Reforming higher education for economic development

by Prof. Gunapala Nanayakkara

Once known for quality of education in Asia, Sri Lanka has now become a victim of the forces of globalized education industry. We no longer receive many foreign students, even through the Commonwealth arrangements, to our universities. Instead, Sri Lanka has become a significant source of supply of students to universities overseas, and the negative economic impact at home is serious.

In recent years, we have been spending overseas over Rs. 80 billion annually for educational purposes and this is about 12% of Sri Lanka’s trade deficit, 18% of external reserves of the country or 25% of total capital expenditure of government last year. Obviously, this is not a trend that favours economic development of Sri Lanka because this expenditure does not justify the benefits of educating our people abroad.

Let us look at some of the details of our expenditure on education overseas. A Central Bank survey of 2008 found that nearly Rs. 28 billion had been sent overseas previous year through commercial banks alone by Sri Lankans for educational purposes. This does not include the Sri Lankan foreign exchange diverted to foreign educational institutions by non-banking means including ATM transactions that are difficult to monitor by purpose. This is a much larger amount, averaging Rs. 35 billion a year. In addition, the foreign savings spent by parents on their children’s higher education overseas which could otherwise be foreign exchange that comes to Sri Lanka by way of remittances are very significant.

Last year, Sri Lanka received approximately Rs. 380 billion by way of remittances by Sri Lankans overseas. If the amount spent by parents for higher education is about 6% of these remittances, then we are diverting another Rs. 23 billion a year. Thus, our nation is permitting a total of over Rs. 80 billion to be spent by Sri Lankans for education abroad. Assuming that say Rs. 60 billion of this total is used for higher education purposes, and knowing that our State expenditure on university education last year was nearly Rs. 17 billion, one could ask how a nation could justify such a staggering difference of State expenditure locally and private expenditure abroad.

Relevance at home

Surely, Sri Lanka needs a new higher education policy and an institutional formula. The strategy of economic development, as enunciated in the Mahinda Chintana blueprint for economic development policy, makes many demands on higher educational institutions.

Development programs, private firms and the government need graduates who can work hard, be creative and norm-setters in their workplaces: Manufacturing firms need product designers and process managers; ports need logistics managers; agriculture needs food technologists and agri-business entrepreneurs; schools need devoted and competent teachers; and banks and services need specialist and analysts. Good IT graduates are in great demand everywhere. Country’s economic development programs are looking for employable graduates who can be relied upon for greater productivity and responsibility.

Shouldering this responsibility, the Minister of Higher Education S.B. Dissanayake is now on the path of fact finding - he is visiting the universities, meeting administrators, employees, students, and other stakeholders.

As expressed in his many public speeches recently, the Minister is bent toward a greater and well-governed role for the private sector in higher education. As a boy from the village, blessed with the benefits of free education, S.B. (as he is known better) is well aware of the need to promote and nourish free education as a priority despite what he may trigger on other dimensions.

He is taking forward the President’s vision to see the day that foreign students from such countries as India, China, Vietnam and other East Asian countries, Nepal, Maldives, and the Middle-East come in large numbers to Sri Lanka to receive higher education. The President envisions the day that private universities working with State universities operate campuses in key locations of the island - Southern, Central, Northern and Eastern provinces in particular - to provide education for them.

The belief is that we must learn from the higher education policies and strategies adopted by some of the developed countries in order to design ours for competitive advantage that is present in Asia.

Overseas providers

The higher education sectors of the developed countries like UK, USA and Australia are increasingly dependent on income from foreign students. For example, the international education export income of Australia for 2007/08 was $14.2 billion and in addition $438 Million was earned from offshore educational services. Remittances from Sri Lankan students amounted to $262 million during that year, and this has been nearly doubling each year.

While China and India are the main suppliers of students to Australian universities, Sri Lanka ranked 13 among the top 50 countries sending students to higher education in Australia. Income from international student fees account for 40% of total higher educational expenditure in Australia. Our policies and institutional reforms should aim at having this pattern of expenditure on higher education in Sri Lanka.

In the United Kingdom, total university income for 2008/9 was Sterling pound 25.4 billion, and it marked yet another year of revenue increase. Income from university student fees was Sterling pound 7.3 billion, as increase of 16% over the past year, represented nearly 30% of the UK higher education budget.

It is also noteworthy that many developed countries have discriminatory (higher) fees charged for foreign students though these students are not even guaranteed of the quality education provided to the nationals. Thus, the countries where higher education is developed are located on the side of benefits of the equation of economics of higher education.

The massive outflow of foreign exchange from Sri Lanka for education overseas is largely the result of policies and conditions of higher education at home. Large numbers of students, youth and professionals who cannot find suitable opportunities in the state-run university system are pushed out of the local system and they find funds from various sources to look after their future development. While entry to local universities has been quite restricted for the past few decades (only about 15% of the qualified AL students could enter State universities in Sri Lanka), lack of education relevance and poor quality too had contributed to the push factor.

For decades, the doors of higher education in Sri Lankan universities have been closed to over 85% of those who qualify each year through national examinations. In addition, there are thousands of qualified children of Sri Lankan parents living overseas who are forced to look for alternatives to Sri Lankan Universities where the number of places available per year has been limited to a quota of 2% or about 350 students in recent years.

Our university graduates are seen by employers as ill-prepared for the task. Employers’ perceptions are marred by negative attitudes about hard and soft skills of our graduates, their work values and overall quality. These attitudes are the long-term consequences of our often mismanaged higher educational institutions.

Our poorly managed universities are registered in the minds of our people for student strikes, agitations, clashes and blood-shed and frequent closing of faculties and campuses. In other countries, including neighbouring India, universities in the minds of people are associated with science and technology, innovations and research findings, quality and new horizons of knowledge.

Our universities have suffered for decades from lack of capital, brain-drain, rigid rules, academic arrogance, and indifference to national demands for economic development.

However, despite the severe constraints, universities have admitted marginally increasing numbers of students and a lot of credit must go to those academics who have stayed on track to perform. What we have achieved, though,is far less from the desired.

Punishing markets

In the globalised market place, poor performers are punished by the market forces. Our universities, though highly protected by State laws, could not escape these market forces.

The growth in internationally-traded education services is having a serious and multi-dimensional impact on our State universities on the one hand, and economics of education of the country on the other. In the border-less education industry, empowered by virtual service providers, Sri Lanka has become an attractive supplier of students to off-shore operators. As a result of the State’s inability to cater to the growing demand for higher education, there are as many as 50 private providers who are operating in Sri Lanka under the legal umbrella of collaborative relations with foreign providers.

These foreign providers come mainly from Australia, UK, USA, India, and Western Europe and they are active in our markets with the manifest support of their governments for reasons of domestic financial needs.

In view of the above context, should our universities continue to be indifferent to the governing variables of the environment and thus, as medieval educational institutions undertook faithfully, produce knowledge and graduate outputs for a world of yesterday? Or should we the universities awaken to a world that is unfolding right in front of us? Nobel laureate in economics, Professor Vernon L. Smith took a dramatically realistic academic view of universities when he declared, “The reduction and ultimate elimination of world poverty is the pre-eminent socio economic priority.

This truth must be part of the university’s commitment to the development and dissemination of human knowledge. Educational institutions must emphasize the distinction between ‘knowing that’ and ‘knowing how’, recognizing that the world’s work is done by people who ‘know how’. A country aspiring to develop fast should drive higher education on the path of social utility.

Asian giants

Japan presents an example of accelerated economic development. Its development change was deliberate, visible and inspirational. In many ways, Japan can be considered the case of technological applications executed through trading agencies, industry, laboratories, universities, financial institutions and government agencies in systematic coordination in order to realise a long-term vision of global economic presence of Japan. Sri Lanka needs such coordinated and deliberative action where human capital plays a central role.

China’s education, grounded in mathematics, technology, and skills, is directly linked to the advances it is making in the world of business. China has absorbed the competitive labour advantage that many developing countries enjoyed years ago, and adding quality to once cheap labour products ‘Made in China’ are fast invading the consumer goods markets world-wide.

Are the Sri Lankans aware of the vibrations the Chinese economy is causing globally? Which university in Sri Lanka is teaching Economic Development in China as a subject?

In many ways, India’s economic conditions and achievements resemble those of China. India is now implementing its 14th five year plan, and India: Vision 2020 envisages a holistically developed nation by about the year 2020. India envisions joining the Big League of Developed Economies (countries with GDP of $100 billion and above are considered members of the League) by increasing India’s share of 1.7% of collective GDP of 33 nations in 2002 (US$ 28,843 billions) to 4.07% of collective GDP of 42 nations in 2020 (US$ 52,488 billions). India’s approach to development is clearly based on the development of indigenous competencies, R&D for local technology development, utilization of Indian resources, and promotion of market competition in favour of Indian products and services. The tangible proof of India’s ability to perform is its IT sector.

New initiatives

Higher education in Sri Lanka clearly needs a comprehensive approach which gives attention to (a) a set of new principles of education and institution building, (b) orienting education to skills and development needs of the economy, (c) improving quality and standards of education, (d) engaging private sector in the provision of education through independent universities as well as corporate universities with public - private partnership, (e) enabling state universities to forge collaborative ventures with private sector and foreign universities on a self-financed and surplus making basis, (f) attracting foreign students to Sri Lanka for education and training, (g) regulating off-shore education providers, (h) establishing a system of accreditation of higher educational programs and institutions, and (i) enhancing foreign exchange earnings from education and drastically reducing outflow of funds for education overseas.

Namal Rajapaksa, MP, and the leader in charge of youth and development, is reported to be initiating action to take educational programs to the rural youth. This is an initiative in the interest of developing much demanded skills and resource development, and he will attract foreign collaborators as partners in education and skills development.

We should aspire to taking forward higher education as the key factor of economic development in Sri Lanka. The educated and the talented are the ones who shall steer lead projects and programs in the frontiers of action.

We shall no longer expect a nation to depend on hard, less-educated, labour to be the main sources of value whether they are our plantations workers, employees in the garment factories, or house-maids and unskilled labour in the Middle-East. We need to transform the equation of education-value creation in this country.

Fundamental to both vision and mission in higher education are the values, the collectively held principles and ideals which guide the thoughts and actions enunciated for the future. In higher education, we must get ready for a value revolution.

Accepting value change as unavoidable in market-driven, globally-connected, and knowledge-pursuing economies, university academia should move from theory and modelling to action-learning, from universalism to global-local relevance, from preaching to doing, from spending tax payers’ money to earning revenue for universities, from text-book to modernity, and from isolation to connectivity. These value changes are revolutionary for a Sri Lankan university though these values pervade modern universities elsewhere.

The writer was founder-director of the Postgraduate Institute of Management, University of Sri Jayawardenepura, and currently the Senior Professor of Management.