The Brains BusinessAFor those of a certain age and educational background, it is hard to t

The Brains Business

A For those of a certain age and educational background, it is hard to think of higher education without thinking of ancient institutions. Some universities are of a venerable age—the University of Bologna was founded in 1088, the University of Oxford in 1096—and many of them have a strong sense of tradition. The truly old ones make the most of their pedigrees, and those of a more recent vintage work hard to create an aura of antiquity. Yet these tradition-loving (or -creating) institutions are currently enduring a thunderstorm of changes so fundamental that some say the very idea of the university is being challenged. Universities are experimenting with new ways of funding (most notably through student fees), forging partnerships with private companies and engaging in mergers and acquisitions. Such changes are tugging at the ivy's roots.

B This is happening for four reasons. The first is the democratisatJon of higher education— "massification, in the language of the educational profession. In the rich world, massification has been going on for some time. The proportion of adults with higher educational qualifications in developed countries almost doubled between 1975 and 2000, from 22% to 41%. Most of the rich countries are still struggling to digest this huge growth in numbers. Now massification is spreading to the developing world. China doubled its student population in the late 1990s, and India is trying to follow suit.

C The second reason is the rise of the knowledge economy. The world is in the grips of a "soft revolution" in which knowledge is replacing physical resources as the main driver of economic growth. Between 1985 and 1997 the contribution of knowledge-based industries to total value added increased from 51% to 59% in Germany and from 45% to 51% in Britain. The best companies are now devoting at least a third of their investment to knowledge-intensive intangibles such as R&D, licensing and marketing. Universities are among the most important engines of the knowledge economy. Not only do they produce the brain workers who man it, they also provide much of its backbone, from laboratories to libraries to computer networks.

D The third factor is globalisatJon. The death of distance is transforming academia just as radically as it is transforming business. The number of people from developedcountries studying abroad has doubled over the past twenty years, to 1.9 million universities are opening campuses all around the world; and a growing number ef countries are trying to turn higher education into an export industry. The fourth is competition. Traditional universities are being forced to compete for students and research grants, and private companies are trying to break into a sector which they regard as "the new health care". The World Bank calculates that globa! spending on higher education amounts to $300 billion a year, or 1% of global economic output. There are more than 80 million students worldwide, and 3.5 million people are employed to teach them or look after them.

E All this sounds as though a golden age for universities has arrived. However, inside academia, particularly in Europe, it does not feel like it. Academics complain and administrators are locked in bad-tempered exchanges with the politicians who fund them. What has gone wrong？ The biggest problem is the role of the state. If more and more governments are embracing massification, few of them are willing to draw the appropriate conclusion from their enthusiasm: that they should ether provide the requisite funds (as the Scandinavian countries do) or allow universites to charge realistic fees. Many governments have tried to square the circle through tighter management, but management cannot make up for lack of resources.

F So in ail too much of the academic world, the writer Kingsley Amis's famous dictum that more means worse is coming to pass. Academic salaries are declining