European Higher Education: Challenges and Achievement

Abstract

Universities in the European Union are called to support integration and pursue economic value, as evidenced in both European and national strategies. In line with this perspective, European higher education institutions strengthen the value of their education and knowledge output while reinforcing their economic basis. The former goal is in line with the greater competition among economies, the latter became important following the international crisis and the fiscal crisis of many European states. A particular feature of higher education institutions in the European Union is their role in supporting European integration, with particular concern for a unified labor market. Much of the EU action has thus been concentrated on moving governments and universities in the direction of pursuing the integration of national education systems. To do so, and given the limited EU competences in education, the European Commission has proposed strategies and goals and has provided (part of) the necessary resource basis. National governments in turn are called to implement the necessary reforms. The fundamental component of this approach is the so-called Bologna Process that created the European Higher Education Area. The core of the Process is to ensure comparability in the standards and quality of higher-education qualifications among European countries. The outcome of these processes has been important, but much remains to be done. The paper critically analyzes the evolution of the European higher education and research system within the frame of European integration and with a view to the goals pursued, the results achieved, and the challenges ahead.

1 Introduction: The Evolution of Universities

Universities are among the oldest institutions in the world and they are also among the most open to society and internationally. They went through deep changes in their organization and roles through centuries, yet the modern university evolved in Europe in the Middle Ages. The medieval Latin term universitas denoted a community or corporation devoted to learning and education; its corporate existence had been recognized and sanctioned by civil or ecclesiastical authority or by both.¹ The documented topic moment was the acceptance by the University of Bologna in 1158 (or 1155) of the Constitutio Habita, which guaranteed that a traveling scholar had the right to unrestricted passage for the purpose of education. This moment is considered to be the origin of the fundamental principle of academic life: academic freedom (Moutsios 2012).

Initially, universities cultivated culture and educated the children of the ruling classes in both civilian and ecclesiastical subjects. With the establishment of capitalism, universities became institutions of higher education of a non-vocational type, endowed with the right to confer degrees whose codified value was generally recognized in the labor market. Following their involvement also in research, universities played a fundamental role in innovation and economic development, gained prominent economic and social role, and became soon concern for policiesand public funding.

As their role evolved, the universities’ traditional aspiration to academic freedom and governance autonomy conflicted with the authorities’ will to control or govern universities. The dispute came essentially from two sources: the social and economic role of universities as providers of recognized degrees and the universities’ increasing need for financial resources. The financial crisis of many states and the stagnation of real incomes dramatically exacerbated public and private difficulties in financing growing education and research costs.

The successful experience of a limited number of world-level universities, particularly in the United States, to attract significant amounts of external resources, particularly from private industry and public agencies, fostered the evolution of the entrepreneurial university as part of the relation among government, universities, and business. In this model, the university pursues the economic value of its education and research missions (Dallago 2014). Yet this regards only a limited number of world-class universities, particularly in Anglo-Saxon countries.

While in the Middle Ages the European university was typically international and used Latin as the international language of the educated and leading community, the advent of the nation state after the Westfalia peace in 1648 changed the landscape. Universities became increasingly national: they became often part of the state apparatus and submitted to a national (or state or regional, in federal countries) minister, were financed in large part from the state budget, used the national language and paid attention to national issues and goals in their education and researchpolicy primarily. Awarded degrees were recognized only within the national borders.

The process of European integration brought a new goal for universities to the forefront. In the institutional architecture that evolved, national governments have predominant competences in education and, less so, research, while EU only has complementary competences. The national nature of universities is thus at odds with the essence of European integration and the aim of developing a European labor market and education and research space.

The chapter uses an economic perspective to analyze higher education in the perspective of European integration. It looks also at the consequences for the labor market (EC 2005a). The next section considers the needs and limits of the European integration process and looks at the consequences of European institutions and their relations with national institutions, with particular concern for higher education. As explained in Sect. 3, there are strong and resilient national traditions and cultures within the EU, while the EU has only partial and soft competences in the field of higher education. A fundamental issue is how these diversities could and should be managed in order to support European integration, with particular concern for the economy. Section 4 looks at the achievements that the drive to integration of European universities has actually achieved and concludes that, along with important outcomes, many problems are still open. Section 5 concentrates on some important features of the context, which became prominent following the international crisis. These have to do primarily with the growing fault between the countries of Northern Europe and those of Southern and Eastern Europe, with important consequences for universities. Section 6 concludes.

2 European Integration and Higher Education

The distribution of competences in higher education between national or local governments and the EU is defined in the 2007 Treaty of Lisbon and based on the EU fundamental principles. According to the principle of subsidiarity, defined in Article 5 of the 1992 Maastricht Treaty, decisions are taken as closely as possible to the citizens and the EU has competence only where its action is more effective than action taken at other levels. Moreover, according to the principle of conferral (Article 5 of the Maastricht Treaty), the Union acts only within the limits of the competences conferred upon it by the member states in specified areas. In the field of education, the EU has competences supporting member countries and in that of research it has competences parallel to those of member countries. Particularly in the former case, the role of the EU is indirect and has to relay on the willingness of national governments to develop and be part of a European educational system. Conversely, the EU role is more direct and effective in the case of research (Dakowska et al. 2018).

Such a distribution of competences is a problem for European integration. The soft EU approach is at odds with the fundamental role of states and the differences among national systems of education based particularly on the varieties of the relationship between universal values and the search for a national identity (Hörner et al. 2015). Moreover, the success of integration requires that educational systems are at least mutually compatible, for cultural, social, and economic reasons. In spite of its limited competences, the EU has devolved a great deal of attention, effort and resources to the field of education, with fair success. However, if member countries do not converge in the economy (Dallago 2016) and education systems converge, new problems may appear in the form of brain and skill drain to the disadvantage of more vulnerable member countries.

There are two main reasons behind the EU drive to educationintegration: first, create a homogeneous European cultural space fostering and supporting the cooperation and integration of European societies. Education belongs in the founding and fundamental values of the European Union and is essential for promoting cultural, social and political integration (EC 2018a; Rome Declaration 2017). Second is the importance of education for economic and social reasons.

The role of higher education is fundamental for supporting EU integration. Yet the EU is an incomplete and asymmetric integration of different countries (Dallago 2016). Incompleteness means that the Union lacks fundamental institutional features and components, such as political union. Asymmetry means that the Union has diverse kinds of competences in different fields, such as in the monetary and fiscal domains. The split of competences between the Union and national governments is not problematic when policies are not necessary, i.e., when markets can autonomously fix unbalances or can provide the resources necessary to do so. The theory of Optimum Currency Areas (OCA) defines the necessary conditions, such as labor mobility, that make the use of one common currency as advantageous compared to having more currencies (Dallago 2016; Baldwin and Wyplosz 2012).

Various authors have long highlighted (Eichengreen 1991; Eichengreen et al. 1990; Feldstein 1991; Friedman1997; Obstfeld and Taylor 1997; Sala-i-Martin and Sachs 1991) that the Eurozone is not an OCA. It is thus important to see which can be the contribution of European higher educationpolicies in filling this gap. Labor market (im)mobility is the essential, yet most problematic OCA criterion (Zimmermann 2009). Various studies, referring to different periods of time, have found that labor market shocks led to weaker internal and external migration in Europe than in the United States (Bonin et al. 2008; Decressin and Fatás 1995; Bentivogli and Pagano 1999; Gáková and Dijkstra 2010), although the situation improved slightly following the crisis (Dao et al. 2014; Jauer et al. 2014). The role of labor mobility in reducing the differences in economic development between the states is important in the United States. In the EU, this effect is much lower and labor mobility is not important in reducing disparities among EU member countries.

Free circulation of people within the EU for labor reasons is one of the fundamental principles of the EU, with modest effects. Rules in the labor market remain mostly national, due to political and cultural factors, different languages, social interests, institutional and real constraints, such as the different recognition of degrees and the rigidity of the housing market in many countries. The EU also tried to foster integration by supporting the circulation of migrants, with doubtful outcomes and national opposition.

Among the most important labor market differences are entry and exit flexibility, usually greater in the United Kingdom and Ireland, seniority relations and firm specific investment, which are more important in continental Europe. Due to these features, financial shocks have faster and greater consequences in the former countries than in continental Europe. While faster reaction fosters adaptation, it also increases contagion in the real economy. In countries like Germany, alternative instruments of flexibility exist, such as reduced working hours. Where neither mechanism works well, as in countries of Southern Europe, labor reallocation is slow and youth and long-term structural unemployment are high. In the resilient countries of Northern Europe, employee–employer relations are more cooperative, pay is better related to workers’ productivity, hiring and dismissing workers is more flexible, and labor participation activity rate is also higher.

Institutional variety of labor markets across countries and different legal systems leads to different behavior of economic actors, different types and features of contracts among parties, as well as different ways and intensity of the transmission of shocks (La Porta et al. 2008; Ménard and Marais 2006). Welfare systems are typically important in Europe, but they have different features and organizations, different dimension and costs, different incentive effects, and different consequences for economic activity, in spite of some convergence (Bouget 2003; Sapir 2006).

Downward wage rigiditiesin the EU were particularly pronounced before the crisis in many countries, depending on the features of trade unions and the degree of centralization of wage bargaining (Crouch 2012; Freeman 2008). Downward nominal wage rigidity is stronger when unemployment is low, union density is high and strict employment protection legislation is in place (Holden and Wulfsberg 2008). Downward nominal wage rigidity is stronger in Southern European countries (Italy, Greece, Portugal and Spain) and in Northern European countries (Denmark, Finland, and Sweden). In continental countries (Austria, Belgium, France, Germany, Luxembourg, and the Netherlands) and Anglo-Saxon countries (Ireland and the United Kingdom), downward nominal wage rigidity is weaker. However, rigidity decreased somewhat with the crisis, particularly in vulnerable countries, through labor marketreforms (OECD 2014).

Low labor mobility and weak contribution of immigration have two distinct effects. First, adjustment processes must go through more problematic channels to regain competitiveness, such as through internal devaluation. Second, the low mobility of labor opens the possibility for policies to take an antilabor stance, e.g., in the form of bad quality labor contracts. The intent is to increase competitiveness through cheaper labor and not through investment, with negative consequences for the size of the domestic market and international specialization.

Differences in labor market efficiency are large within the EU and the Eurozone (Eurostat 2018; WEF 2018) and the bulk of labor mobility is within regions of the same country (Gáková and Dijkstra 2010). Under these conditions, common policies become more difficult and less effective. Increasing labor mobility is fundamental in order to weaken the probability and effect of asymmetric consequences from shocks and upgrade the effect of common policies. The EU action in higher education finds a strong motivation in these issues.

3 Higher Education and the EU Strategy and Goals

European Higher Education Institutions (HEIs) are subject to a double set of pressures: those typical of any developed area and those deriving from the European integration (EC 2017). As to the former, universities in the European Union are called to pursue economic value to support innovation (Forge et al. 2013). This is evidenced in both European and national strategies and is more stringent in countries fighting with budget and financial problems (particularly in Southern Europe) and those characterized by neoliberal political views (such as Great Britain). A fault line is evident between Northern European countries—where higher education is generally free of charge and much of research is government-sponsored—and Southern European and Anglo-Saxon countries, where economic value is fundamental in both education and research.² This distinction makes difficult setting up joint education and researchprograms among HEIs belonging in different groups of countries. Since most of the competences—and all primary competences in the field of higher education—belong in national countries (central governments in most countries, regional governments in others, such as Germany), countries follow idiosyncratic paths and the EU does not have any compulsory role.

Pressures coming from European integration include ideals and aims and economic and organizational needs of integration. These pressures led the EU to take the lead in setting up a European system of higher education, including the development of European universities, and moving toward a European Education Area (see below). Although these moves have HEIs as their primary target and are based on ideal and scientific motivations, their final goals have social and economic nature (EC 2017).

The EU goal in the economic and social fields is to coordinate countries in moving toward mutually compatible and effective higher education systems without jeopardizing intercountry cultural differences. The European system of higher education is relatively simple: a continuously moving undertaking, with important achievements duly accomplished with some faults and failures and with ambitious goals ahead.

Erasmus (EuRopean Community Action Scheme for the Mobility of University Students) is the forerunner of European programs in education, an EU student and teacher exchange program established in 1987 after the 1981–1986 period of pilot student exchanges. Later accomplishments include different versions of the Erasmus program and the Bologna Process (see below). Additional programs involve cooperation with universities of particular countries, such as former countries in transformation (Phare, Tempus).

The number of students who took part in the Erasmus program in 2006 was over 150,000, almost 1% of the European student population. The share among university teachers was still higher: 1.9% of the European teacher population, or 20,877 people. In 2013–2014 academic year, the number of recipient students was 272,497, which increased the total number of Erasmus students to 3.3 million since the beginning (EC 2015c). In 2017 the number of students increased to 797,000, that of organizations to 84,700 and the budget reached €2.6 billion (EC 2018e, f). The Erasmus program had parallel programs, in particular the Erasmus Mundus (EM) program aimed at converting European higher education into a world standard and attracting third-country students with ad hoc teaching courses and scholarships. The Lifelong Learning Programme (LLP) originated by incorporating the Erasmus program and a number of independent programs, such as Leonardo da Vinci, into Socrates program. The latter was established by the European Commission in 1994 and was transformed into Socrates II in 2000. LLP replaced Socrates during the 2007–2013 budget as an umbrella program.

During these years, LLP was the single financial instrument of the European Commission for managing education and training policies. The program, with a total budget of €7 billion over seven years (2007–2013), was managed and funded through a network of national agencies. More ambitious and far-reaching projects, such as Erasmus Mundus, were managed and financed either directly by the European Commission or through its Education, Audiovisual and Culture Executive Agency (EACEA). LLP continued the main actions launched under previous action programs and included six specialized subprograms.³LLP supports the development of lifelong learning in member countries’ education and training systems. The program supports exchanges and connections between people, institutions, and countries within the European Union and the European Economic Area. Analyses and opinions on the effect of EU programs vary. Although some doubts exist on the effect of selection and self-selection mechanisms among students, it is undoubted that programs gave a boost to the interaction and cooperation of European HEI and students of different countries, with potential positive outcomes for the integration of Europe.

Erasmus+, or Erasmus Plus, replaced LLP in the following 2014–2020 budget period, with an overall budget of €14.7 billion. Erasmus+ combines all the EU’s current schemes for education, training, youth, and sport.⁴ The program provides, through home institutions, grants for study, work placement, training, and cooperation actions for students, teachers, and administrators in another country. A decision to extend the program over the next budget cycle 2021–2027 was taken, with a doubled budget of €30 billion.

The achieved organizational stability of Erasmus+ also needs that the home university fully recognizes the period and related activities that students spend at another university in another country, in spite of the significant differences among national systems of higher education. To do so, European universities adopted a set of mutually compatible organizational and academic principles through the so-called Bologna Process (EC 2018c).

The Bologna Process is a voluntary intergovernmental cooperation of 48 European countries, including non-EU countries, and the European Commission.⁵ Its aim is improving the compatibility between national features and internationalization of higher education, also to make European universities more competitive and attractive. The Process guides and coordinates the activity of institutions and persons directly involved in higher education (universities, teachers, and students), national authorities, stakeholders (associations, employers, quality assurance agencies, international organizations), and the European Commission.⁶

Along with increasing intercountry compatibility, the Bologna Process supports the modernization of education and training systems to make sure these meet the needs of a changing labor market. Key focus areas include lifelong learning, employability, funding, degree structures, international openness, data collection, quality assurance, and learning outcomes, i.e., the definition of what students should know and can do on completing their degrees. Implementing these goals fosters mobility, supports qualifications and skills, and improves the effectiveness and efficiency of the labor market. Placed under the Lisbon Recognition Convention, the Process created the European Higher Education Area (EHEA) in 2010,⁷ introduced the three-cycle system (bachelor/master/doctorate), and strengthened quality assurance. It also introduced a common system of ECTS credit points (European Credit Transfer and Accumulation System) and the diploma supplement to ease the recognition of qualifications and periods of study abroad.⁸ According to the system, one year of full-time academic study corresponds to 60 ECTS points, split down in lectures and homework of 1500–1800 hours per year. However, differences exist among countries in the level of implementation and the exact definition of what one credit means (Faber and Westerheijden 2011).

The EU activity in making higher education “more European,” i.e., make national systems better compatible and integrated, includes the Paris Communiqué of May 2018 (EHEA2018) by the 48 Education Ministers on the priorities for the coming years. These include an inclusive and innovative approach to learning and teaching, with particular concern for the access of underrepresented and vulnerable groups and environmental sensitivity. The 2017 Gothenburg Social Summit represents a fundamental event in the definition of the European Commission vision for 2025 of a European Education Area. The Area foresees the free movement of learners in a continent “…where spending time in another Member State – to study, to learn or to work – has become the standard and where, in addition to one’s mother tongue, speaking two other languages has become the norm” (EC 2018b). This means creating the conditions for increasing labor mobility, particularly of highly educated and skilled people, thus contributing to improve labor mobility and labor market efficiency.

The Commission identified three key priorities to pursue the goal: a network of European universities, the automatic mutual recognition of diplomas to remove barriers to student mobility, a European student card to facilitate the secure exchange of student information and reduce administrative burden for higher education institutions. The European Commission launched a call in October 2018 to test the European Universities model. “European Universities are transnational alliances of higher education institutions from across the EU that share a long-term strategy and promote European values and identity. The initiative is designed to significantly strengthen mobility of students and staff, and foster the quality, inclusiveness and competitiveness of European higher education” (EC 2019a). Equally important is that “…European Universities will also contribute to the sustainable economic development of the regions where they are located, as their students will work closely with companies, municipal authorities, academics and researchers to find solutions to the challenges their regions are facing”⁹ (EC 2018b).

The three priorities pursue three distinct goals through various: (a) improve the interconnection among European HEIs and students’ mobility; (b) create a set of supranational agreements for the mutual recognition and acceptance of diplomas based on the comparability of standards and quality of higher-education qualifications covering bachelor, master, and, since 2003, also doctoral levels (“Bologna Process”); and (c) increase the level and the quality of higher education (Europe 2020 strategy).¹⁰ All these actions are based on the free will of member countries to participate and coordinate their policies with other countries, also supported by other organizations, such as the European University Association. National idiosyncrasies remain, but are placed in a common framework. Fundamental competences continue to belong in member countries; the EU provides a coordinating frame and a set of common goals and adds further resources to the primary resources that continue to come from member countries. The end outcome is a more standardized and perhaps better quality system of higher education, more and better opportunities for students, teachers, and universities, and better integration of labor markets.

4 Outcomes and Achievements

Achievements have been remarkable, particularly so if one thinks at the complexity of the issue and the resilience of national systems. The European landscape of higher education has changed significantly, with particular reference to openness, quality, and integration. It became truly European in many senses, including teaching approaches, hosting foreign students, availability of international mobility programs, trans-European cooperation for teachers, financial sources for studying/teaching and researching.

However, the European higher education system is not really integrated: national idiosyncrasies remain and barriers that students have to afford for having their international experiences fully recognized at home continue to be significant. Transaction costs for academic teachers and the system complexity increased significantly, particularly for evaluation and assessment procedures. One should neither overlook the potentially negative consequences of stronger standardization on innovation and quality and variety of teaching and research.

Analyses and assessments of outcomes and effects of reforms concentrate on higher education, but hints also exist on more general economic and social effects, with particular concern for the labor market. Enders, de Boer, and Westerheijden (2011) present one of the first comprehensive analyses putting the evolution of the European higher education system into a dynamic perspective: “While signatory countries have to some extent interpreted the [Bologna] Declaration in their own ways, the process rapidly achieved a wide acceptance. Focusing at first on reforming study programmes into the two-cycle ‘bachelor-master’ structure, concerns about comparability soon pushed quality assurance and accreditation and degree recognition firmly into the mix” (Enders, de Boer, File, et al. 2011, p. 2). This recognition led to include Ph.D. courses as the third cycle and to link the European Higher Education Area with the European Research Area, a decision taken in Berlin in 2003 (Kottmann 2011).

The relation between common aims and achievements and national idiosyncrasies and goals was and is the most intractable issue of the Bologna process. The process was initiated to streamline national higher education systems to a common “European” system, but also to provide support for initiating or strengthening the reform of national systems, in spite of the nonbinding nature of the Bologna process. This created a unitary European frame based on national diversities (Faber and Westerheijden 2011).

Pursuing economic value is a common thread at both Union and national level. Universities need to attract an increasing amount of external resources and to rely progressively on market-type governance solutions, replacing bureaucratic governance (Jongbloed 2010). Also important is the political call to universities to play a useful role in the country’s competitiveness, in both education and research. Universities should consequently increase their willingness and capacity and that of their teachers and researchers to produce economically and socially useful knowledge and restructure teaching programs and methods so as to increase the employability of their students (Dill and van Vught 2010).¹¹

The traditional governance structure in European universities, particularly in continental countries where most universities are state-owned, was centered on the state. However, since the 1990s, there was a growing involvement of more actors and a move toward more autonomy and indirect governance. While previously the government was the fundamental player in one-level governance, stakeholders obtained an active role in a multilevel multi-actor governance system with important consequences for the working of universities (Van Kersbergen and Van Waarden 2001). Governance became more complex and required stronger internal coordination, but also became more open to the external world and required also more external coordination (de Boer and File 2011). Economic value received prominence, together with the central role of evaluation and accountability (de Weert 2011).

The reform of governance has, among others, the aim of attracting external resources from the private sector and through the participation of national and international competitive calls for education programs and researchfunding. Achievements are mixed: while universities rely more on external resources that until the 1990s, the private sector contribution increased only marginally. More important are international resources, in particular from the European Union. However, national public expenditure and investment continue to be fundamental. According to a study by Aghion et al. (2008), government appropriations are the dominant although decreasing source, exceeding two-thirds of the total revenue, in all EU countries except the United Kingdom and Ireland. Tuition fees are an important source only in Italy, Spain, and the United Kingdom. In most countries the aggregate share of grants and contracts ranges between 10 and 20% and is increasing (Table 1).

Table 1 Shares (%) of revenues for a sample of European universities, 2006Footnote

The data is based on information from 66 European universities in the Top 500 of the 2006 Shanghai ranking. The sample is thus biased toward the more research intensive universities

Although government funding continues to dominate, its allocation has progressively lost the nature of grants and is increasingly allocated on preestablished performance formulas and competitive mechanisms (Tables 2 and 3).

Table 2 Public funding allocation mechanisms in European countries

Table 3 Overview of indicators used in funding formulae

Overall and compared to the United States and Japan, universities in many EU countries continue to be underfunded (Bennetot Pruvot et al. 2019). However, more prominent is the divergent evolution of long-term public funding trends in different countries (Table 4). Over the period 2008–2017, Austria, Germany, and Sweden had both significant and comparatively sustained funding growth. In France and the Netherlands, investment was more limited, although on a relatively stable trajectory. In Luxembourg and Turkey, public funding nearly doubled in the period.

Table 4 Public funding to universities and GDP growth

In various countries higher educationbudgets were the target of repeated cuts. Particularly large were cuts in Greece, while Italy stabilized at low funding level after significant cuts until 2013. Only in the Czech Republic and Spain there was a modest recovery in 2017. Other countries with negative patterns are Estonia, Lithuania, Great Britain, and Serbia. A third group of countries show a recovery pattern after years of severe cuts (Hungary, Latvia, Ireland, Island) or less severe cuts (Slovakia, Croatia) or mild cuts followed by significant recovery (Poland, Portugal). In most cases, improvements took place after 2013.

The situation is varied also looking at the enrollment of students and its relation to public funding (Bennetot Pruvot et al. 2019). In the 16 countries where public funding was higher in 2017 than in 2008, comparing funding to student population trends provides contrasted situations: in 6 countries (Luxemburg, Switzerland, Norway, Sweden, Poland, Portugal) public funding growth is superior to student enrollment growth, while in another 9 countries (Turkey, Germany, Austria, Denmark, Belgium, Netherlands, Island, France, Croatia) the reverse situation holds. In 17 countries, cuts in public funding were serious, yet the effect depended on the growth of students’ enrollment. Particularly strained was the situation in 3 countries (Ireland, Greece, and Great Britain) in which fund cuts proceeded with enrollment increase. In 10 other countries (Slovakia, Finland, Slovenia, Hungary, Italy, the Czech Republic, Spain, Baltic Countries) both funding and enrollment decreased, suggesting declining higher education systems.

One important cause of the scattered picture of European countries is different national growth rates during the post-crisis years. National (dis)preferences also played an important role. In some countries, higher education institutions were called to pay a disproportionate price for the crisis. This is the case of Greece, Italy, and Slovenia, in which funding decreased more than the fall of GDP. Equally negative was the case of countries (Czech Republic, Estonia, Spain, Finland, Ireland, Lithuania, Latvia, Serbia, and Slovakia) in which economic growth coincided with disinvestment. The most virtuous case is that of Croatia and Portugal, in which increasing investment in higher education took place despite economic decline and that of countries (Austria, Germany, Denmark, Luxemburg, Netherlands, Norway, Sweden, Turkey, and Switzerland) in which investment was above economic growth. Finally, in France, Hungary, Iceland, and Poland,investment was below economic growth.

Although the role of teachers and researchers is central in both the restructuring and internationalization of education and research, not all teachers and researchers participate in the new drive (Leisyte and Enders 2011). Moreover, the new system and its governance indirectly contributed to growing differentiation among and within universities. The need to rely increasingly on external resources allocated in a competitive way gave an advantage to universities which could set up the necessary structures and competences. These are mostly large universities from more developed and better organized countries. Within universities, the differentiation between individuals and research groups was equally noteworthy. Although many took a passive attitude, others became proactive, took initiative, and competed successfully. The distinction was in part based on reputation and positive outcomes of research and education assessment. However, in many cases, the strength of the home university and the ability to be part of strong networks also played important roles. In a survey undertaken in 2017 with responses from 303 institutions from 43 higher education systems, the European University Association (EUA)¹³ found that “National strategies, where existent, seem to give impetus and serve as a driver for institutions, although they do not stand out as the first source of inspiration for institutional learning and teaching strategies. Overall, institutions that have a learning and teaching strategy seem more influenced by university alliances at the national, regional, or international level” (Gaebel and Zhang 2018, p. 7). National strategies exist in 78% of responding institutions, while external quality assurance and fundingand financialincentives to foster compliance exist in more than half of respondents, supported by European instruments, such as the Standards and Guidelines for Quality Assurance in the European Higher Education Area and the European Qualifications Frameworks. Although all these measures are generally considered to be useful for the quality of higher education, there is concern for the growth of bureaucracy, the restriction of autonomy and academic freedom, and the risk of decreasing traditional institutional funding.

Overall, “…governments remain the primary funding source for higher education institutions. The figures and trends show that European investment in education and R&D, especially from private sources, is not pushing Europe towards parity with its global competitors….” (Enders, de Boer, File, et al. 2011, p. 9). Moreover, European countries are different, with the countries of Southern Europe and even more so of Eastern Europe in disadvantaged situations. “Any effort at integrating higher education into a European Higher Education Area will invariably need to accommodate an increasingly rich variety of systems with regard to cultural norms, economic policies, organizational structures and GDP levels” (Enders, de Boer, File, et al. 2011, p. 9). The added value of the Bologna process in this perspective is that of mutual adjustment: “…a process in which national governments continue to adapt their policies nationally, but in response to, or in anticipation of, the policy choices of other governments” (Faber and Westerheijden 2011, p. 15).

Thanks to voluntary coordination, the international mobility of students and teachers increased dramatically and the development of transnational research groups was also an undeniable European success. Moreover, the reform of degrees has open the way to setting common European standards for quality assurance and learning outcomes. Again, these are commonly set goals that national governments have to implement through a system of self-certification by national authorities against a common checklist (http://www.ehea.info/page-qualification-frameworks). Due to the sensitivity of the issue, the coordination work continues also through the work of the Bologna Follow-up Group (BFUG) (http://ehea.info/page-the-bologna-follow-up-group).

There are still problems in the implementation of the commonly agreed standards and structures, with countries often going their own way in both the degree of implementation and the particular features of the implemented standards (EC 2018d). Idiosyncrasies concern both EHEA foundations (three-cycle degree structure including ECTS and Diploma Supplement, recognition of qualifications and quality assurance) and priorities added subsequently (learning and teaching, social inclusion, and employability).

Most EHEA countries have implemented the three-cycle degree system in line with Bologna guidelines, although some countries still need to implement further reforms. Significant differences persist in degree structures, in particular in labor market recognition of first-cycle qualifications. In half of the countries, the majority of first-cycle graduates continue to study in a second-cycle program. Conversely, in a quarter of countries, less than 25% move directly into the second cycle. Moreover, different countries offer different, usually shorter higher education programs, usually vocational in character or outside the three-cycle-degree structure. In some cases, these programs are not recognized within the national higher education systems. ECTS has been adopted in most countries for credit accumulation and transfers, with learning outcomes and student workload increasingly used as the basis for credit allocation, although European rules are not yet the common basis for the correct implementation of the system (EC 2015b).

The Diploma Supplement is implemented in most countries according to commonly agreed principles, except the third cycle. Also the implementation of national qualifications frameworks (NQFs) is in line with the Framework for Qualifications of the European Higher Education Area (QF-EHEA) in most countries. Correspondence is self-certified and the national qualifications framework is used by national authorities in public policy and for coordinating qualifications across sectors and levels of education. With this progress, the content of national legislation and regulation is generally coherent with the international legal framework. Formal compliance with most aspects of the Lisbon Recognition Convention (LRC) of 1997 at national level is well established across EHEA (https://www.coe.int/t/dg4/highereducation/recognition/lrc_EN.asp?). There are still important recognition problems, though, while automatic recognition still requires considerable effort.

Considerable quality assurance achievements concern primarily internal practices. External quality assurance is usually undertaken by independent agencies working in line with the Standards and Guidelines for European Quality Assurance (ESG) (https://enqa.eu/wp-content/uploads/2015/11/ESG_2015.pdf). Unfortunately, national legislations restrict the fulfillment of external quality assurance to the use of national quality assurance agencies and prevent the implementation of the European Approach to the Quality Assurance of Joint Programmes (https://www.eqar.eu/assets/uploads/2018/04/02_European_Approach_QA_of_Joint_Programmes_v1_0.pdf).

Among subsequently added priorities, employability is particularly important for the labor market, yet problems are still significant and differences among countries important. Systematic efforts are needed to improve the relationship and match between higher education and the labor market. The problem is particularly significant in some countries, where graduate unemployment remains a significant problem.

5 Industrial Specialization, Financial Stability, and the Output of Universities

Pursuing economic value and adapting to new situations and opportunities are two fundamental aspects of European universities. The former comes from world trends and growing financial difficulties for governments in financing universities. The latter reflects the EU’s will and the member countries’ determination to create a European frame for HEIs and harmonize national education systems to support the integration of labor markets. Much of the EU action is concentrated on moving governments and universities in this direction, by proposing strategies and goals and providing (part of) the necessary resource basis. National governments are called to implement the necessary reforms.

European higher educationand research institutions have to strengthen the value of their education and knowledge output, leading to greater competition among universities. Moreover, universities should strengthen their economic basis, particularly important goal following the international crisis and the fiscal crisis of many European states. As a consequence, a kind of inefficient dichotomy developed between humanities and social sciences on one side and natural sciences and technology on the other. In research, the latter became prominent and enjoys increasing investments both in absolute and in relative terms. At the same time and similarly to the United States, enrollment in social sciences slightly increased in recent years, while that in natural sciences and technologies institutions slightly diminished (Eurostat database).¹⁴

The trend was not identical in all EU member countries, though. Universities of different countries pursuing economic value play different roles and are in diverse situations. Particularly important is the ongoing process of differentiation of international specialization within the EU, with important consequences for the demand of competences and skills. This creates different conditions for and places diverse requirements on universities, and opens different opportunities for people holding degrees.

The EU is losing in innovation strength and competitiveness (Sonderman 2012), particularly vis-à-vis Eastern Asia, and has scattered internal innovation pattern (EU 2018a). Most EU member countries—including all of Central and Eastern Europe, their regions (except Prague) and an important part of the regions in old member countries—are moderate and modest innovators (EU 2018b; Hollanders et al. 2009). Countries and regions of Northern Europe (Sweden, Germany, Denmark, and Finland) are innovation leaders. However, recently important signs of EU industrial policy for technologically highly advanced productions are taking hold (Hall and Milne 2019).

The EU behaves like a kind of two-faced Janus. Member countries are increasingly split in their economic strategies. Various cases around the world, including the United States, China, and Northern Europe, show that success depends on these countries’ ability to foster a systematic approach to innovation, within which higher education and research have a central role, together with governments and business. Unfortunately, this is not the general case for Southern and Eastern EU member countries. The lack of a systematic approach to innovation and competitiveness in an important part of the EU is a serious problem for the process of integration, a problem that the EU reaction to the international economic crisis exacerbated. As a consequence, universities play different roles and the achievements of higher education differ considerably within the EU, although in recent years there was a general improvement in all member countries, at least in quantitative terms (Fig. 1). Yet the ratio 2:1 between the best and the worst performers remained roughly unchanged and strong differences in the levels of expenditure per enrolled student continue to persist (Fig. 2).

Fig. 1

(Source Elaboration on Eurostat database [https://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=sdg_04_20&plugin=1])

Tertiary educational attainment, by country, 2000 and 2018 (% of the population aged 25–34, 25–64 and 55–64)

Fig. 2

(Notes *2014, **2015, ***Private government dependant institutions. Source Eurostat database)

Annual expenditure on public educational institutions per student at tertiary level of education (ISCED 2011), 2016

The strategy prevalent in Southern and Central-Eastern European countries is based on cost cutting, as envisaged in the European Competitiveness Pact of 2011. Stabilizationpolicies in financially unbalanced countries, such as Greece, Spain, Portugal, and Italy until 2013, strengthened this approach. While technical innovation was pushed to the background, this strategy foresees that countries gain competitiveness by decreasing wages and weakening welfare through internal devaluation and austerity policies. Inevitably, these countries are pushed to specialize in productions where competitiveness through cost cutting may compensate for a lack of innovation and higher productivity. These are productions where the competition from emerging countries is strong and growing. Consequently, the role of universities as producers of knowledge and skills becomes weaker and universities may be seen as a cost and not a resource for the country. In these countries the allocation of public resources to universities decreased. Cheaper labor means less demand for highly educated people and lower return to human capital (Corak 2013).

The case of Northern European countries is remarkably different. Their EU references are the Lisbon Strategy and Europe 2020. The key elements of these strategies are investments in innovation, knowledge infrastructure, and human resources, plus high-quality services to support investment and attract resources. The role of universities is central for both high-level education, the number of degrees, research, and their cooperation with enterprises (Nielsen 2018). This strategy appears economically stronger and socially stable. Moreover, it guarantees remunerations in line with the existing level of income and quality of life. Northern European countries thus outperform other member countries in innovation, level of education, resources devoted to education, standard of living, social stability, and international competitiveness.

Financial stability is another factor that may have important consequences for universities. Following the international crisis, government expenditure on education as a ratio to GDP decreased by 0.5% in the EU over the 2003–2017 period: it was 5.1% of GDP in 2003 and decreased to 4.6% of GDP in 2017. As a share of government expenditure, and considering that overall government expenditure as a ratio to GDP decreased by 0.4% over the period, the share of expenditure on education in total expenditure decreased more, from 11.0% in 2003 to 10.2% in 2017 (Eurostat 2019). The implementation of austerity policies made the situation particularly difficult in countries of Southern Europe, where the financial situation of universities worsened dramatically for two reasons.

First and foremost, governments decreased their financing. In distressed countries, governments gave priority to fund primary and secondary education. As a consequence, public funding for tertiary education decreased as a share of overall funding for education, while private funding increased only marginally. Second, austerity worsened the financial situation of families and persons, many of whom had difficulties in pursuing university studies. As a consequence, the number of enrolled students in distressed countries decreased (OECD 2018). Similar observations hold for research expenditures, both public and private (Fig. 3). The crisis led part of the EU into a weak position, one that is bound to have permanent negative consequences for the future and may jeopardize European integration.

Fig.  3

(Note Public sector includes Government sector, Higher education sector, and Private non-profit sector. Source Eurostat database [retrieved 24 March 2020])

Gross domestic expenditure on R&D, by sectors of performance, by country, 2018 (% of GDP)

Although consequences were direct and negative for universities’ financial and human resources, negative effects did not necessarily translate directly and fully in the quality of their work. Universities in distressed countries relied on their traditions and implemented resilience strategies, sometimes successfully. Pastor and Serrano (2016) find that research output does not depend exclusively on the amount of available resources. The weight of some countries—Bulgaria, Romania, Croatia, Cyprus, Slovenia, Hungary, Greece, and Portugal—in terms of publications is more than twice their weights in terms of R&D expenditure. Conversely, the weight of some larger countries in terms of R&D expenditure—Germany and France, but not the United Kingdom, Spain, and Italy—is higher than in terms of publications. Similar conclusions hold in terms of scientific output per capita, where intercountry differences are even larger (Figs. 4 and 5). A more refined analysis needs a distinction among sciences in both inputs (human and financial resources) and output (such as number of students obtaining degrees and publications).

Fig. 4

(Source Elaborations on data from World Development Indicators, World Bank)

Researchers (right axis) and scientific output related to R&D personnel (left axis), 2016

Fig. 5

(Source Elaborations on data from https://knoema.com)

H index score and rank, 2019

6 Conclusion

The chapter critically analyzes the evolution of European higher education and research systems within the frame of European integration, stresses achievements under the leadership of the European Commission, highlights problems, drawbacks, fault lines, and challenges ahead. Part of these problems comes from the external context, particularly unfavorable for universities following the international crisis and austerity policies. However, many difficulties come from the very nature of the EU: a club of countries with different national educational and research systems, with different specializations and strategies, separated national labor markets. Although countries keep sovereignty in education and in part also research, the EU successfully coordinates member countries in the far-reaching and ambitious process of transforming higher education institutions and pursuing increasing integration of research and the educational system. Unfortunately integration of labor markets did not match this effort and the consequences are particularly disadvantageous in the Eurozone and contributing to high levels of youth unemployment, including highly educated people in selected countries.

In spite of problems and disparities, results are important and overall positive. Among the most important positive outcomes are growing numbers of students having the opportunity to spend significant periods of their academic life in another country, while continuing their career at the home university. It is expected that these persons, once active in the labor market, will effectively take European values ahead and actively support European integration, although so far evidence is not conclusive.

On the minus side and in spite of EU efforts, universities are still be largely funded through national public resources, while fiscal rules hardly stimulate private donors. Administrative approaches still dominate national public financing, i.e., financing after the number of students enrolled, or the number of teachers, with a modest role given to outcomes. European responses to the international crisis magnified these features and led to severe cuts in financing universities in various countries. Even the recognition of degrees within the EU, a goal pursued with determination, is still partial and meets various obstacles. This hinders the integration of the European labor and skill markets. In most European countries enterprises, governments and universities have difficulties in cooperating and coordinating their visions and activities. Universities were not particularly successful in establishing stable intercountry and interregional knowledge and research networks, in spite of EU programs and support, although lately some interesting institutional progress is taking place. Finally, although the new system led to growing education and research level and quality, growing standardization, bureaucratization, transaction costs, and burdens on teachers and researchers had negative effects on academic life and the traditional critical role of universities.

Universities combine three main missions: education, research, and the third mission. Traditionally, prominence of top universities is in research, which also brings advantages to the other two missions. However, not all universities are equal and play the same role and countries are different. In later years the accent of academic policies moved to the advantage of education. This move has been particularly relevant in the EU, for good political, social, and economic reasons. There is a need to support integration within the EU, particularly so in the labor market of the Eurozone. Although the public role of universities in research remains invaluable, the role of education is prominent also for the economy. Enterprises have a keen interest in hiring good quality graduates, perhaps the fundamental and most effective mover of innovation and competitiveness. From this descends the interest of enterprises in maintaining links with universities also in the field of education: “…far too much attention has been paid to the contribution universities make to economic development such as spin-offs, patents and licensing as means for technology transfer, and … insufficient attention has been paid both in Europe and in the US to the contribution of universities to local and regional labor markets, through graduated students …” (Lawton Smith 2006, p. 6).

The nature of the European integration, particularly in the monetary union, dramatically needs a more integrated higher education system as a necessary precondition for an integrated labor market. Yet there is a deep contradiction in the European construction: the European strategy and policy in the field of higher education has a soft and dynamic nature, based on the voluntary participation of member countries, continuous interaction and adaptation, and mainly national financial resources. Conversely, the monetary union is eminently coercive and static in its nature. After having freely decided to adopt the common currency, a country has to comply with predefined rules of financial discipline and accept monetary decisions taken looking at the entire Eurozone needs. The advantages from the monetary union are also considered in a static perspective of lower transaction costs and risks. The Economic and Monetary Union misses the fundamental dynamic perspective of growth and development. Without this perspective it is illusory to expect that labor markets can really integrate and avoid one-way brain and skill drain within the EU, with problematic consequences for the European integration.