American Universities in a Global Market (review)

For countries such as the U.S. at the world technological frontier, industrial innovation is the principal means of sustaining economic growth and productivity (Aghion, 2006). The U.S. "academic research enterprise" (ARE)—the internationally respected private and public research universities that produce the bulk of our academic research and doctoral graduates—is therefore not only a source of national pride but a primary contributor to America's technical innovation, economic success, and competitive advantage (Dill & van Vught, 2010). Two recent reports by the National Academy of Sciences (COSEPUP, 2006, 2010) raise serious and increasing concerns about the future strength of our national innovation system and particularly about the performance of U.S. higher education. As other countries adopt the U.S. strategy of investing in mass higher education and strengthen their ARE, the U.S. is beginning to lag in the production of STEM fields graduates (i.e., science, technology, engineering, and mathematics), in native-born S&E (i.e., science and engineering) doctoral students, and in the quality of our published research. In particular there is a concern that the U.S. will become less competitive for the best and brightest foreign-born doctoral students on which our higher education system and economy have come to depend.

In this highly informative volume Charles Clotfelter and his fellow economists from the National Bureau of Economic Research (NBER) pursue the question of how the changing world market for academic research and advanced training may affect U.S. universities and their international standing. In contrast to some of the literature on the emerging global market of higher education, the papers in this collection are distinguished by their balance and rigorous empirical approach. The first part of the book examines the performance of U.S. universities as firms competing in the international market for able doctoral students and for the provision of academic programs overseas. The second section examines the policies and practices of our emerging competitors, the countries of the European Union as well as the Asian countries that are primary sources of America's S&E doctoral students.

An introductory analysis notes the dramatic decline in U.S.-born doctorates in STEM fields after 1970 despite an 84% increase in American students attending college since that time. There is evidence of high defection rates among U.S.-born undergraduates who initially choose to major in engineering, the sciences and math, and these defection rates are attributed primarily to rational choices as students select majors such as finance and accounting with higher average salaries. But this analysis appears incomplete as the lifetime earnings (and alternative opportunities) for students who do major in STEM subjects are substantially greater than in many other fields with increasing enrollments, which suggests a significant and still unexplained market failure.

A thoughtful analysis of the large increase in foreign doctoral students in recent decades emphasizes they have enrolled primarily in public university fields outside the top-ranked programs and therefore have likely not "crowded-out" U.S.-born students. A related paper by Black and Stephen also includes an enlightening exploration of the current nature of doctoral education and research in the sciences. Based upon a cleverly designed study of the authors of recent articles in the respected journal Science, Black and Stephen discover that even as doctoral and post-doc students the foreign-born make important contributions to the production of U.S. world-class academic research. Unfortunately these informative analyses of the benefits of foreign-born doctoral students do not effectively assay the social costs of this policy. For example, the large numbers of foreign-born doctoral students from developing countries depress the wages of U.S. PhDs and post-docs in STEM fields, wages which as argued in the earlier paper discourage U.S.-born undergraduates from enrolling in these subjects. The paper on the provision of overseas academic programs by U.S. colleges and universities concludes, unsurprisingly, that even leading...