colleges helped expand opportunities to bring educational progress and jobs to poor communities. As Dang and Nguyen point out (2009: 97), “This ensures a social balance in education --- training that helps the poor, especially talented poor students in socio-economically-backward localities, who find opportunities to access higher education.” An important measure of socioeconomic success for Viet Nam's higher education system will be the successful expansion of its community college system to encompass poor rural populations, including women and minorities, and urban poor who become increasingly vulnerable during recessions due to the rise in jobless rates.

Other Asian Systems

Kazakhstan's higher education system has been hard hit by the global financial crisis, putting its plan to become an Asian tiger economy in jeopardy. Thousands of students are unable to pay tuition and fees. The government is addressing the problem through fast-tracking measures to assist financially strapped students (Lillis 2009).

In the Philippines, the Presidents' Forum at Ateneo de Manila University (January 2009) agreed on four strategies for universities to respond to the global financial crisis, including financial aid, student programs and services, organization management, and research. Among the suggestions to make college education more accessible to students from low-income families were student aid loans and subsidies, flexible payment schemes, scholarships, and discounts for international study. Organizational reforms, such as budget alignment, flexibility, and collaboration with other educational institutions and industries, were also mentioned as ways to cut costs and help set aside more of their budgets for financial aid to students. Finally, there was a call for more research to find ways of reducing the impact of the recession (Flores 2009).

The global economic crisis has accelerated the need for Asian universities to engage internationally, and to create regional mechanisms through which students and faculty members can move more easily from one country to another. The reform of higher education is central to continued internationalization for economic and social development. Although the global recession has hit some Asian countries harder than others, the downturn constitutes an opportunity to move forward with measures that will sustain the region's development.

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