connection between higher education and (basic)research – HER – is also obvious, and the US, themodel for other countries in terms of its success-ful HER system, demonstrates a very close asso-ciation between higher education and researchthrough its highly successful research universi-ties. These excel in publications, while attractingforeign talent and developing worldwide researchlinks, including with emerging Asian economies
.Meanwhile, Europe invests too little in higher edu-cation. The EU spends less than two percent of itsGDP on R&D, compared to more than 2.5 percentin the US. But the gap between Europe and the USis even wider for universities than for R&D spend-ing: total (public and private) spending on highereducation in the EU accounts for less than 1.5 per-cent of GDP, against more than three percent in theUS. In terms of expenditure per student, the con-trast is starker still, with annual spending morethan three times higher in the US.Moreover, the unsatisfactory research perform-ance of Europe’s universities also results frominadequate institutions: they suffer from poor gov-ernance, are insufficiently autonomous and offeroften insufficient incentives to devote time toresearch.Europe started to recognise some years ago thatits university system faced a problem. The 1999Bologna Declaration was the starting point for thecreation of a European Higher Education Area. Theobjectives were to establish a degree of compara-bility between higher education qualifications andto improve mobility within Europe. In 2000, theEuropean Commission initiated the EuropeanResearch Area in a drive to improve the effective-ness of research in Europe. An increasing numberof EU member states have also tried to reformtheir university systems. But much more remainsto be done. In particular, the economic and finan-cial crisis should not be allowed to underminebasic research funding.
3. See Reinhilde Veugelers(2010) 'Towards amultipolar science world?',
82:439-456.4. See Philippe Aghion,Mathias Dewatripont,Caroline Hoxby, AndreuMas-Colell and André Sapir(2008)
Higher Aspirations: An Agenda for ReformingEuropean Universities
,Bruegel Blueprint, volume V;and Philippe Aghion,Mathias Dewatripont,Caroline Hoxby, AndreuMas-Colell and André Sapir(2010) ‘The Governanceand Performance of Research Universities:Evidence from Europe andthe U.S.’,
,vol. 25/01.5. The contribution of private donations anduniversity intellectualproperty revenue is alsohigher than in the EU, butaccounts for a modestshare of the overalldifference.
Dewatripont, Sapir, van Pottelsberghe, Veugelers
BOOSTING INNOVATION IN EUROPE
It has been empirically documented that for qual-ity basic research, a mix of increased funding,stronger autonomy and more vigorous competi-tion is required. Specifically, recent empirical evi-dence shows that increased university fundingdoes lead to both higher levels of academic output(measured by publications or citations) and morepatenting, and that these gains are stronger foruniversities that are more independent of publicfunding authorities, and which face a more com-petitive funding environment
. The complemen-tarity of funding, autonomy – in terms of hiringand wage setting, for example – and competitionis intuitive: (i) more money helps, and helps morewhen universities are allowed to allocate theirresources efficiently; (ii) the discipline of compe-tition in turn induces autonomous universities tomake efficient decisions in resource allocation.While giving universities more autonomy is theresponsibility of member states, and several of them are making progress in this area, the EUcould help greatly in the areas of funding and com-petition, by:•Encouraging and monitoring – by relying on theOpen Method of Coordination – a concertedeffort to raise university funding in Europeancountries, for example by one percent of theirGDP. While the precise mechanism by whichuniversity revenue is raised could be left to themember states, it is important to make surethat it is raised. Note that higher US universityfunding comes partly from higher public fund-ing but, more importantly, from much higherstudent fees
. If university funding were tocome from higher student fees, it is critical thata well-functioning system of grants or loans tohelp poorer students is set up.•Enhancing excellence thanks to EU-wide merit-based competition (open to anybody in theworld who wants to do research in the EU), byincreasing funding for the European Research
‘The unsatisfactory research performance of Europe’s universities also results from inadequateinstitutions: they suffer from poor governance, are insufficiently autonomous and offer ofteninsufficient incentives to devote time to research.’