Crises offer a chance to think about the past and prepare for the future. That is evident in the case of Spain and Italy, where a debate is underway over the economic model followed over the last decades. \’Investment in knowledge\’ is now in the mouth of every politician, but this requires long-delayed and painful reforms.

Quo vadis Italia?

In Italy, higher education reforms have been met with mixed reactions. In 2010 the government introduced a bill aiming to boost domestic competition by offering economic incentives to universities. The reform also initiated competitive and performance-based research funding, mergers between smaller institutions, and representation of the private sector on boards of directors. However, student protests in 2010 and 2011 hampered the government\’s plan to implement a full-scale overhaul of the university system.

Bureaucracy is the main problem. As Alessandro Monti points out in his book Investigation of the Decline of Italian Universities (2007), more than 1,000 laws and rules were introduced from 1990 to 2006. \’University barons\’ control hiring policies and resist reforms; one of the main goals of newly introduced legislation is to reduce their influence. In some cases universities are even family-run institutions. According to research by L\’Espresso and La Repubblica, Italian universities are 10 times more likely than other employers in the country to hire members of the same family.

Italy\’s real problem, and a possible factor in its economic predicament, however, is the lack of connection between universities and the business world. In 2007, only 7% of Italian graduates had a degree in a STEM subject.

Unsurprisingly, the crisis has adversely affected public expenditure on higher education. In 2010, the government cut scholarships by 90% to €26m ($32m) for 2011 and €13m ($16m) for 2012. According to Andrea Lombardinilo, an Italian academic, former spokesman for the Ministry of Education, Universities and Research, and author of University: The Challenge of Change (2010), the recent reform will be incomplete without sufficient funding, especially for recruitment of young researchers and quality assurance. He points out that there has been a 7.2% reduction in resources allocated to universities through the state-run Fondo di Finanziamento Ordinario (FFO) since 2009, and the number of academic staff and researchers has decreased from 64,000 to 54,000, one of the smallest numbers in Europe as a percentage of the population.

As the following graphic shows, Italy\’s expenditure on higher education has been fairly stagnant, whereas Spain has invested heavily in it. In 1998 both countries were spending less than the OECD average on higher education per student. Ten years on, Italy remained roughly at the same position whereas Spain had managed to match the OECD average.

Spain on the rise, but trouble ahead

In 2009 the Spanish government launched a policy initiative, Estrategia Universidad 2015, aiming to boost the competitiveness of Spanish universities. Internationalisation is one of the main goals of the strategy,

which:
• encourages cooperation with foreign universities
• provides a framework for the quality of services offered to international students and academics, including residence and language courses
• provides incentives for the launch of international Masters and PhDs, including programmes in English and French
• sets as a goal the increase of the number of foreign professors, researchers and students
• enhances integration into the European Higher Education Area and the emerging Latin American higher education space
• provides quality assurance mechanisms for international recognition and accreditation of qualifications obtained in Spain

Two important aspects of the strategy were the establishment of Fundación Universidad in 2008, responsible for the international promotion of Spanish universities and the coordination of their international strategies, and the launch of the Campus de Excelencia Internacional programme in 2009, which includes 15 projects with a total budget of €204m.

Spain is already a leader in internationalisation. According to 2010-11 data released by the European Commission last May, Spain sends and receives more Erasmus students than any other European country. Since its introduction in 1987, the Erasmus programme has transformed the culture of Spanish universities, incentivising them to establish international offices and create their own exchange programmes with other regions apart from Europe, using Erasmus as a model. The launch of the Alfa Puentes programme will probably help them to increase their presence in Latin America.

Ongoing efforts to make the system more competitive internationally might be undermined by the recently elected government\’s plan to cut spending on education, a decision met with anger by the academic community. The government aims to reduce public spending on education from 4.9% to 3.9% of GDP in five years, for a target saving of €10bn ($12.4bn). As in the case of the UK, austerity brings with it a rise in tuition fees, though at a much more modest level. The government has asked local governments to raise fees by an average rate of €500 ($620) per student and imposed restrictions in the allocation of scholarships.

Think locally, act globally

Two changes seem to be necessary in Spain and Italy: reform and internationalisation. In both countries, these can be at the local, regional or state level, rather than the national level. Italy has a long tradition of robust local and regional administration, necessary in a state where political instability is the norm. The de facto federal nature of Spanish governance means that the states have extended powers in many sectors, including higher education.

Torino (Turin) provides one example. The current Mayor, Pierro Fassino, aims to transform the city into a university town (citta universitaria) to attract companies and foreign universities to set up operations there (link to the interview). Fassino claims that the crisis has forced his city \’to optimise the use of existing resources due to cuts in public spending\’ and that the project \’will go ahead… with the resources already available and perhaps through a more efficient use of them\’. He notes that he expects the government to back his plan.

In Florence, the local authorities have brokered a deal with Ningbo University. The Chinese university will set up a branch campus in the city, apparently with a mainly Chinese student market in mind. In Spain, the autonomous government of Valencia (Generalitat Valenciana) has provided land and other means of support to Berklee College of Music to set up a branch campus in the city.

Is internationalisation the way forward?

Both Italy and Spain fare relatively well in terms of international student recruitment. According to OECD data, Italy had just under 66,000 foreign students in 2009 and Spain had 85,000 – both more than double the 2000 numbers. Both countries had a global market share of 1.2% in 2000, which increased to 1.8% for Italy and 2.3% for Spain in 2009 as shown in the graph below.

Spain\’s comparative advantage is its access to the Latin American market. Half the international students studying in Spain in 2009 were from Latin America and the Caribbean. Interestingly, Spain received 3,428 students from Brazil in 2009, whereas Portugal had 3,813.

Italy, on the other hand, has been more successful in recruiting Asian students, with 12,750 students from that region in 2009, whereas Spain had only 3,850. According to University World News, the Marco Polo overseas study programme has increased the presence of Chinese students in the country since its launch in 2004. The number rose dramatically from 74 in 2003 to 5,269 in 2011.

Is internationalisation a potential source of revenue? According to Hans de Wit, Director of the Centre of Higher Education Internationalisation at Università Cattolica del Sacro Cuore, \’culture and tradition are more relevant pull factors than academic ones in the case of Spain and Italy. Full-degree recruitment is less likely to make revenue, as the reputation and branding of their higher education sectors are not high for non-EU markets. There is some attraction from Latin America and the Africa/Mediterranean region, but often based on subsidised fees. Some of the better private universities like Bocconi, Cattolica, Luiss and specialised universities like Politecnico might benefit from more incoming students\’.

Language is certainly an issue. The OECD\’s Education at a Glance 2011 includes both Italy and Spain in the group of countries with few or no programmes offered in English in 2009. For Spain that might not be a problem, given the size of the Spanish-speaking population in the Americas. In Italy, a change may be afoot. The BBC recently reported that the Politecnico di Milano will, in 2014, become the first Italian university to offer programmes in English. De Wit says that \’the media and political reaction is similar to that in the Netherlands in the early 1990s, when there was massive opposition to similar plans but within ten years was generally accepted\’.

Expansion abroad is also an option. SDA Bocconi School of Management of Milan became in July the first university from a non-English speaking country to set up a branch campus in India. According to de Wit, \’Italy has a long tradition of offering double and joint degree programmes, for instance in Argentina and other parts of Latin America. This is a more likely future trend than branch campuses or franchise oprations, although there are some signs of interest in the Mediterranean region to attract Italian universities into this kind of operations, for instance in Albania\’.

Tough decisions ahead

Spain and Italy are ranked in the middle of the U21 Ranking of National Higher Education Systems (24th and 30th, respectively, of 48 countries). In the \’Environment\’ category, which measures government policy and regulation, diversity and participation opportunities, they are ranked 36th and 42nd. They are not much better in terms of \’Connectivity\’, roughly a measure of internationalisation. Reform is needed to catch up.

On the other hand, attempts at reform might be undermined by cuts in public spending. The U21 report argues a \’strong relationship between resources and output\’. And economic downturns always signal greater demand for higher education. In Spain, there was expectation of a rise in the number of enrolments and applications in 2011 due to the crisis, according to a 2010 OECD survey.

As Professor de Wit says, \’in both Italy and Spain the decision to implement reforms has not matched with the right conditions for successful reforms. The lack of good student-loan systems, for instance, is an example. You cannot make students study faster if they have to work at the same time, a major concern in Spain. Protests against Bologna and other reforms are more protests against their governments for having failed to invest in a good foundation for the reforms than against Bologna reforms as such. The current crisis will have an extra negative impact as there are no means to invest in higher education, although for instance a student-loan system might stimulate students to study instead of work and thereby reduce unemployment rates among younger people\’.

It seems evident that a decline of investment in higher education might negatively affect the ability of southern Europe\’s powerhouses to meet demand, restart their economies, and make their universities competitive at the international level.