Why Germany will overtake the UK as Europe’s leading education provider?

So far, most of my blog posts have been (geographically) focused around internal issues in the UK, US and selected Eurozone economies. Now I’ll move a bit “cross-country” which is why this month’s texts will be (mostly) concerning cross-country comparisons. The first post of the month on China has been in that direction.

The success of the US

Education has always been the creator of progress in a society. Technological advancements and innovation (based on secured property rights and the functioning rule of law which prevented new inventions from exploitation) have been the drivers of growth of the United States ever since it was founded. But the rapid accumulation of knowledge and technological innovation didn’t start in the US until after WWII. One proof of this is the disproportional size of Nobel prize winners situated in the US prior and post WWII. With Germany, UK and France leading the way in sciences prior to the War, in the last 60 years the US has outpaced them significantly. It currently holds more Nobel laureates than the first three countries following it on the top list combined. The vast majority of America’s laureates comes from after the War (see here or click on image to enlarge it).

They had a bit of luck at the time to attract all these people, as they mainly came to the States escaping from the Nazi threat in Europe. But the Americans quickly seized this advantage and realized the potential of having all these people in the country. For one thing, the expertise of the world’s leading physicists at the time led to the creation of the atomic bomb, winning the War for the US on the Far East front. It wasn’t hard to realize the importance of having these people stay, in both military terms and economic terms. So the great progress of the United States in technological, military and consequentially political terms began when they started focusing on attracting the best and the brightest. This is a lesson some seem to be forgetting.

While the UK closes its borders...

Even though the UK is currently by far Europe’s most influential education provider, having the reputation of its top educational institutions attract many foreign students in search for a high quality education, the immigration policies aimed to reduce a number of immigrants each year to less than 100,000 by 2015 are hurting the influence of these institutions. This ‘cap on quality’ will make it much harder for Britain to attract top class students wanting to study in the UK, not to mention its negative impact on British businesses. 

Migration caps are generally one of the most ridiculous policies aimed to preserve jobs for domestic workers. If migrants are happy to work for less, so be it. It will cut the costs to business owners making them more open to invest and expand their business later on. The labour market signalization is just another type of specialization patterns that tend (in the long run) to allocate labour to where it is most productive and most efficient. 

The most ridiculous argument against immigration is that it causes congestion in public transportation. Don’t immigrants pay for these services? They don’t ride for free, even if they’re students. Monopolies such as Transport for London can only benefit from the economies of scale and from having more customers paying for their overpriced services offering almost no value for money. 

Besides, anti-immigration policies are highly discriminatory. Why is someone worth less if he’s not of an EU, UK or US origin? Talk about equality. 

Source

But I digress. Attracting talent has become even more important in the current era of globalization where the focus is on creating value. And unique talent which the UK is lucky to attract due to its historically strong educational institutions is the most important parameter in creating value. By throwing this away the UK is seriously undermining its long and medium run competitiveness. 

By putting a cap on quality, the current government is again shooting itself in the foot. The attractiveness of the UK as a place to study and a place to live and generate wealth in, is highly undermined. The graph illustrates this. Signals sent to students that they aren’t welcomed in the UK anymore will only encourage them to seek education and employment elsewhere. Most likely in Germany.

...Germany opens them  

While the UK is closing its doors, another European giant is opening them widely. Germany, already overtaking the UK in economic and political power, will soon do so in the field of education as well. 

The Germans are done with bringing in the low-skilled cheap labour from Turkey and Eastern Europe and they now want to attract the best and the brightest from these areas as well – building primarily on the positive social context in which Germany is presented in these countries (bear in mind that a lot of remittances were flowing out of Germany at the time, having a substantial effect on domestic incomes of the people from emigrant countries). 

But they aren’t stopping there – they seek to attract all those who got rejected by the UK. They are offering an amazing range of scholarships that encourage students from the Far East, Middle East, Eastern Europe and anywhere where there is a concentration of quality which cannot excel in the country of origin, to come and study in Germany. They offer to pay the tuition fees, send the students to study German and encourage them to stay in the country after graduating. Germany is essentially adopting the same strategy the US adopted in post-war reconstruction. 

As a comparison, in the post-war reconstruction both of these nations attracted a lot of migrants – Germany to rebuild the country’s destroyed infrastructure, and the US continuing on the war and pre-war patterns of attracting the brightest of minds. The results were exceptional for both of these countries but Germany has now reached a point where it can focus on the long-run educational strategy to preserve its dominance in Europe. Just like the US did 60 years ago. 

I’m always careful in making bold predictions (because I don’t trust them), but in this case I dare to say that in 20-30 years from now German universities will be better ranked than UK’s and will have a better perception among the non-EU population. That is, if all things stay equal of course, meaning that if the UK continues discouraging high education and if Germany continues to encourage it.