Responding to Market Economies

Taiwan’s Responses

Seeking to install market mechanisms in the higher education environment, MOE and the Executive Yuan Education Reform Committee, formed in 1994, explored the employment of several market mechanisms within higher education, most urgently calling for deregulation. By granting HEIs more autonomy, the predominant government role changed from regulator to facilitator. Government no

longer intervenes with direct administration over public HEIs, instead supervising them through the University Act and other state laws. As frequently the case in the UK, Germany and Japan, government funding is no longer guaranteed and some actions toward incorporating public universities are under way. Following the Japanese Public University Incorporation Law in 2003, the Taiwanese MOE coincidently initiated a proposal to incorporate public universities. This act enabled some of the chosen and voluntary universities to transform into more independent, cost-effective and autonomous entities under the protection of law. Consequently, universities are expected to assume more financial responsibility and move toward a merit-based system in personnel decisions and calls for university accountability and efficiency are evident and stated repeatedly throughout government.

In 1999 the MOE in Taiwan initiated the “Project for Pursuing Excellence in Higher Education” in 1999, followed by the launch of a “White Paper Report on Higher Education in Taiwan” four years later. This paper sums up the latest developments of higher education in Taiwan and recommends a wide range of measures to achieve excellence in higher education, including the introduction of a university evaluation system, the establishment of a university financing committee, university merging and the increasing international exchange programs among faculty and students.

Taking university financing reform as an example, Taiwanese authorities proposed to change the ratio and method in funding, and encouraged public universities to search for alternate ways in raising revenue (Ministry of Education, 2006). Programs for continuing education, encouraging more cooperation with enterprises for sponsorships, setting up joint ventures on campus with outside business world all mushroomed within HEIs across the country (Dai, Mok, and Hsieh, 2002). The result is a very different campus culture in which faculty and administrators are driven to seek more resources with declining funding.

In addition, these government bodies sought to create greater heterogeneity among HEIs, suggesting that they should be differentiated respectively by their own characteristics, and mission. For example, faculty salary scales that might better be based on seniority are viewed as insufficient to promote the desired competition. To increase faculty competitiveness in HEIs, the committee suggested a more accountable reward system. The MOE also attempted to lessen its control over the establishment and enforcement of curriculum requirements, and has set up guidelines to allow for competing resources as well as financial subsidies based on merit and performance.

Although many critics remain sceptical of the picture that the Education Reform Committee (1994-96) and the White Paper Report portrayed (2003), most of the

policies recommended in the reports later became mandatory and were put into practice regardless of the initial resistance from HEIs. Universities and colleges now experience increasing pressure from the market and government in competing for resources, funding and student recruitment. Meritocracy, accountability and networking among faculty and staff carry more weight than before.

China’s Responses

Among all the major changes within Chinese HEIs in response to the worldwide market economies, structural reforms deserve close attention. A series of new educational policies has been launched over the years that reduce governmental involvement and increase the responsibilities to be exercised by universities in order to meet the needs of the society.

Higher education in China has historically been strongly administered by the central and provincial governments in the centrally-planned economic system prior to the 1990s. As a result, HEIs were immune to responding to any social changes or global competition and has long been criticized as “irrational, irrelevant, and segmented.” (Fang & Fan, 2001) Therefore, the structural reform and adjustment of the higher education system became one of the top priorities including a release of Higher Education Act in 1998 .This act detailed a two-level education provision system with an attempt to differentiate responsibilities between different levels of governments, and university’s responsibilities in resource generation, funding allocation, and student recruitment. (Dai, Mok, and Hsieh, 2002). Specific reform programs were implemented such as change of the government/university relationship (Huang, 2005; Min, 2005), and institutional mergers. One example being the emergence of the new Zhejiang University from five neighbourhood universities later to become one of the leading comprehensive universities in China.

Moreover, university curriculum reform has come under revision. Universities have been criticized for providing overspecialized and fragmented knowledge which prevented students from embracing well-rounded development and practical knowledge for the job market. In response to this problem, curriculum reforms that took place across Chinese universities after the late 1980s introduced interdisciplinary studies, general education, and many more market-oriented programs along with reforming teaching and learning process. Universities are also undergoing a series of re-organization among different programs, disciplines, departments, and even administrative offices.

In addition, a new University finance reform was underway. In the past, Chinese HEIs were public-funded and charged no tuition for students who later received government jobs. University faculty, as public officials, received humble salaries

based on seniority rather than performance, and HEIs could admit only a limited number of elite students through a highly competitive college entrance examination.

As Chinese higher education enrolments expanded rapidly over the past decades, the publicly-funded system was forced to reconstruct due to its financial constraints (Min, 2005.11.10). A cost-sharing and cost-recovery system among central and local governments and the universities was adopted to reduce the former public funding model. Universities began to charge tuition and fees around the mid-1990s. At present, more than one-fifth of the total operational budgets of HEIs are covered by tuition and fees.

In addition, universities now can generate their own revenue by issuing patents, copyrights and contracts with industry, conducting business consultation, offering in-service training programs, and launching fund-raising activities. Leading universities like Peking and Tsinghua University also generate revenues by setting-up university-affiliated high-tech companies in China. In the year 2000, of the total expenditures of Chinese higher education, 57% came from state appropriations, 22%

from tuition and fees, and the remaining 21% from revenue generated by the universities themselves (Min, 2005).

In addition, a salary-scale renovation was introduced detailing different formulas for job performance among faculty members to recognize their merit rather than seniority. Research and publication is highly encouraged, as well, and integrated into salaries at leading Chinese universities.

Another major reform in China over the last decade has been the re-establishment of private higher education (so-called minban or non-state-run higher education). In an attempt to combat the enrolment shortage of public institutions, the Chinese government implemented policies deregulating the private sectors to increase university enrolment rates from 3% to 14% of the college age cohort by 2002.

Although most of the private HEIs remained as short-term and vocational-oriented programs, some of them later developed into comprehensive and competitive HEIs.

Currently, there are over 1,200 private universities and, enrolling over one million students. However, only about 5 % of these institutions have been officially accredited by the government to grant university diplomas. A new law regarding the legal status and management of private education was issued and implemented for the first time in 2003, recognizing the contribution of private sectors and the return rate permitted to be granted to the investors.

Finally, a major reform needing mention is the abolishment of the governmental job assignment policy among college graduates in the mid-1990s. Like their counterparts in most countries, Chinese university graduates currently enter a competitive job market with qualifications rather than depending on governmental

arrangement. As market economies develop, a university education is expected to be more responsive and relevant to social needs and the job market. Programs and courses have been revised based mostly on practical and market values, instead of theoretical and pure-science subjects. Programs such as economics, finance, law, industrial/commercial management, foreign languages, computer and applied technology have been more popular. Consequently, students in China now pay more attention to their future job market prospects and career development than their own interests and academic potentials (Dai, Mok, and Hsieh, 2002).