Economic Aspects of University Activities in Japan

Abstract

Reduction of available financial resources, increased social differentiation of society, and drop in students in 1990–2000s gave an impulse to structural reorganization of Japanese universities. Reforms affected coverage of higher education, as well as cost and quality of university education. As state financing was being reduced, the problem of preserving the achieved opportunities of university education was solved through restructuring higher education and expanding its private sector. The state concentrated resources in a small number of selected universities, denying both strict regulation and broad support to the bulk of private educational institutions. The consumer was made responsible for comparing themselves the cost and quality of provided education and for selecting a suitable university, while the state restricted its function to disclosing information about university activities and to eliminating asymmetry of such information. Concentration of resources in a small number of educational institutions, along with overall resource reduction, resulted rather in increased differentiation between the groups of universities than in a higher average level of education in the country. A situation close to a market failure was created, and the state had to intervene in order to build vertical relations and inter-university cooperation. The search for the best possible combination of cost, quality, and social characteristics of university education in Japan is by far not over. However, the experience accumulated and the lessons of implemented reforms may be of interest for many countries including Russia.