The Presentation by Akiyoshi Yonezawa Examined the Past, Current and Future Relationship

State, Institution and Market:

The Changing Relationship Between Public and Private Higher Education in Japan

Akiyoshi Yonezawa

Associate Professor

National Institution for Academic Degrees and University Evaluation (NIAD-UE)

Japan

A paper for presentation in CHER 2004 at Cheps. This paper is also aimed for a draft of the Prophe Working Paper (

Abstract

Private higher education in East Asia has experienced a rapid expansion. Most countries in the region, including those with transitional economies such as China and Vietnam,have utilised the private higher education sector to absorb the demand for higher education, relying heavily on family contributions. On the other hand, neo-liberal policies and the introduction of new public management to public university systemshave changed the status of ‘public’ universities. Malaysia, Thailand and Indonesia have incorporatedsome public universities, while Singapore established the SingaporeManagementUniversity as a ‘publicly-funded private’ institution.

Kim (2001) indicates that some South Korean private universities have a prestigious status. Japan is also a country that has a relatively long and continuous history of modern private universities in Asia. Some of these have longer than 100-year histories, having already become equally prestigious with public institutions by the end of the 1970s (Geiger 1986). Since April 2004, all national and most local public universities in Japanhave been incorporated, with some having diversified their financial resources to complementbasic public funds. Nowadays, the distinction between institutional behaviours and functions of the public and private sectors is unclear. The incorporation of the public sector may stimulate direct market competition among public and private institutions. The changing relationship between public and private higher education will, in turn, affect relations between the state, higher education institutions and the market. In certain aspects, state controls over the private sector have become stronger, while financially, the role of the state has been replaced by (sometimes quasi-)market mechanisms.

This paper aims to examine the past, current and future relationship of public and private higher education in Japan. Historically, distinctions of social function and organisational behaviour between the sectors had been clear, with the public sector catering mainly to elites or experts, while private institutionsoperated mostly to absorb market needs, especially mass higher education. This distinction became obscure, however, especially after the legal recognition of the public function of the private sector in the 1970s, while the process has not been monotonous. [can kill the last 7 words or AY would have to find a different term so monotonous isn’t clear here] The “corporatization” [right word?]incorporationof public institutions and allowance of for-profit entities at the Special Districts for Structural Reform from 2004 willfurther confuse traditional public-private boundaries. Public universities have become more ‘private’ than ever, whereas some private institutions increases ‘privateublic’ aspects upon bypassing receiving project base public funds distributed through competition with public institutions on an equal footing (Yonezawa, 2000; 2003).

the “public” mission generally claimed by private nonprofit organizations.[Delete what’s in []? enhance such overlap between functions of public institutions and those of private ones.] [I don’t follow the for-profit side. I see how corp of publics makes them more private, but I don’t see how creation of f profits makes the private sector more public.] Through an analysis of policy changes and their financial impact, the author examines the development process of private higher education in Japan. The focus of the discussion is on the changing role of the private sector, from a complementary role of compensator for public higher education’s limited access to a role of significant competitor with public higher education. Differences in current-fund expenditures between the national and private sectors are no longer absolute, while the private sector continues to rely heavily on income from tuition fees. In certain fields such as engineering, however, there still exists a wide gap between the sectors.

Except for the new for-profit pilot schools starting from 2004, private higher education institutions are operated by non-profit organisations in Japan. A nominal part of private sector finance is supported by public funds as a part of ‘public education’. It is unlikely that the incorporation of public universities from 2004 will lead to a drastic redefinition between public and private higher education. However, the role of public institutions and prestigious private institutions are clearly overlapping, mainly due to the continuous upgrading of the status of private institutions through inconsistent policy and market changes. Based on the gradual change in the social and financial conditions of public and private universities, the new relationship between public and private higher education appears to develop through continuous but fluctuating interactions between the state, higher education institutions and the market.

Introduction

Private higher education in East Asia has experienced a rapid expansion. Most countries in the region, including those with transitional economies such as China and Vietnam, have utilised the private higher education sector to absorb the demand for higher education, relying heavily on family contributions. On the other hand, neo-liberal policies and the introduction of new public management to public university systems have changed the status of ‘public’ universities. Malaysia, Thailand and Indonesia have ‘incorporated’ limited number of public universities, while Singapore established the SingaporeManagementUniversity as a ‘publicly-funded private’ institution.

Kim (2001) indicates that some South Korean private universities have prestigious status. Japan is also a country that has a relatively long and continuous history of modern private universities in Asia. Some of these have longer than 100-year histories, having already become equally prestigious with public institutions by the end of the 1970s (Geiger 1986). However, top universities in Japan and Korea, such as University of Tokyo of SeoulNationalUniversity, are public institutions which receive concentrated financial investment from the national government. Therefore, prestigious universities in Japan have to compete with top public universities in the higher education market. This market structure is quite different with the market for top private universities in the United States, where the top public universities do not compete directly with those private institutions, especially in the Eastern states and California.

In April 2004, all national and most local public universities in Japanwere incorporated. The Japanese government has limited increase of basic formula based funding, and increased project based funds and targeted funding in the last two decades (Asonuma 2002). The competitive national universities have already highly diversified their financial resources, and the incorporation will accelerate the financial independency of those top public institutions.

Nowadays, the distinction of institutional behaviours and functions of the public sectors from those of private sectors is unclear. The incorporation of the public sector may stimulate direct market competition among public and private institutions. The changing relationship between public and private higher education will, in turn, affect relations between the state, higher education institutions and the market. In certain aspects, state controls over the private sector have become stronger, while financially, the role of the state has been replaced by (sometimes quasi-) market mechanisms.

This paper aims to examine the past, current and future relationship of public and private higher education in Japan. Historically, distinctions of social function and organisational behaviour between the sectors had been clear, with the public sector catering mainly to elites or experts, while private institutions operated mostly to absorb market needs, especially mass higher education. This distinction became obscure, however, especially after the legal recognition of the public function of the private sector in the 1970s. The incorporation of public institutions and allowance of for-profit entities at the Special Districts for Structural Reform from 2004 will further confuse traditional public-private boundaries. Public universities have become more ‘private’ than ever, whereas some private institutions will seem much more ‘public’ upon receiving project base public funds distributed through competition with public institutions on an equal footing (Yonezawa, 2000; 2003).

Through an analysis of policy changes and their financial impact, the author examines the development process of private higher education in Japan. The focus of the discussion is on the changing role of the private sector, from a complementary role of public higher education with limited access to a role of significant competitor with public higher education. Differences in current-fund expenditures between the national and private sectors are no longer absolute, while the private sector continues to rely heavily on income from tuition fees. In certain fields such as engineering, however, there still exists a wide gap between the sectors.

Framework and Context of Japanese higher educaiton

a) system

Japanese higher education has three sectors—national, local-public and private. The national higher education institutions which have been operated directly by the national government became independent from Ministry of Education (MEXT) as ‘national university corporations’ or other types of ‘independent administrative corporations’ from April 2004. National higher education institutions still posses the status as public organisations directly supported mainly by national budget. The Minister of Education take a final response of their mid-term goals, while in reality, the Ministry respects the autonomous decision-making by the institutions. The staff of the national institutions changed its status from national civil servants to university employees.

The local prefectures and city governments have established local-public institutions. When current education system started under USoccupation government around 1949, at least one national university was set in each 47 prefecture, influenced by American university model. However, it was the national government who operates those national universities, and the prefecture do not have direct administrative and financial relationship with those national universities.

Some of the prefectures and cities have established universities and other higher education institutions adding to the national university system. The number of those local public institutions has increased based on the local demands for higher education closed to the local community.

The private sector has got the equal academic status with national and local public sector from the beginning of current post-war higher education system. In 1918, the national government set up an ordinance to recognise private universities. When the new system started in 1949, the official differentiation among the university system especially between ‘imperial’ ones and other ones were abolished. At the same time, most of the public and private Senmongakkos (polytechnics) were integrated or upgraded into universities which offer in principle four year undergraduate, two year master and three year doctorate courses, or junior colleges which offer two year associate degree programs. Most of the junior colleges later have functioned as women’s short cycle higher education.

Figure 1. Education system in Japan (source: MEXT)

b) distinctive role

It has been said that the function of the national universities is clearly different from that of private ones. The national government has concentrated its financial investment into the national institutions in order to train the elites and experts necessary for national development, while private institutions have contributed to absorb the social demands for training high skilled employees mainly of the private enterprises, relying on the tuition fees (Amano 1986).

The origins of the private universities are various. Kaneko (1997) mentions the existence of many political leaders outside of new Meiji restoration government entrepreneurs who supported the establishment of non-governmental higher education institutions. Some of them were started by the intellectuals who had direct experiences in the western world, or some expert groups such as medical doctors or engineers. Others relied on the networks of retired and acting academics in the public higher education sectors.

The demands for higher education graduates in the private industrial sector already started to expand in 1920s. The governmental recognition of the private sector is understood as one of the outcomes of the emergence of parliament based cabinets and wider participation to the election (Itoh 1999). However, it is 1960s that the Japanese private sector formed clear characteristics as demand-absorbing sector for mass higher education.

With the limited resources allowed in the recovery from the fatal damage of World War Second, Japanese government did not have a choice to provide public mass higher education as US did in 1950s and 1960s. Public resources were intensively invested to the limited number of students in the public sector. Therefore, it was the private sector which absorbed the demand for the access of the increasing number of secondary education graduates which achieved almost 100% participation until mid 1970s.

The demand-absorbing function of private higher education is regarded as one of the major types in private higher education research. Based mainly on his Latin American study, Levy (1986) developed a typology of private higher education institutions; religious institutions, secular elite institutions, and demand absorbinginstitutions. Through the comparative study of public-private relationship of higher education in North America, Europe and East Asia, Geiger (1986) developed a typology of higher education institutions especially for understanding complex American system; private research universities, liberal arts colleges, and urban service universities. ‘Demand absorbing’ institutions and ‘urban service’ universities appear to have similarity in terms of their reliance on the social demand for mass higher education, and tendency to be located in large city areas where the high demand could be expected.

In his comparative study, Levy also made a typology of public-private relationship; homogeneous (Chile), dichotomously distinctive (Mexico), qualified distinctive (Brazil). Japan is categorised as a type of qualified distinctive higher education. In Japan, the private higher education sector has a clear distinction with public sector, while a small share of the public subsidies are given to private sector. Geiger categorised countries into; mass private (Japan, Philippines), parallel public and private (Belgium, Netherlands), peripheral private (France, Sweden, UK), and Japan is categorised as a type of mass private higher education.

Two types of the models could be shown for understanding the ongoing global trends of ‘privatisation’ in higher education. The figure 2 is the model developed by Umakoshi (1999). He tries to understand the dynamics of privatisation observed in East Asian countries. This figure explains the positive correlation between the expansion of higher education system and increasing share of private sector. Most of the East Asian countries which developed mass private higher education sector such as Japan, Korea and Philippines experienced the domination of demand-absorbing private institutions with limited provision of public higher education. This model in principle relies on two critical assumptions; (1) public and private higher education is distinctive between each other; and (2) the countries transform its higher education from ‘private higher education as periphery’, ‘private higher education as compensation’ and then, ‘private higher education as dominance’ through the expansion process of mass higher education.

However, there is no clear evidence that all of the countries go through this process, as Umakoshi himself has cautiously denied his intention to use it as a ‘development stage’ model.

Figure 2. Dynamics of the developing private sector in East Asian higher education

He argues that the increasing share and role of private higher education sector is positively correlated with the development of mass higher education in East Asia. However, the nature of the distinction between public and private sector is not discussed is not discussed in the Umakoshi model, or its clear distinction is rather taken for granted. He also tries to explain that the development of private sector is somewhat inevitable for realising mass higher education with limited public financial resources and high social demand for higher education typically observed in East Asian countries.

Some unsolved questions are remaining. First, the definition of public-private distinction is not always clear, especially in the current various trends of ‘privatisation’ or ‘marketisation’ in many higher education systems. Second, even within the private sector, different types of institutions such as religious, secular elite, demand absorbing, urban service institutions are co-existing in a large and complex higher education system, as Geiger showed in his chapter of American higher education. Third, the increasing share of revenue from tuition fees in the public sector typically observed in UK, Australia, Vietnam and China since 1990s may indicate another pathway for the development of private aspect of higher education. In these countries, the expansion of participation for higher education are mainly realised through the introduction of private financial contribution to the public sector.