Writer, Journalist, former Editor of The Economist

One important thing you are taught when studying economics at university is that it is a mistake to use one policy instrument to try to achieve several different objectives. Yet for the past half century, governments in Europe have done exactly that with universities. They have tried to use universities simultaneously as an instrument to boost social mobility and equality, to generate advanced basic scientific research, to boost productivity, to increase entrepreneurialism, to preserve cultural heritages, and even to provide political patronage. And for as long as universities were dependent on rising flows of public money, they accepted these mixed objectives.

That era is now surely coming to an end, as the public money runs out. It is dying only slowly, as governments still find it tempting to use universities as multiple-objective policy instruments in the old way, but dying it is. Austerity is shining a harsh light on inefficiency, demanding greater scrutiny of performance and the more effective use of funds. The fact that most European universities have ended up as mediocre institutions, unable to fulfill any of their objectives very well, is increasingly clear. The question is what will come next.

Under pressure on their public finances, governments would be well advised in any case to change the way in which they think about universities. Treating them as part of the public sector, to be controlled and even run by central or local government, is unnecessary and inefficient. It would be better if governments were to repeat the lesson they learned in the 1970s and 1980s when they used to subsidise companies in order to preserve employment, and realised gradually that it would be better to target the money at the workers themselves, rather than their employers.

So, with universities, if governments want to carry on financing students, they would be better advised to give the money to the students themselves, leaving them to choose at which universities to spend it. Governments that already channel their research funding to projects and teams rather than just to institutions are following a similar path.

Increasingly, as this approach is adopted, universities will increasingly become privately-run institutions, competing for funds from the various sources available: students, whether publicly financed or not, public research grants, corporate sponsorship and so on. Public universities may survive as specialist providers of certain sorts of education, but their prominence within European university systems will gradually decline.

It is in this context of financially driven change that internationalisation needs to be seen. An argument can be made for it on its own merits: that international exposure, contacts, exchanges have an intellectual value in themselves, and an educational value for students due to work in the modern world. But as with most such arguments, it is possible to disagree with this, as many rectors do. This disagreement reflects the multiple nature of the objectives that universities have been set.

In future, I would suggest, universities will—and should—become more and more differentiated from one another, choosing greater specialisation and greater focus on particular objectives. The distinction between universities and other types of intellectual institution—including think-tanks, corporate training bodies, even media organisations—may well become less than before. The definition both of knowledge creation and knowledge dissemination is changing.

Within that new diversity, internationalisation will be an option that some universities will follow profitably, serving both their financing needs and their desire to attract top-class faculty and students. But, widespread though it may prove to be, it will not be the only option.

As a result of this new diversity, it will make little sense for countries to market their university systems as a whole: that task will best be done institution by institution, emphasising their special characters and models. What governments do need to do is to set their visa requirements and procedures in such a way as not to impede the proper international development of those universities that want to internationalise—a mistake currently being made by the British government, in its zeal to cut back net immigration into the UK.