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This chapter provides an American perspective on issues affecting higher education in China.One of the major differences between the economy of today and the industrial economy of a generation ago is that a contemporary economy has to be based much more on the authority of ideas and much less on the idea of authority.In the United States, the land-grant colleges established during the Lincoln administration--with the objective of spreading education and in particular promoting research into more productive agriculture and the dissemination of agricultural technologies--are generally regarded as having made an important contribution to US economic success.As the agricultural revolution gave way to the Industrial Revolution, increasingly the Industrial Revolution is giving way to a kind of information This content downloaded from 37.131.108.160 on Thu, 21 Mar 2024 08:13:35 +00:00 All use subject to https:/ Financing Higher Education and Economic Development in East Asia 20 revolution.Salary differentials between those with high-school degrees and no high-school degree, those with college degrees and no college degree, graduate degrees and college degrees, those with training at first-rate institutions versus those with training at second-rate institutions--all of these economic differentials have widened very substantially, and that suggests the high importance of the increase in the supply of highly skilled workers.Strong institutions of higher education that promote access, that enable access without regard to financial circumstances or the ability to pay, that provide large numbers of spaces for those who are most able, regardless of their connections or their family's wealth, are also important guarantors of the kind of social mobility that promotes a healthy society.In emerging markets, the largest fraction of the benefit will probably derive from facilitating the adoption and dissemination of new technologies.He expressed that hope because he recognised that people who started successful businesses, who built successful institutions, generated enormous externalities by employing large numbers of people.The case in countries such as the United States or those in Europe is that a large fraction of the benefits of higher education derive from enabling entrepreneurs to push the frontier of science with commercial application.None of the arguments is entirely without merit, and to suggest that higher education should be emphasised at the expense of primary and secondary education is not the point.Economic historians who have studied the growth of Europe assign a very significant role to what took place in universities.We are replacing semi-conductive steel with semiconductors; we are replacing manufactured products with services.In either event, successful practically oriented institutions of education are crucial to the success of any country competing in today's global economy.The argument was made from the point of view of mass economic development.

This chapter provides an American perspective on issues affecting higher
education in China. It discusses how the work of universities is so important
to the development of nations, and reflects on the success of the US system and
what lessons can be taken from this system for higher education in other parts
of the world.
Discussions of higher education and development took an odd turn about
a generation ago from which we are only now recovering. It came to be a
fashionable idea that emphasis should be placed on primary and secondary
services, rather than on tertiary services. The argument was made that from an
equity point of view, it was more important to teach more people to read than
to teach a small cadre the liberal arts. The argument was made from the point
of view of mass economic development. Strengthening primary and secondary
schools for the many was more important than strengthening universities for the
few. The argument was made that in a fundamental sense, there was something
unegalitarian about support for universities, especially since the majority of
students entering the system were the children of what quite likely had been
privileged families. None of the arguments is entirely without merit, and to
suggest that higher education should be emphasised at the expense of primary
and secondary education is not the point. It does seem that the lessons of recent
economic history point in a very compelling way towards the importance of
strong universities—and universities that receive substantial public support.
This is not a new idea. Economic historians who have studied the growth of
Europe assign a very significant role to what took place in universities. In
the United States, the land-grant colleges established during the Lincoln
administration—with the objective of spreading education and in particular
promoting research into more productive agriculture and the dissemination of
agricultural technologies—are generally regarded as having made an important
contribution to US economic success.
Most evidence would suggest that the current world economy is going to
be a knowledge economy to a much greater extent than any we have seen to
date. As the agricultural revolution gave way to the Industrial Revolution,
increasingly the Industrial Revolution is giving way to a kind of information
This content downloaded from
37.131.108.160 on Thu, 21 Mar 2024 08:13:35 +00:00
All use subject to https:/
Financing Higher Education and Economic Development in East Asia
20
revolution. Alan Greenspan made that point in a very powerful way by noting
that even as the value of the US gross product had increased, its total mass
had quite substantially decreased. We are replacing semi-conductive steel with
semiconductors; we are replacing manufactured products with services. All you
have to do is look at the results of the market to see the impact of knowledge.
Salary differentials between those with high-school degrees and no high-school
degree, those with college degrees and no college degree, graduate degrees
and college degrees, those with training at first-rate institutions versus those
with training at second-rate institutions—all of these economic differentials
have widened very substantially, and that suggests the high importance of the
increase in the supply of highly skilled workers.
Bill Clinton was fond of remarking that you could not have employees without
having employers. Or, as he sometimes put it, he hoped that there would be
many more millionaires in the United States at the end of his term than there
were at the beginning. He expressed that hope because he recognised that people
who started successful businesses, who built successful institutions, generated
enormous externalities by employing large numbers of people. If there is going
to be that leading edge in any country, it is going to depend critically on that
country’s system of higher education, because in today’s economy, the majority
of such people are going to be those who have received sophisticated education
at the undergraduate level and perhaps even the graduate level.
The case in countries such as the United States or those in Europe is that a large
fraction of the benefits of higher education derive from enabling entrepreneurs
to push the frontier of science with commercial application. In emerging
markets, the largest fraction of the benefit will probably derive from facilitating
the adoption and dissemination of new technologies. In either event, successful
practically oriented institutions of education are crucial to the success of any
country competing in today’s global economy.
There are other reasons why strong institutions of higher education are
important to the work of nations. Strong institutions of higher education that
promote access, that enable access without regard to financial circumstances or
the ability to pay, that provide large numbers of spaces for those who are most
able, regardless of their connections or their family’s wealth, are also important
guarantors of the kind of social mobility that promotes a healthy society.
These are only some of the reasons why the work of universities is very important
in any society. One of the major differences between the economy of today and
the industrial economy of a generation ago is that a contemporary economy
has to be based much more on the authority of ideas and much less on the
idea of authority. The most successful organisations today are not those based
on strong hierarchical commanding control; they are based on organisations