End of the national development state for HE in Japan?

End of the national development state for HE in Japan?
by Charles Jannuzi

Introduction

Japan's vast higher education system includes around 1300 government-certified, degree-awarding institutions, 745 of which are designated as universities (that is, awarding 4-year degrees). This system enrolls close to 3 million undergraduate students, including about 120,000 foreign nationals. The national government directly funds and indirectly subsidizes higher education in multiple ways. This fiscal mission ensures that the national government directs how institutions run degree programs and carry out research in science and technology. Any detailed analysis of how public and private monies are used to fund higher education in Japan reveals considerable disparities and complexities across the system, depending most on an institution's type and charter.

Over a decade of economic blahs--and budgetary woes

Japan's government has continued to struggle with a period of low economic growth that started in the early 1990s and is well into its second decade. This period has seen ballooning levels of public debt and government deficits, bringing calls to end the 'national development state' and to reform the country into a mature, services-oriented, consumption-driven economy more in tune with its dominant ally, the US.

Government bets on an improved higher ed sector

Despite such difficulties, the national government has remained committed to subsidizing higher education because it falls under both education and science. Much hope for reform of Japan's society and political economy is pinned on improvements in these two areas.

Somewhere between 8-10% of the annual national budget goes to the category of 'education and science'. Statements of exact amounts for the past decade vary by year, source, definitions, and exchange rates, but this 'super category' of expenditure can be estimated to be perennially over US$ 60 billion. Again, depending upon definitions, all forms of education that are post-secondary probably receive close to 40% of this, an amount that could be put at close to US$ 25 billion.

The national government also subsidizes education and higher education through its revenue sharing and tax grants to local government. Local governments nationwide spend about double the amount the national government does on school education, but higher education only captures about 7% of this. Much of this goes to fund the country's 86 public (prefectural or metropolitan) universities. 　

Former national universities to drive scientific R&D--and economic growth

Another prominent goal has been to spend an amount of public funds on scientific research and development at a level of 1% of GDP. This has benefited universities with research laboratories and centers, especially those within the national university system of 87 institutions. This commitment to scientific research matches in size the 1 - 1.5% of GDP that is annually put towards higher education in total from both public and private sources.

Japan's political economy is structured around a centralized national government, which exerts control across the entire country from the top on down to the lowest of government. The higher education sector is no exception.

American-style accreditation is not yet a major factor in quality assurance. Institutions can issue degrees, certificates and diplomas only because the national government approves and certifies them. The government also sets enrollment quotas for all certified universities and colleges.

In the case of national institutions, the quotas determine the size of bloc grants disbursed annually in support of taught programs. In effect, this means that the top university in Japan, the University of Tokyo, receives the same amount per student from bloc grants as do the handful of tiny national teachers' colleges.

NUCs are born

With an act of legislation that took effect in October 2003, Japan's national universities were re-chartered. Effective 1 April 2004, each university became a national university corporation (NUC). The NUCs are being weaned from annual bloc grants by a reduction of 1% per year. However, they are allowed to raise their tuition fees by a maximum of 10%. This means that eventually the NUCs will charge rates that are similar to private universities. Private institutions make up around 75% of higher education, and their average annual tuition fees of around US$7,400 are about 35% higher than those at national or public institutions.

Can the newly born NUCs adjust and even thrive?

In the next decade, NUCs must scramble to shift their finances to the business operations of their school corporations, deriving funding from the sort of mix that private universities and colleges have long had to live with--higher tuition fees, donations, investments, and revenue-raising activities. Meanwhile, as the NUCs guaranteed share of national education funding is reduced, private universities are sure to increase their efforts to compete for the national funds that are being offered to create an elite 30 world-class universities.