Higher Education Reform and the Renewed Lisbon Strategy: Role of Member States and the European Commission
In a recent survey ‘The Battle for Brainpower’, The Economist of 5 October, 2006 argues that talent has become the world’s most sought-after commodity. The greying of populations and the retirement of the baby-boom generation throughout the developed worl
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Frederick van der Ploeg and Reinhilde Veugelers
5.1 Introduction
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In a recent survey ‘The Battle for Brainpower’, The Economist of 5 October, 2006 argues that talent has become the world’s most sought-after commodity. The greying of populations and the retirement of the babyboom generation throughout the developed world, the increasing globalization and the shift towards ‘tacit’ jobs makes the shortage of young graduates a serious problem. No economy can afford to be complacent about the war for talent. Alongside the rapid progress of China and India with their huge pools of young talented people and notwithstanding the greying of China, greying Europe faces particular challenges if it does not want to struggle to find enough engineers, scientists, doctors, lawyers and managers. During the last decade Europe’s annual growth in GDP per capita has been about 0.4 percentage points lower than in the US. If this continues for another decade, Europe’s GDP per capita relative to that of the US will fall back by a further quarter. Still, the investment rate and the capital-labour ratio are higher in Europe than in the US. (Aghion 2006) therefore stresses that Europe’s problem is not insufficient saving and investment, but lack of competition, not enough R&D and too little investment in education. As 1
An earlier version was presented at the conference ‘Subsidiarity and Economic Reform in Europe’, Brussels, 8-9 November 2006. We thank the participants as well as the editors for their comments. Veugelers acknowledges financial support from the Belgian Federal Government DWTC (IUAP P5/11/33) and the Research Fund of the KUL (0T/04/07A). The chapter reflects only the views of the authors and does not commit the European Commission.
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Frederick van der Ploeg and Reinhilde Veugelers
secondary education was crucial to the post-war economy, so higher education has become essential for the development of the knowledge society, which demands increasing levels of supply of highly-educated, highlyskilled people. As Europe approaches the world technology possibility frontier and leaves the era of catching up behind, innovation becomes more essential and the returns on investing in higher education become even higher. European universities have enormous potential. But European universities are not currently in a position to achieve their potential in a number of important ways. As a result, they are behind in the increased international competition for talented academics and students, and miss out on fast changing research agendas and teaching curricula, and on generating the critical mass, excellence and flexibility necessary to succeed. These failures are compounded by a combination of excessive public control, bad governance coupled with insufficient funding. Europe needs universities able to build on their own strengths and to differentiate their activities on the basis of these strengths. Modernization of Europe’s universities, involving their interlinked roles of education, research and innovation, has therefore rightly
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