Perspectives on Responding to Economic Crises

A time of recession also offers opportunities to take higher education reform forward in Asia's developing countries. Rather than conceive of responses to the recession as life boats to bring the system back to safety, responses can best be viewed as a way of exploring growth strategies to stimulate college and university reform beyond restoring past levels of access to poor and potentially vulnerable populations. Therefore, there is good reason at this critical juncture to gain a deeper understanding of trends during past and present slowdowns of public expenditure for higher education, effects of slowdowns on labor markets, and their implications for poor and vulnerable populations. While the origins, characteristics, and paths to recovery of the 1997–1998 crisis differ in fundamental ways from the global slowdown, many of the deleterious effects are the same.

As the recession recedes, the challenges of access to and relevance of higher education in developing countries in this region will not disappear. Even developed countries at the height of their economic prowess must constantly be vigilant about how to ensure that opportunities for a higher education are not reserved for privileged groups in society. However, developed countries have been far more successful in putting the mechanisms in place, including improved governance, that effectively deal with problems of access and relevance.

Therefore, the manner in which the global economic situation is addressed in Asia has long-term implications for the reform of higher education. In short, colleges and universities are essential for national development and in times of economic crisis, and it is mistaken to consider them as parts of the education system that can be sacrificed. They not only offer hope and confidence to poor and vulnerable populations, but also make contributions that are invaluable to national development. It is in times of recession that the opportunity arises to fine-tune institutional governance and policies.

Some common responses in higher education during the 1997–1998 crisis were budget cuts, staff reduction, less hiring, wage freezes, delays in building, tightly regulated utilities and maintenance, postponed library purchases, and canceled travel grants for international conferences. Declining household incomes were met with policy responses that increased the availability of subsidies for higher education. During that crisis, cuts in higher education were more on investment budgets than recurrent budgets. In response to students dropping out, student support systems were provided, including grants, loans, and scholarships. In some cases, they worked. However, results varied across countries and income groups. Private colleges and universities were strongly affected by drops in enrollment and diminished stock portfolios exacerbated the problem and required austerity measures that affected quality. Some families made a switch from fee-paying private higher education to less expensive public institutions.

Countries such as the PRC and Malaysia had large numbers of students studying overseas. Countries that had as much as a fifth of students studying overseas inevitably had to reduce fellowships and scholarships to study overseas. Although some countries tried to maintain overseas study fellowships, a more useful response was to establish a credit transfer arrangement that provided an opportunity for students to return from expensive overseas study and continue their education at home institutions.

Such responses to the global recession provided colleges and universities with more autonomy from government, financially or otherwise. This was an encouragement to the private sector and some new universities resulted. Since Western countries were less affected by the Asian crisis but increasingly affected by competition for students and the pressure to internationalize, representatives from many of them came to Asia to recruit students and fostered an increase in twinning programs.

Wealthy countries of the region could provide innovative financial support to students of higher education, despite the economic crunch, because of their access to resources, both institutional and technological. Students could be provided with graduate retraining at public expense. Colleges and universities offered courses in information technology, life sciences, and generic skills to make their graduates more marketable. Poorer countries had to cut back on their educational budgets and resorted staff retrenchment. This led to creative policy approaches like enhancing university autonomy and strengthening the capacity of these institutions to cope with sudden resource cuts.

The 1997–1998 crisis demonstrated that existing safety net systems were inadequate. Government responses were limited and only minor reform in higher education resulted from the experience. That is not to say that the experience was not useful. More than anything else, it appears that the global recession provides more of an opportunity to consider reforms in several areas, including policy and regulatory frameworks, governance and management of higher education institutions, and equitable access and support for disadvantaged students. At the same time, better regional cross-border collaboration among economies in the Asia and Pacific region holds promise for new forms of resource and cost-sharing arrangements. This also extends beyond the region to transnational collaboration and cost-sharing with colleges and universities in other parts of the world. Finally, aspirations within Asia for the region to become more globally competitive, not only as a knowledge economy but also as an area with more world-class universities, mean that research and innovation in science and technology need to be sustained during a recession.

The 1997–1998 crisis also confirmed the usefulness of periodic policy forums and other occasions where policymakers, scholars, and academics can come together to design systematic strategies for the development and improvement of higher education. Regional perspectives and consultations are needed. For example, Singapore avoided the 1997–1998 crisis by having invested in higher education; so did the PRC to some extent (Postiglione 2005).

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