UNESCO Forum on Higher Education, Research and Knowledge

The Impact of Globalization on Higher Education and Research in the Arab States

Selected Proceedings

Regional Research Seminar, Rabat, Morocco, 25-26 May 2007

The authors are responsible for the choice and the presentation of the facts contained in this book and for the opinions expressed therein, which are not necessarily those of UNESCO and do not commit the Organization. The designations employed and the presentation of material throughout this publication do not imply the expression of any opinion whatsoever on the part of UNESCO concerning the legal status of any country, city or area of its authorities, or concerning the delimitation of its frontiers or boundaries.

Published by the United Nations Educational, Scientific and Cultural Organization 7, place de Fontenoy 75352 Paris 07 SP France

Regional Research Seminar coordinated by The Secretariat of the UNESCO Forum on Higher Education, Research and Knowledge and Faculty of Sciences Mohammed V Agdal Rabat Morocco

UNESCO 2007 Printed in France

Table of Contents

List of Abbreviations Foreword Mary-Louise Kearney Summery Report English Munir Bashshur Summery Report Arabic Munir Bashshur Funding and financial performance of private higher education institutions in Kuwait Imad M. Al-Atiqi Mohamed El-Azma Globalization and education Darim Albassam Knowledge-based economies: globalization and the business of science Wail Benjelloun WTO/GATS: Possible implications for higher education and research in the Arab States Abdalla R. Bubtana Funding higher education in the Arab States: thoughts and reflections on the topic Ali El-Hawat Research and development in the Arab States: the impact of globalization, facts and perspectives Albert Sasson Higher education, R&D, economic development regional and global interface Antoine B. Zahlan Appendix PowerPoint Presentation on New Roles for Arab Schools and Universities in a Knowledge-Based Society Professor Abdullateef H. Haidar Al Hakimi

5 7 11 35

51 75

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List of Abbreviations
ABEL ACE ACK ADFC AGFUND Association BioEuroLatina. Advisory Centre for Education. Australian College of Kuwait. Abu Dubai Future Energy Company. Gulf Programme for Support of United Nations Developmental Agencies. AIHR Arab Institute for Human Rights. ALECSO Arab League Educational, Cultural and Scientific Organization. AOU Arab Open University. API Arab Planning Institute. ASTF Arab Science and Technology Foundation. ATF Arab Thought Forum. AUCC Association of Universities and Colleges of Canada. AUK American University of Kuwait. BWTC Bahrain World Trade Centre. CAUS Centre for Arab Unity Studies. CAUT Centre for the Advancement of University Teaching. CEDOs Consulting Engineering Design Organisations. CEH Centre of Excellence in Healthcare. CHEA Council for Higher Education Accreditation. COMSTECH Science/Technology Committee of the Organization of the Islamic Conference. CROs Clinical Research Organizations. CVCP Committee of Vice-Chancellors and Principals. DAD Dar Al Dawa . DADVet Veterinary and Agricultural Industrial Co. Ltd. DUBIOTECH Dubai Biotechnology Park. EAD Euro-Arab Dialogue. EI European Institute. EU European Union. EUA European University Association. FDA Food and Drug Administration, US. FMHS Faculty of Medicine and Health Sciences. FTA GASB GATS GATT GCC GDP GERD GFCF Free-Trade Agreement. Governmental Accounting Standards Board. General Agreement on Trade in Services. General Agreement on Trade and Tariffs. Gulf Cooperation Council. Gross Domestic Product. Gross Expenditure on R&D. Gross Fixed Capital Formation. 5

GMP GNP GUST HC HE HLM HR HRCC HSP IAS IAU ICARDIA ICTs ILO IPRs ISESCO ISI JORAS KMBS LDCs MAD MIT MOH NGOs OIC OTC PBL PECDAR Ph.D. PMI PUC R&D S&T-System SAIDAL SAIPH TRALAC TRIPS TT UAE UB UNDP UNESCO UNIDO UNU-IAS WCHE WTO WTO/GATS

Good Manufacturing Practices. Gross National Product. Gulf University for Science & Technology. Human Capital (educated persons). Higher Education. High Level Manpower. Human Resources. Human Rights Consultative Council. Highly Skilled Personnel (university graduates). International Auditing Standards. International Association of Universities. International Centre for Agricultural Research in Dry Areas. Information and Communications Technologies. International Labour Organization. Intellectual Property Rights. Islamic Educational, Scientific and Cultural Organization. Institute of Scientific Information. Pharmaceutical Spa, Algeria. Kuwait-Maastricht Business School. Less-developed countries. Moroccan Dirhams Massachusetts Institute of Technology. Ministry of Health. Non-Governmental Organizations. Organization of Islamic Countries. Over-the-counter. Problem-Based Learning. Palestine Economic Council for Development and Reconstruction. Doctor of Philosophy. Peat Marwick International. Private Universities Council. Research and Development. Science and Technology System. Pharmaceutical Production, Algeria. Socit Arabe des industries pharmaceutiques. Trade Law Centre for Southern Africa. Trade-Related Aspects of Intellectual Property Rights. Translation Technology. United Arab Emirates. University of Beirut. United Nations Development Programme. United Nations Educational, Scientific and Cultural Organization. UN Industrial Development Organization. United Nations University Institute of Advanced Studies. World Conference on Higher Education. World Trade Organization. World Health Organization/General Agreement on

Foreword
The UNESCO Forum on Higher Education, Knowledge and Research is pleased to present the publication, entitled The Impact of Globalization on Higher Education and Research in the Arab States. This volume emanates from the second regional research seminar of the Forums Scientific Committee for Arab States which was held in Rabat in May 2007 and hosted by the University of Mohammed V-Agdal, in cooperation with the Moroccan National Commission for UNESCO and the UNESCO Office in Morocco . At the outset, it is appropriate to situate this publication in relation to the aims of UNESCO Forum and, thus, to contextualize the specific issues related to the higher education in the Arab States region today. The UNESCO Forum focuses on the role and status of national research systems and international trends in this domain in relation to the challenges posed by the Knowledge Society of the 21st century. Located at UNESCO and supported by the Swedish International Development Agency (Sida), the UNESCO Forum provides a platform for researchers, policymakers and relevant stakeholders to engage critically with the key elements unpinning research systems: policy trends, infrastructure, human capacity, and investment. This project has assured follow up action for two major UNESCO conferences, and the 1999 World Conference on the 1998 World Conference on Higher Education

Science , and links closely to the intergovernmental programme for the Management of Social Transformation ( MOST), located in the Sector of Social and Human Sciences. Since 2001, the UNESCO Forum has consolidated its efforts to bridge research and policy in a number of ways through facilitating and broadening the space for critical debate and through revisiting the established and dominant views so as to reconceptualize future directions. To date, its various components for attaining these goals - mobilizing experts, stimulating global and regional debate, producing and disseminating research, promoting strategic partnerships, facilitating communication and strengthening the systemic approach have yielded creditable results. The UNESCO Forum believes that it is central to reaffirm the importance of research at the current moment given the rapid developments since 2000 in knowledge production and management and their ramifications for social change and progress. Research on research has become, therefore, even more crucial and is now well recognized as a major field of enquiry for international organizations, charged with advising their member

states about the questions involved. In this regard, the World Bank and the OECD are key partners of the UNESCO Forum. The UNESCO Forum pursues a systemic approach to the analysis of research so as to address strengths and weakness, as well as specific issues and concerns, in a critical manner. This work will embrace research and in both industrialized and emerging contexts, as well as researchers whether reputed or at the start of their careers. The central objective is to promote ongoing research and to place significant results in the public eye. development. Today, unprecedented emphasis is being placed on research as key motor for advancing the Knowledge Society and its offspring, the Knowledge Economy. Consequently, research on the state of research has moved high on the priority agendas for governments, for their specialized agencies and bodies devoted to this area, and for higher education institutions. Thus, it becomes essential to map and analyse systems to acquire an understanding of their functioning and of their future requirements This systemic approach necessitates the study of specific issues arising from the various areas involved. In this regard, key challenges facing education systems in the Arab States, and the contribution of higher education in addressing these, merit serious actual and forward-looking analysis. The present publication focuses on the major areas of the research seminar: globalization and education, higher education, R and D and economic development with reference to regional and global interfaces, and the funding of higher education and scientific research. The experts writing in this volume present a strong case for renewing higher education and science systems to meet the challenges of the Knowledge Society, as well as the United Nations Millennium Development Goals. The MDGs now orient the efforts of member states to overcome the most pressing problems resulting from poverty and exclusion so as to promote more equitable social progress. Against this background, higher education and science systems today must seek flexibility and innovation, while still maintaining their traditional commitments to quality and relevance. As this research seminar reiterated, higher education, though its mission to promote research generating advanced knowledge has a unique and invaluable contribution to make to this systemic renewal. Consequently, research may be more original, innovative and effective, thus leading towards more sustainable human

The UNESCO Forum

expresses its gratitude to the Arab States Regional Scientific

Committee for their dedicated efforts to conceptualize and organize the seminar and to ensure a very rich and thoughtful report. In this regard, special thanks are due to Professor Nouria Lakhdar-Ghazal, Chair of the Organizing Committee, and to Professors Nouria BenghabritRemaoun, Zakia Bouaziz, Munir Bashur, Mustafa O.Attir, and Mohamed Najib Abdul Wahed. The outcomes of this research seminar are intended to provide fresh insights for policy makers, the higher education community and scientific researchers alike as they address the main issues facing the Arab States in the Knowledge Society of the 21st century.

Mary-Louise Kearney, Secretariat The UNESCO Forum for Higher Education, Research and Knowledge

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The Impact of Globalization on Higher Education and Research in the Arab States

SUMMARY REPORT1 Munir Bashshur (General Rapporteur)

Preface 1. Terms of Reference The main idea underlying the Seminar was that globalization has ushered a new stage in the history of world civilization, and that people, wherever they are, are affected by its dynamics whether they are willing or hesitant partners. Along with this, it is recognized that while education, as an activity, has been significantly affected by globalization everywhere, but, as a discipline or a field of study, it has fallen short of giving globalization the attention it deserves compared with what is given to it by other disciplines such as economics or political sciences. This faltering in attention or concern is particularly evidenced in the Arab region, where globalization is frequently mentioned as a target, but rarely dealt with as a phenomenon that requires serious examination. globalization and its impact on higher education. Hence this Seminar, focusing on

2. Scope and Organization The Seminar was organized around four themes: Session l gave a general introduction to the topic; it included three keynote addresses and one keynote presentation. Questions of definitions of education, culture, knowledge, knowledge society, and globalization were raised and answers given to them emphasizing a new turning point for the world, and an opportunity/challenge for the Arab states.

This Report made use of notes and observations that appeared in individual reports submitted by the Rapporteurs of Session 2 of the Seminar, Prof. Zakia Bouaziz, and Session 4, Prof. Nouria Lakhdar Ghazal, and in notes submitted by the Rapporteur of session 3, Prof. Mohamed Najib Abdul Wahed. The contents of the presented papers however, and ideas expounded on them by their authors during presentations, constituted the main source of ideas in this report. 11

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Session 2 took for its theme the WTO/GATS Agreement and its implication for the Arab states. Four presentations were made in this session, a mixture of theoretical and case study reports. Session 3 explored the implications of globalization for research in higher education and also included theoretical as well as case study reports. Session 4 took up the question of funding of higher education and scientific research in four presentations, one covering the Arab world as a whole, and the remaining three covering cases in individual countries. Session 5 was the closing session; had a general discussion, reports on previous sessions and an end note presentation delivered by the Dean of the Faculty of Sciences at Mohammed V University where the Seminar was hosted.

SESSION 1- KEYNOTE ADDRESSES 1. Globalization and Education (Darim Albassam) 1.1 Globalization: definitions and Challenges 1.1.1 Globalization is evidenced in the structural changes in the global economy where knowledge, education and learning have become crucial factors of production. 1.1.2 This structural change may be expressed in a shift from the FordistTaylorist model of development to one based on innovation-mediated production. The first rested on 3 pillars: the factory system, scientific management and the assembly line. The second is based on the blurring of distinctions between mental and physical labor and on the increasing application of knowledge to the processes of production. 1.1.3 Another component of globalization is the increase in the connectedness of the world and the growing interdependence of people and countries. 1.1.4 A major manifestation of globalization is in the area of information revolution. Previous generations were faced with scarcity of information; the present generation is challenged by abundance of information. 1.2 Educational implications of globalization

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1.2.1 New habits of the mind are required, expressed in terms of tolerance for and understanding of ambiguity, complexity and uncertainty. 1.2.2 Problem-based learning (PBL) becomes central; it requires inquiry, information gathering and reflection (information management) and processing of knowledge. 1.2.3 A shift from education for conformity to education for creativity; from individual to partnership and group work. 1.2.4 For the Arab world globalization highlights the need for strategic imagination which will render alternative scenarios of reform that deal 1.2.5 with two of the conditions that most affect decision making in a globalized world: uncertainty and complexity. 2. Higher Education, R & D, Regional and Global Interface ( A.B. Zahlan) 2.1 Nature and extent of knowledge gap in Arab societies 2.1.1 Arabs have more university students studying at home and many more studying abroad per million population than China or India. Some 12,000 Arabs earn Ph.Ds abroad annually. 2.1.2 The problem is not in the amount (stock) of human capital available or produced but in their employment and contribution to development at home: 85% of Arabs who obtain Ph.Ds abroad brain drain. On a per capita basis the Arab brain drain is 4 times greater than that of China and 5 times that of India. 2.1.3 Investments made through turnkey contracts make little provision for technology transfer, hence they do not generate local employment. They result in a low multiplier factor. 2.2 Research activity in the Arab region is abnormally low in terms of allocated funds, publication output and cooperation among researchers. 2.3 Measures to overcome current difficulties: 2.3.1 Independence, i.e., give the opportunity to Arab companies to compete with outsiders. 2.3.2 Scientific cooperation and collaboration. 13

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2.3.3

Insure technology transfer through participation.

3. Funding of Higher Education and Scientific Research (Iman El-Kaffass) This presentation was in the form of a slide show, highlighting the following: 3.1 Where do funds come from? Are they enough? 3.1.1 97% of research funds in Arab states come from government compared to 30% in Canada, Sweden and Singapore, and 18% in Japan. 3.1.2 1.5% of GDP in Arab states goes to research ( 0.9% in Egypt), compared to 2.5% in Europe. 3.2 What is to be done? 3.2.1 Link education to development, and research to social needs (this was illustrated by a slide show on students training for leadership in development at the American University in Cairo, Egypt). 4. Remarks and comments from the floor on Session 1 4.1 Globalization is here to stay; need to deconstruct the concept and then reconstruct it to make it more meaningful and relevant to Arab needs. 4.2 Forces of globalization started long time ago. Science in its very nature is universal (global). 4.3 There are huge investment outlays in the Arab region in various fields; something is wrong in a region where there is so much to do and yet so many qualified people leave. 4.4 We have been addicted to foreigners to solve our problems; since Moh. Ali in Egypt 200 years ago, the approach was to import experts rather than depend on our own.

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5. Keynote Presentation: Research and Development in the Arab States: the Impact of Globalization: Facts and Perspectives (Albert Sasson)

The position of the Arab states in terms of research and development is clearly low compared to most other regions of the world, but this should not hide some success stories. Examples of success are given in three areas: biotechnology, pharmaceutical industry and renewable energy. 5.1 Biotechnology: achievements in this field are noted in Egypt and Tunisia. In the later, the Pasteur Institut of Tunis employs 370 persons 60 of them are scientists; the Institut acts as an R & D center as well as a training ground for some 100 graduate students per year; its output in terms of publications and patents is considerable. The activities and programs of the Institute however are closely associated with overseas teams, particularly in France, where there is an important diaspora of Tunisian scientists, physicians and engineers Also in the United Arab Emirates (UAE) University- Faculty of Medicine and Health Sciences where significant research is taking place in clinical and molecular immunology in cooperation with Italian teams, and with institutes in the UK and the USA. the UAEU office of research is very active in engaging industrial and private support for research fundingthe pro-business approach of the government and its forward looking mindset [has led] to the setting up of Dubai Biotechnology Park and the Arab Science and Science Technology Foundation which are good steps in the right direction. 5.2 Pharmaceutical industry in Jordan occupied the second rank in the countrys economy; the value of its exports was $280 million in 2003. There were about 230 producers, private or public companies, working in association with foreign partners. Eight pharmaceutical colleges in the country graduate about 800 pharmacists a year, 55% of them are Jordanians. Moroccos pharmaceutical industry is another example of a thriving sector. In 2006 it included 22 industrial sites where national laboratories were manufacturing their products under certification of French regulatory bodies and Canadian and British bodies in several cases. The sector plays an important socio-economic role: 35,000 persons were employed in it directly or indirectly, including 20% managers 15

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and executives; 10% of the whole production is exported, mainly to French-speaking African countries. 5.3 Renewable energy: Abu Dhabi is seeking to become a centre for the development and implementation of clean energy technology. In 2006 it launched an initiative called Masdar, with a $250 million Clean Technology Fund and began construction of a special economic zone for the advanced energy industry. In 2007 Abu Dhabi announced plans to build a 500 megawatt solar power plantone of the most ambitious of its kind in the world. Furthermore, it announced an even more ambitious project to develop a graduate level research centre in association with Massachusetts Institute of Technology (MIT), to be focused on technology of renewable energy. In a decade it is predicted that Abu Dhabi will have expertise in solar energy, photovoltaics, energy storage, carbon sequestration and hydrogen fuel. Other countries are moving forward in similar areas. Bahrain is experimenting with wind turbines, Saudi Arabia and other Gulf States began research programs in nuclear energy. 5.4 Conclusion: There is an increasing awareness in the Arab region of the need to invest in R&D, in higher education, and in the training and retraining of personnel and of skilled labor. Globalization plays a key role in this awareness, because it can offer opportunities and benefits to those who would like to penetrate markets and seek to build alliances and make joint ventures. In this context, research, development and innovation are key factors.

SESSION 2- WTO/GATS NEGOTIATIONS FOR HIGHER EDUCATION AND RESEARCH This session included four presentations, the first, an invited one, looked into the possible advantages and disadvantages of the GATS for Arab countries. The remaining three were more in the form of case studies: two of them on Saudi Arabia, and the third in the form of a proposal for setting up networking arrangements to speed up exchange and cooperation among Arab educators.

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1. WTO/GATS: Possible Implications for Arab Higher Education and Research: An Invited presentation (Abdallah Bubtana)

1.1 Definitions and Trends. 1.1.1 GATS stands for General Agreement on Trade in Services. The services in question include education at all levels, but concern has focused on higher education in particular. Joining the Agreement means lifting the barriers that stand in the way of importing or exporting educational services (as commercial products) across state borders. Individual states may negotiate specific terms or provisions that may apply to them alone when signing the Agreement. 1.1.2 As of February 2007, over 47 countries have made commitments to include education in the Agreement; 38% of those included higher education. Among the 47 countries there is so far only one Arab country (Bahrain) which pledged commitments under GATS. It is not clear, however, whether education and higher education have been included in the protocols signed by Bahrain. 1.1.3 Liberalization of trade in (higher) education has received fierce resistance from many quarters; it has also received endorsement and support from others for various reasons. The opponents and proponents do not correspond exactly to lines of division between the rich (developed) and the poor (underdeveloped) countries, but the pattern generally points in this direction. 1.2 Proponents 1.2.1 Diversifying the providers and delivery modes thereby increasing the likelihood of innovation. 1.2.2 1.2.3 1.2.4 Broadening access to help meet increasing demand for places in higher education. Increasing the mobility of students, academic staff and researchers and promoting competitiveness which should lead to improved quality. Increasing financial and economic aid.

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1.3 Opponents 1.3.1 1.3.2 Losing government (state) control over education and consequent threat to national systems that cannot compete with foreign providers. Drastic decrease in state control of quality, relevance and adherence to national priorities and agendas. Social principles, such as democratization and equal access, will no longer be policy priority; education as public good will be jeopardized. Likewise aspects such as cultural identity and national citizenship will have to be compromised as they cannot be traded off by foreign investors. 1.3.3 The absence or lack of sound mechanisms for accreditation or quality control in the receiving countries may cause many of them to fall prey to foreign programs of dubious quality. 1.3.4 Gradual erosion in the character of the university as an autonomous institution depriving it from an essential prerequisite for delivering its mission. 1.4 Implications for Arab states and recommendations: 1.4.1 There is fear that Arab negotiating teams may not be aware of the negative consequences of GATS in a sensitive field such as education. These teams are usually concerned with economic and financial benefits rather than with social and cultural priorities. 1.4.2 If any Arab country decides to include higher education in its GATS agreement it must either opt for gradual liberalization or lay down some restrictions and limitations that preserve national interests and maximize the benefits for itself. 1.4.3 Arab governments must explore the possibility of entering into negotiations with GATS as a regional group, within the framework of the Arab League for example such as the case with the European Union.

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2. The Effects and Influential Factors of Globalization on the Saudi Higher Educational System (Hind T. Al-Sudairy) The general aim of this presentation was to show the various ways in which Arab and Saudi educational system in particular can benefit from joining the GATS, and at the same time be aware of the risks involved. 2.1 Benefits 2.1.1 2.1.2 Access to knowledge across borders. A country that is not a member does not have equal access to those markets that are open for members. Particularly for a country like Saudi Arabia which has vast distances between its cities, distance and e-learning programs are of a great value, particularly for girls. Such programs are more likely to prosper and succeed under some partnership arrangement with the outside. Globalization and the GATS are positive factors in this case. 2.2 Risks 2.2.1 It is possible that GATS and globalization may foster a dual educational system: expensive private (globalized) education, enjoyed by the better off minority, and a poor quality government education for the majority. 2.2.2 2.2.3 Global education brings with it the potential of imperialistic attitudes, and the suppression of native culture. Braindrain: highly trained people can be attracted and, with the existence of GATS, they can be more easily bought out, particularly with the ease in mobility at present. 2.2.4 Conclusion: Arab countries are obliged to embrace globalization and open their educational systems to international forces. Arab countries should be ready to face the challenges brought to them by GATS.

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3. Globalization and the Translation Industry in Saudi Arabia: Factors Inhibiting the Use and Integration of Translation Technology into Mainstream Course work (Afnan Hussein Fatani) 3.1 Translation and Globalization 3.1.1 Translation studies have witnessed vast growth over the course of the last ten years. The world market in translation is thought to be in excess of 10 billion a year. 3.1.2 Global factors have affected not only the size of the market but the training required of professional translators. 3.2 Translation Industry in Saudi Arabia 3.2.1 The recent entry of Saudi Arabia into the WTO, the irreversible globalization of Saudi business, the large number of Saudi sectors that have recently entered into partnership with Microsoft, and the internet revolution, have all combined to make translation services a rapidly growing field with excellent employment opportunities. 3.2.2 This case study presents the results of a market research aimed at addressing the gap that exists between the training of translators at Saudi universities and the requirement of professional life in the country Conclusions of the research indicate that the majority of Saudi graduates majoring in English are reluctant to venture into Translation Technology (TT). Saudi translators are still using a dictionary-based strategy, i.e., translations are done in a roughly word-by-word manner with no attempt to upgrade the technique. 3.2.3 One reason for this shortage is explained in terms of poor English language preparation of students at the university as well as at the pre-university level. A more stubborn reason may be found in the cultural attitude of many who consider Arabic as the chosen language and resist opening themselves to another language.

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4. Inter-university networks: experience and propositions (Fouad Badran) This presentation is more in the form of an invitation to Arab educators to organize themselves into working networks. It illustrates the advantages of this arrangement by referring to a network which is already in operation under the name Med Link. 4.1 The Concept 4.1.1 Networking emphasizes cooperation among members, and horizontal (transversal) rather than hierarchal relationships. 4.1.2 4.1.3 It is project based and memberships shift depending on the tasks to be accomplished. A network is different from an organization or an institution, which has more fixed goals or positions. Universities are institutions or organizations; a network connecting university members may be formed to undertake more immediate and specific tasks or projects across university borders. 4.2 Some Illustrations 4.2.1 Summertime Universities: nine of these have been held since 1997, with 75 university participant in each, from Syria, Jordan, Lebanon, Palestine and Iraq. 4.2.2 Tempus-Finsi: The focus in this is on exploring the interdependence that exists between industrial systems and establish linkages between them. Some 35 engineers and university professors from Jordan, Lebanon, Palestine and Syria have joined forces with others from Europe to exchange and disseminate experiences. 4.2.3 Tempus-Rufo: This is a project designed for Palestinian universities, with a focus on capacity building in the area of distance education in cooperation with European networks. 4.3 Conclusion and recommendations It is recommended that a special fund be set aside for stimulating and supporting activities that relate to networking. These will complement the work of the universities in more concrete and more rewarding effects. a

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5. Remarks and comments from the floor on Session 2 5.1 There is a difference between internationalizing higher education and globalization. The later carries with it the seeds of corporate control (business) and marketization. 5.2 There is a need to find out which Arab states have already signed up with GATS, and which are in the process of doing so, and whether higher education is included and under what conditions. 5.3 One major aspect not highlighted is related to the training that Arab students need so that they may assume leadership positions. A shift in the leadership structures from traditional factors to those based on qualifications and skills will constitute a big jump towards joining the advanced world. 5.4 Some of the Arab states do have quality control mechanisms and regulations. Experiences are building up. Barriers to joining GATS are more likely administrative and procedural rather than ideological. 5.5 As a faculty member or member of a university institution, an individual is bound to the values and expectations of that institution; he/she may be bundled with too many regulations in which he/she has no interest. The same person working in a network is freed from all these bundles; his/her energies become more focused on specific tasks.

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SESSION 3- GLOBALIZATION, HIGHER EDUCATION AND SCIENTIFIC RESEARCH This session included five presentations, two of them theoretical and the remaining three were case studies dealing with specific countries or issues. Two of the three case studies were on Palestine, and the third was on Sudan. 1. New Roles for Arab Schools and Universities in the Knowledge Society (Abdullateef H. Haidar) The term knowledge society refers to the dissemination and production of knowledge and its efficient utilization in all societal activitiesin a continuous quest to advance human development. 1.1 Characteristics of Knowledge Society 1.1.1 Specialized knowledge: knowledge in the context of and related to a specialty. It has value only if it has practical application, described as knowledge in action. People who lead in a knowledge society are knowledge workers; they include surgeons, lawyers, accountants, engineers, teachers..etc. Knowledge workers depend on their brains more than on anything else to achieve their purposes. 1.1.2 Learning organizations: for knowledge workers to develop knowledge and turn it into product, they need to belong to learning organizations. 1.1.2.1 A learning organization is a group of individuals who interact with one another and with the world around them; they share a common feeling and identify with the organization they belong to. 1.1.2.2 Organizations provide knowledge workers with opportunities to work in teams to discover and produce new knowledge and to apply it. 1.1.3 Team work: knowledge workers will face up to new challenges, hence they need to work in teams. When people face a task that is beyond the ability of any one individual, or when they are faced with a short and urgent deadline working in teams is the surest way to success.

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1.1.4

Inquiry: inquiry is an essential ingredient for the discovery of new knowledge as it requires reflection; reflection is the backbone of professional growth. 1.1.4.1 Inquiry helps professionals to identify best practices and consequently develop standards for the profession. 1.1.4.2 Institutions which adopt the learning organization mode provide their workers with ample opportunities to inquire, and find solutions to the problems that face them.

1.1.5

Life long learning: the pace in which knowledge production has been taking place is phenomenal. Knowledge workers have to keep up with this pace making learning a process that never stops. 1.1.5.1 I.C.T. has become pervasive; distances among individuals and nations have practically disappeared; business is a 24 hour a day affair, so learning must be. l. 1.5.2 Institutions need workers who are skillful in ICT so that they may accomplish their tasks faster and betteranytime, anywhere.

1.1.6

Globalization: countries do not have the choice anymore to be or not to be a part; people interact all overt the globe. Companies work internationally; some chose to leave their home bases and establish headquarters abroad. Multinational companies are a reality; business has become international.

1.2 Proposed New Roles for Arab Schools and Universities 1.2.1 Revise mission: schools and universities need to provide specialized knowledge and professional development to knowledge workers, as well as opportunities for continuous upgrading; they need to function as learning centers for all members of the community. 1.2.2 Convert schools and universities from teaching institutions into learning organizations. The school/university as a factory model is obsolete; learning organizations are places where problems are tackled and solutions sought, where learning and pursuit of answers occurs collectively in a team fashion. 1.2.3 Develop and renovate curricula, methods of teaching and assessment. In this regard the new discoveries in learning psychology, brain research, and nature of intelligence have to be taken into consideration. The emphasis on reconstruction as the heart of learning put at present by one of the most

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advanced theories of modern psychology calls for serious attention. Intelligence itself is not uni-dimensional anymore but varied in content and direction. The implications of all this to assessment is huge, where judgment on performance of the learner is never terminal but a step for better performance (formative). 1.2.4 Utilization of ICT in teaching. Modern technology has opened new vistas for learning; the challenge has become finding the best ways to utilize the huge resources that ICT offers, and using these effectively. This requires technical skills but more importantly it requires the active involvement of the learner in the process of acquiring knowledge. Arab countries are urgently called upon to make full use of this new technology in their educational systems, particularly in the interest of the less advantaged groups of people who do not have access to it in their homes, or elsewhere in the society. 1.2.5 Facing up to the demands of globalization. Globalization is a fact of the present, and Arab states must face up to this reality and prepare their youth to become active participants at the global level. This requires knowledge about the rest of the world, and involvement in whatever issues or problems it faces. 1.2.6 Quality assurance measures. Arab learning institutions are required to adopt systems of quality assurance so that their graduates may turn out to possess the kind of knowledge and skills that qualify them to compete and succeed in the global markets. 1.2.7 Reform of administration. Arab educational systems suffer from heavyhanded centralization. New educational challenges require that this be broken down, and decentralization become the guiding principle. Particularly at the school level, the head of the school (chief executive officer) is to be given freedom to make decisions, take initiative, and respond creatively to challenges facing his institution. 2. Higher Education and Globalization in the Sudan (Tahani Mohammad) (an invited presentation) Sudan is a vast country with a very rich history; has a mixed character: African/Arab/Moslem. Since independence in 1961, it had a very turbulent history which

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reflected itself in radical and sudden shifts in education. Two major features leave their mark on its present educational terrain: 2.1 Massive increase in the number of higher education institutions. The number has jumped from one or two in the early years of independence, to 6 or 7 in the 1990s, then to more than 40 at the turn of the century. The increase in the last 5 or 6 years is accounted for by the government opening regional institutions, a situation different from what happened in other Arab countries where the increase was due mostly to opening of private institutions. With this great and sudden expansion there is serious concern regarding the drop in quality of higher education in the country. 2.2 Negative interpretation of globalization. In the Sudan, globalization is recognized as a force, but the interpretation given to it put it in the category of neo-colonialism of the West, particularly the USA. To many Sudanese globalization is a one-way street, carrying the influence of the powerful over the less powerful, where the rich get richer and the poor get poorer. This attitude, however, is not generalized towards the new technology, which is regarded as helpful and necessary for the development of the country.

3. Respecting Globalization or Globalizing Respect: Palestinian University Students Perceptions of Globalization (Nabil Jondi) This study aimed at investigating Palestinian university students views regarding globalization, based on responses of 200 students enrolled in four Palestinian universities (50 students from each). In addition, focus groups were used to elaborate on those views. Results of the study show that: 3.1 Palestinian students have high levels of readiness to engage in various forms of globalization and to avail themselves of its products, while holding negative attitudes towards it at the same time. 3.2 The negative attitudes are specifically directed at the political aspects associated with globalization, which is viewed by most as Americanization; this is equated by them to McDonalization of markets. 3.3 The positive attitudes students have are towards information technology, internationalization of curricula, cultural exchange, and trade and immigration. They also believe that revolution in communication and technology can enhance the

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competencies of Palestinian institutions and prepare them to engage more effectively in globalization. 3.4 In terms of actual practice, results show that Palestinian students do make use of internet provisions in conducting their research and carrying out assignments in their daily work.

4. The Impact of Globalization on Palestinian Higher Education (Labib Arafah) This is a general presentation of development and evolution of higher education in Palestine under political/military occupation. The volume of the educational enterprise has grown tremendously since 1971; at present it includes 12 universities and 32 community and university colleges. This development has taken place under extremely adverse conditions and stands out as an act of commitment to human resource development and faith in education as a force against oppression. The majority of HEIs have started and remained public non-profit. 4.1 Rationale for globalization: globalization has become a fact. It finds its rationale in all spheres: economic, political and cultural factors. 4.2 International trends: manifestation of globalization are apparent in systems of higher education everywhere; examples are given from the USA and Europe (Bolognia declaration); the impact of IT and internet is highlighted as well as new emphasis on quality assurance mechanisms. 4.3 Responses of Palestinian higher education students: these are described in terms of opportunities/threats: 4.3.1 Opportunities lie in the field of international cooperation (mainly with Europe), the exponential growth in IT and sharing in knowledge society, and in quality assurance mechanisms. 4.3.2 Threats lie mainly in financial cuts and dependence on foreign support, and in the possible drop in quality as a consequence of vast expansion in numbers. 6. Globalization, universality and academic transfer (Abdelhak Bellakhdar) 5.1 Definition of globalization: sharing a global space in all fields: the economic, political and cultural. Means: deregulation, externalization and delocalization. 5.2 Constraints: globalization magnifies internal and external constraints in the Arab countries, because these countries do not have the immunity that comes from 27

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regional globalization, such as that other countries have, like the Europeans. 5.3 Identity: Arab identity has served as a mythical reference that did not prepare for modernity; identity is approached more as a content than as a process. 5.4 Scientific discourse: Arab scientific discourse does not negate, nor does it reconcile traditional knowledge with the modern; in our universities priority is given to information over method, and experimental method is reduced to ready-made recipes. 5.5 Role of the State: the State in Arab countries can play a structuring role at four levels: the universality of knowledge and methods, the coherence of the educational system, community of common interests, and the assemblage in supra structural entities. 6. Remarks and comments from the floor on Session 3: 6.1 Distinction should be made between knowledge transfer and knowledge generation: the first is likely to make us followers; the second can make us partners. 6.2 Knowledge society and the emerging knowledge-based economy are the context in which higher education is becoming globalized. 6.3 In proposing roles for Arab institutions to cope with globalization, it is not sufficient or helpful to produce lists of items of what needs to be done. More important is to prioritize these and explain steps and the order of implementation. 6.4 There is doubt as to whether specialized knowledge or specialization is one of the attributes of the knowledge society. It is quite possible that a broad based knowledge in the form of liberal education is more essential. 6.5 Thinking in terms of Arab conditions and Arab challenges, we should not ignore important facts and realities on the ground, namely, that the Arabs belong to different states, and that it is the state structure which needs to be examined and corrected. 6.6 In networking, consideration is to be given to the complexities involved, particularly when moving horizontally from one Arab state to another, across private/public or national/international groups, or across centers of influence. 6.7 It might be attractive to contemplate the advantages of investing in training of human resources in education; teacher-trainers, for example, as versus training of engineers or medical doctors, where the returns from the first can have a much higher value (or profit) in view of the higher multiplier effect that applies to training of teachers or educators as compared to training of others.

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6.8 There is a mood of opposition to globalization and aversion towards it as a concept or a force that makes it close to globalophobia. This opposition, however, is much lower towards the technical fruits of globalization, particularly among the younger generations. 6.9 In our talk about knowledge and research, we tend to overlook the factor of language in which the research is framed. Whether we like it or not, we in the Arab world are very much affected by Western ideas because the language of research, even when translated, is Western.

SESSION 4- FUNDING OF HIGHER EDUCATION AND SCIENTIFIC RESEARCH Four presentations were made in this session, the first used a wide angle taking in Arab states as a whole; another was theoretical, and the remaining two were country case studies, the first on Algeria and the second on Kuwait. 1. Funding Higher Education in Arab Countries: Thoughts and Reflections on the Topic (Ali El-Hawat) 1.1 Patterns of finance 1.1.1 In the past half century or so emphasis was on expansion in numbers (of both institutions and students), and a considerable amount of money was expanded in this regard to support this expansion. 1.1.2 This past trend could not be sustained due to accelerated population growth and massification of secondary education, coupled with inadequate financial resources for education in view of competing and rising demands. 1.1.3 In the more recent past, new providers appeared on the scene in the form of private institutions, many of them in partnership with American or European institutions. These shared with the older government establishments the burden of finance, but introduced a new factor in terms of supply and demand as they were accessible only to those who could afford to pay tuition. 1.2 Changes and crises

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1.2.1 Many Arab states are caught in a dilemma of not being able to uphold their long-standing goal of democratization and equality of opportunity for all, as a consequence of increasing enrolments and heavier burdens of finance. 1.2.2 Some measures to cope with the difficulties included charging fees for certain university services, establishing parallel or after the hour special fee charging programs within the existing public institutions, or combining universities, hence reducing their numbers (14 public universities in Libya were recombined to become only 9), and, above all, encouraging and soliciting private investment in education, a practice considered unacceptable only a few years ago. 1.2.3 Many of the new private institutions are like fast food stands in crowded streets of Western cities; many of them teach only low cost high return subjects such as business administration, computer skills, foreign languages subjects that may be desired for immediate employment, but not always in line with long range development needs of the country. 1.3 Plans and actions To face up to the impending crises, three lines of actions (scenarios) are suggested: 1.3.1 Scenario No 1- maintain the present funding system but with redirection (or modification) such as: imposing new taxes on luxury goods, using Zakat funds, or allocating a certain proportion of the oil revenues for education. 1.3.2 Scenario No 2- create a higher education system that is owned jointly by the public and private sectors. Higher education institutions under this arrangement will become corporations funded in a partnership manner. 1.3.3 Scenario No 3- open the door to private universities that will be financed either by local market or foreign capital. The universities will charge full fees, except from the highly qualified (talented) students. The state will be totally out of the market except as a monitor. 1.4 The author prefers the first scenario for the Arab states. directly to the market. 1.5 In all cases, quality should not be compromised. Along with it, he recommends the establishment of a series of junior or community colleges linked

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2. The research professor: between administration and prevailing culture: keys for understanding (Laroussi Amri) This presentation posed a number of questions on the state of affairs and the issues that face higher education and scientific research in the Arab world in a globalized environment. 2.1 Main issues 2.1.1 2.1.2 2.1.3 2.1.4 2.1.5 Tribal or feudalistic. Centralized political power. The individuality of researchers affected by easy money and social prestige. Uprooting of researchers from their social origins. Enchanted culture as origin, communitarianism and patriarchy as dominant value patterns. 2.2 Methodological framework for reform 2.2.1 2.2.2 Practical experience, some sort of engaged participation, similar to action research Anchored position (grounded theory)

2.3 The state of higher education and scientific research in the Arab world: 2.3.1 The Jacobin framework in administration: founded on a social order marked by social segmentation, both at the individual and collective level. 2.3.2 Higher education organically joined with scientific research. As an ideal. 3. Scientific research in Algeria: between local necessities and international tendencies ( Hocine Khelfaoui) This was an account of the Algerian experience in research, especially of measures Taken during the last 10 years. 3.1 Revival of interest in research : 3.1.1 3.1.2 Scientific research has shown important transformation in Algeria caused by interna land external influences. By the end of the 1980s, state structures were saturated with employees; crisis in financing, and a call for reform became more pressing. 3.2 Institutional plan for research 3.2.1 Financial measures were taken to promote research and increase links to social and economic development.

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3.2.2 3.2.3 3.3.1 3.3.2

Almost all research in universities and centers in the country is sponsored by Government. Research output is still below the norm quantitatively. Priority is given to engineering and technical fields. Research trend is marked by by a growing influence of the global over the local.

3.3 Characteristic of scientific research

3.4 Measures for a better use of research results : 3.4.1 3.4.2 Increase exchange, cooperation, and communication between different institutions and groups working in similar fields. Emphasize connections between research, development and application, and stress on forward-looking resource management.

4. Funding and Financial Performance of Private Higher Education Institutions in Kuwait (Imad M. Al-Atiqi and Mohamed El-Azma) In 2000 a law was passed in Kuwait (Law 34/2000) to regulate the work of private universities, and a council was established to oversee the new policy under the name The Private Universities Council (PUC). The following is a description of how this council works: 4.1 Financial reporting for the purpose of financial monitoringthe model: 4.1.1 Sources of funding 4.1.1.1 Paid in capital. Kuwaiti law 34/2000 stipulates that founders equity for private institutions must have a local (citizen) majority. Most educational providers in Kuwait are owned by registered corporations. 4.1.1.2 Loan facilities. Licensing procedures allow for loan facilities typically not exceeding owners equity. Statements for operating institutions reveal that total liabilities amount to 42% of total assets. 4.1.1.3 Enrolment fees. Tuition fees are agreed upon during license application. These range between 130 and 170 KD per credit hour. The fee structure is not allowed to increase before a lapse of five years.

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4.1.1.4 The offset program. This relates to deviation of particular financial commitments from foreign companies that provide imported goods and services to the government of Kuwait. The commitment is equal to 30% of the contract value to be executed within eight years of the contract award, with a multiplier factor to encourage foreign companies to invest in education. 4.1.1.5 Interstate funding programs. This is related to agreements with trust foundations or the UN organization. The largest example of it is the agreement with AGFUND which led to the establishment of the Arab Open University in 2001. 4.1.1.6 Government facilities. The provision allows for private universities to lease state lands for their campusesan arrangement similar to Land Grant laws in the USA; or government agencies granting scholarships to students in private universities. 4.1.2 Tools of analysis These refer to a number of ways (tools) employed by the PUC to ascertain the financial viability of the university. These include - Economic analysis of industry - Competitive strategy analysis - Accounting analysis - Financial analysis, and - Prospective analysis 4.2 Application of the model to private higher education 4.2.1 Five higher education institutions are licensed in Kuwait so far: 1) Gulf University for Science and Technology, 2) The American University of Kuwait (AUK), 3) Australian College of Kuwait (ACK), 4) KuwaitMaastricht Business School (KMBS), and 5) Arab Open University (AOP). Every one of these institutions was checked out by the PUC for financial viability. In the following are some of the interesting findings: 4.2.1.1 The gap between supply from existing institutions, public or private, and demand by high school graduates justifies private ventures in higher education.

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4.2.1.2 Programs offered by private institutions tend to concentrate in areas of liberal arts, business administration, and computer sciences and technology. This shows a tendency on the part of these institutions to avoid investing in high cost programs in order to insure a higher profit margin. 4.2.1.3 The PUC requires institutional accreditation within two years of the starting date; association with a reputed university on an affiliation basis through a joint degree program, or operating as a branch of such a university. 4.2.1.4 Financial analysis shows that four of the five private licensed institutions manage to achieve a higher return on their investment than they expected in their early years of operation. So far, these institutions are operating in temporary buildings, and the picture may change in the future.

SESSION 5: REPORTING AND CONCLUSIONS This last session included brief reports by the Rapporteurs of the four Sessions, and an endnote delivered by Professor Wail Benjelloun, Dean of the Faculty of Science at Mohammad V University, followed by a general discussion. The discussion was in the form of comments and remarks made by various participants, but no final conclusions or recommendations were made or attempted. There was a feeling that the issues and questions raised in the papers presented, and the experience that participants went through during the previous sessions, and the discussions that followed, provided a unique opportunity for a few Arab scholars and officials in higher education to broach a subject very wide and far reaching in its scope and implications for the Arab region. With a feeling like this, it was almost impossible to come up with any final conclusions or recommendations other than those that may re-affirm the obvious. It was hoped that the papers presented, and the conclusions made in them, and this Summary Report, will be useful as a reference (when published), for any future deliberations on the topic by Arab or other scholars and policy makers.

September 18, 2007 34

Munir Bashshur

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50

Imad M. Al-Atiqi

Funding and financial performance of private higher education institutions in Kuwait

Imad M. Al-Atiqi Mohamed El-Azma Ministry of Higher Education Private Universities Council (PUC) Kuwait

I.

Introduction

Financial monitoring and accountability of higher education institutions has always been an issue of concern in many countries. The voluminous research output on this issue testifies to its importance to the public and regulatory authorities, as well as other stakeholders, to be aware of: (i) what these institutions are doing; (ii) why they are doing it, and (iii) whether they are doing it well (CAUT, 1993). In the United States, the Governmental Accounting Standards Board (GASB, 1987) states accountability as the paramount objective from which all other objectives must flow. In the UK, the publication of the Statement of Recommended Practice for Accounting in UK Universities provides the bridge from decision-making to accountability in these institutions (CVCP, 1989). Recent literature included several studies on accountability of tertiary education institutions in different countries worldwide (Banks et. al. 2004). Notwithstanding, the issue of financial monitoring and accountability has been dealing, to a large extent, with not-for-profit public or private institutions; however, the issue is also of vital concern to other degree-granting, for-profit institutions. For-profit educational institutions are relatively recent phenomena (Geiger, 1986). The University of Phoenix, the biggest provider in the US commenced operations in 1998 and had enrolled over 150,000 students by 2004. These providers are the fastest growing academic institutions with their parent companies often listed in the common stock market and are the most troublesome for regulators. A lawsuit filed in 2004 accused the University of Phoenix of providing recruiters with incentives to enrol unqualified students, a case that Phoenix University settled for US$

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9.8 million (Phillips, 2007). The mechanism and procedure for financial monitoring may not be identical for diverse types of educational institutions, but the inherent need and objective is essentially to assure the stakeholders of the well-being of the institution, and the degree of economy, efficiency, and effectiveness by which it manages the resources available to achieve its mission and objectives. There are several groups of stakeholders which have interest in the financial well-being of higher education institutions, whether public or private, for-profit or not-for-profit such as: regulatory agencies, licensing officials, accreditation agencies, equity owners whether present or potential in the case of for-profit institutions funding and other financial resource providers (e.g. donors), recipients of institutions services (students and their parents), faculty members and administrators, as well as the public at large. Financial reporting represents an essential means of providing stakeholders with information about higher education institutions activities, and provides a basis for informed judgment and decision-making (Engstrom, 1988). In the next section, a general model for financial monitoring and accountability of private higher education institutions is outlined, based on the information generally available in periodic (annual) financial reports prepared and communicated by each institution to interested parties, particularly regulatory agencies. The model provides a detailed description of the components of financial reporting analysis for the purpose of financial monitoring with respect to universities and other higher educational institutions. This model will be used as a basis for assessing the financial performance of private institutions of higher education in Kuwait which are subject to Law 34/2000 for Private Universities. The result of assessment will be used as a basis for policy decisions taken by the Private Universities Council (PUC) in Kuwait, which represents the regulatory body for these entities (Al-Atiqi et al., 2004).

II.
1.

Sources of funding
Paid-in capital: most educational providers in Kuwait are owned by registered corporations. Law 34/2000 stipulates that founders equity for private institutions must have a local (citizens) majority. This equity is determined at the time of license application within the feasibility and financial study. The ample availability of funds within the local private sector enables most institutions to be founded without the need 52

Imad M. Al-Atiqi

for foreign capital. Table 1 below lists the founders equity for the operating institutions. Table 1. Private higher education institutions in Kuwait, paid-in capital according to Licensing Decree Private higher education institutions Gulf University for Science & Technology (GUST) American University of Kuwait (AUK) Australian College of Kuwait (AKC) Kuwait-Maastricht Business School (KMBS) Arab Open University (AOU) 2.

KWD000

Year licensed

10,000 1,000 1,900 200 (not applicable)

2002 2003 2003 2003 2002

Loan facilities: Kuwait has an advanced banking system that can be tapped to supplement owners capital. Current licensing procedures allow for loan facilities to a limited extent, typically not exceeding owners equity. Inspection of common-size financial statements for operating institutions reveal that total liabilities amount to 42 per cent of total assets, of which 30 per cent are current liabilities.

3.

Enrolment fees: Most institutions charge students on a credit-hour basis. This would range between KWD 130-170 per credit and students register in a semester-based system with 12-18 credits per semester. The tuition fees are a major source of revenue for institutions that allow for operating expenses coverage as well as future expansion. Tuition fees are agreed upon during license application. The Private Universities Council (PUC) allows for a reasonable fee structure that is compatible with the standard of living. The enrolment data proves that society accepts the current fee levels, alongside enrolments that match up with, to a reasonable degree, feasibility study expectations. Further elaboration will be made later on in the paper. The fee structure is not allowed to increase before a lapse of five years.

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4.

The Offset Programme: This programme was established in 1992 by the Kuwaiti Government. It is defined as the derivation of particular financial commitments from foreign companies and agencies that provide imported goods and services to the Government of Kuwait. Under the Offset Programme foreign companies which wish to sign supply contracts of a value equal or greater than KWD 1 million with the Government of Kuwait are required to invest, inside or outside of the state, in projects adding value to the national economy. Under this programme, the offset obligation is equal to 30 per cent of the contract value to be executed within eight years of the contract award. As an incentive to invest in counter-trade offset obligations, the Government sets a multiplier for certain developmental projects in order to lower the offset burden. A three multiplier means that a contractor can invest KWD 1 million and obtain credit for KWD 3 millions; the multiplier for educational projects being typically 3.5. Certain academic institutions have benefited greatly from the Offset Programme. One institution has obtained major engineering, aviation and marine science equipments from offset obligations, valued at more than KWD 12 million. The audited results of this provider shows that the offset grant constituted 24 per cent of its total asset in 2006. With this programme, they were able to develop a major expansion from a diploma programme to a Bachelor of Technology Programme. The Offset Programme is also a major provider of student scholarships for students to pursue their tertiary education. This activity is a result of an agreement with the Ministry of Higher Education (MOHE).

5.

Interstate funding programmes: There are numerous funding programmes of this type whether related to trust foundations or to UN organizations. The programme that made the largest impact in Kuwait and many Arab States is the Gulf Programme for Support of United Nations Developmental Agencies (AGFUND). Chaired by Prince Talal bin Abdul Aziz Al-Suood, this programme established the Arab Open University (AOU) in 2001. The AOU was housed in Kuwait by an agreement with the Government and has now branches in more than seven Arab countries. This agreement was ratified as Law 31/2002 in the State of Kuwait. In Kuwait itself, more than 6,000 students are currently enrolled in the AOU Kuwait branch with a tuition fee that is roughly KWD 500 per year. UNESCO has signed an agreement with the AOU Chairperson in October 2001 to provide information and communication technologies (ICTs) equipment and personnel training to the University. This will include video

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conferencing equipment and satellite linkages for distant education and electronic library. The project value was US$ 1.55 million. 6. Government facilities: Several Government programmes are in place for direct and indirect support of private universities. A crucial one is the land grant facility. An agreement was reached with the Ministry of Finance (MOF) and the municipality to allow private institutions to sign long-term leases on state lands for their campuses. In a compact country like Kuwait, this facility proved very beneficial. Other programmes of interest are the scholarships granted by several Government agencies for their employees to study in private institutions. These programmes supplemented institutions with additional sources of revenue following the self-paying students. The biggest programme of this kind is the scholarships of fresh high school graduates which started this year. The PUC secretariat negotiated with the Ministry of Finance a budget of KWD 3.4 million for support of 1,068 students in 2006/07 which constituted 80 per cent of the tuition cost. The purpose of this programme is fair access to otherwise limited tertiary education seats within the country. Not directed to institutional funding, this programme is partially supported by the institutions themselves in terms of subsidized tuition. It is to be noted in this context that all institutions achieved profitable status before this programme commenced.

III.

Tools of analysis

There exists a rich source of references on financial reporting analysis (Palepu, Healy and Bernard, 2004; Wild, Suramanyam and Halsey, 2007), as well as its application to educational institutions (KPMG, 1999; Lane et al., 1987; Moodys Investors Service, 1999; Peat Marwick International (PMI); Mitchell & Co., 1982; Fischer el al., 2003). A brief description of each of the analysis tools referred to in the model is outlined as follows:

IV.

Economic analysis of industry

Analyzing a private education institutions viability and sustainability requires first to assess the potential of the educational sector in which the institution is competing (i.e. its industry). Analysis of the industry and its structure is influenced by the degree of actual and potential competition among institutions operating in the industry, as well as the bargaining power of

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suppliers of services (universities and other higher education institutions) and buyers of services (demand for higher education). Factors affecting the degree of competition include population growth and demand for higher education, the number of institutions offering educational services, their capacity and types of degree programmes they are offering, the threat of new institutions entering the industry and potential effect on market share. Analysis of bargaining power of suppliers and recipients of educational services entails assessing the quality of education offered, the cost of providing the service, the type of degree programmes offered by the institutions and their viability in the job market for graduates.

V.

Competitive strategy analysis

The economic viability of the education institution is influenced not only by its industry structure but also by its vision and mission, the strategic choices it makes and its success at establishing a competitive advantage as well as the sustainability of its competitive advantage. Assuring quality of educational programmes offered by the institution through accreditation, and ensuring continuous improvements in these programmes to meet the changing demand by the job market. A strategy is undertaken by the education institution to differentiate its products from those offered by its rival institutions. Another strategy which may be followed by the institution is achieving cost-effectiveness in providing its services to students.

VI.

Accounting analysis

Administrators of private higher education institutions are subject to accountability to the governing body of each institution (Board of Trustees) as well as to the regulatory bodies responsible for monitoring private educational services at the national level (e.g. the Private Universities Council).

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The institution should maintain an information system capable of providing the

required information in the most efficient and effective manner in order to discharge its responsibility to stakeholders. Financial reports prepared annually by the institution are subject to scrutiny and Analysis of financial reports is a process of evaluating the extent to which financial Auditing of financial statements prepared by the institution by an external independent analysis by regulatory bodies. data presented reflect economic reality. auditor ensures the verification of the integrity of the reported accounting figures and ensures that management use the proper accounting methods and estimates in accordance with generally accepted accounting principles. Accounting analysis includes evaluation of the quality of accounting numbers appearing in the financial statements and its freedom from distortion of economic reality, appropriate disclosure to ensure integrity, reliability and relevance of information. It also includes evaluation of earning power and its sustainability. Assessing the financial viability and sustainability of the education institution may require information beyond those normally disclosed in financial statements. Therefore, accounting analysis may be extended to ensure that the necessary additional information for this purpose is duly, and timely, provided for by the institution.

VII.

Financial analysis

The goal of financial analysis is to assess the performance of the institution, and its achievement of goals and strategies, through utilization of resources available at its disposal. Ratio analysis and cash flow analysis represent the main tools for financial analysis. Financial analysis consists of an assessment in two broad areas (i) Profitability (Return) Analysis, and (ii) Risk Analysis. Financial analysis of past and present performances provides a good foundation for making forecasts of future performances. Ratios and cash flow analysis provide useful tools for assessing the institutions achievements as a result of its strategies, policies and decisions in the three broad areas of operating activities, investing activities and financing activities. Profitability (Return) Analysis focuses on identifying, measuring, and evaluating the impact of various profitability drivers, usually 57

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in terms of the institutions return on investments and its components and its ability to generate adequate return from operations. It also focuses on reasons for changes in profitability and its sustainability. Risk analysis is the evaluation of the institutions ability to meet its commitments, whether in the short-term (Liquidity) or in the long-term (Solvency). Risk analysis involves assessing earnings variability in face of change in the demand for the institutions services (Operating Risk) or as a result of its capital structure which determines the sources of finance (Financial or Credit Risk). The use of financial ratios to assess risk and return characteristics of the institution involves comparison over time (time-series analysis), and with other institutions and benchmarking (cross-sectional analysis).

VIII. Prospective analysis

Prospective analysis is the use of (i) strategy analysis; (ii) accounting analysis and (iii) financial analysis in prediction of future performance. Regulatory agencies in the educational sector emphasize accountability and financial stability of the education institution. Therefore, they assess earnings sustainability and growth expectation in order to meet variability in demand (number of students admitted). It is also of interest to regulatory agencies to forecast the ability to self-finance growth in the institutions services by relying on internal sources of finance, i.e. earnings retention and growth in its net assets. Owners of private, for-profit institutions focus on the ability to create value to owners in terms of earnings and cash flows and their effect on the institutions economic value (usually market value). Forecasted figures for earnings and cash flows provide basis for estimating value.

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IX.

Application of the Financial Performance Model to private higher

education institutions in Kuwait

A total of five higher education institutions were granted licenses to provide degreeprogramme educational services in Kuwait in accordance with the Law of Private University (Law 34/2000-Kuwait), the: 1. 2. 3. 4. 5. Gulf University for Science and Technology (GUST). American University of Kuwait (AUK). Australian College of Kuwait (ACK). Kuwait-Maastricht Business School (KMBS). Arab Open University (AOU).

The ownership structure of these private universities and net capital investments as of the end of the Fiscal Year 2005/06 appears in Table 2. a. Financial data for each of the private institution is taken into consideration and extracted from the audited annual financial report prepared by the institution since inception (income statement, balance sheet, and statement of cash flows). b. A common size income statement and balance sheet for each year are prepared. Operating Revenues being the deflator factor for all items in the income statement, and each item of assets and liabilities and owners equity is presented as a percentage of Total Assets. Table 2. Ownership structure of private higher education institutions in Kuwait as end of Financial Year 2006 Private higher education institutions A B C Owners equity KWD.000 4,666 1,292 754

Ownership structure Wholly owned by a listed corporation. Wholly owned by a listed corporation. A branch of a limited liability company which is a subsidiary of a Kuwaiti closed corporation. Wholly owned by a limited liability company. A branch of an independent, not-for-profit Arab institution for education.

793 (not applicable)

D) E

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c.

Financial Ratio Analysis (see combined statistics in Table 3 below). The following ratios were computed for the purpose of assessing annual performance

in the area of: Activity Analysis: (1) (2) Total Asset Turnover = Operating Revenues/Total Assets; It is a measure of the efficiency of using total resources available to generate revenues. Expenses coverage from owners equity = Owners equity/total expenses. It is a measure of the extent of meeting annual expenses by reliance on funds provided by owners. Liquidity analysis: (3) (4) (5) (6) Current Ratio = Current Assets/Current Liabilities. It is a measure of the ability to meet short-term obligations from current assets. Cash to average daily expense = Cash Balance/Total cash expenses/365. It measures the number of days that available cash covers daily cash expenses. Cash to Total Cash Expenses = Cash Balance/Total Cash Expense. Measures cash coverage of expenses. Operating Cash Flows to Current Liabilities = Operating Cash Flows/Current A measure of ability to meet short-term obligation using cash generated from operating activities. Solvency analysis: (7) (8) Debt to Total Assets = Total Liabilities/Total Assets. Measures the extent of financing total assets from debt financing. Operating Cash Flows to Total Liabilities = Operating cash flows/total liabilities. Measures the ability to settle total debts from cash generated from operating activities. Profitability analysis: (9) (10) (11) Net Profit Margin = Net Income/Operating Revenues. A measure of profitability from common-size income statements. Return on Total Assets = Operating Income/Total Assets. A measure of return on investment, irrespective of sources of finance. Return on Equity = Net Income/Total Owners Equity. Measures return on investment by owners. 60 Liabilities.

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(End of year value is used for balance sheet items instead of average when related to income statement items or cash flow items in order to have, at least, financial ratios for consecutive years). Table 3. (a) Financial ratio analysis from combined financial data of all private higher education institutions 2004 1,03 0,58 2005 1,14 0,64 2006 1,07 0,63 2004-2006 1,07 0,62

Financial ratio analysis Activity analysis: (1)Total Asset Turnover = Operating Revenues/Total Assets (2)Expense coverage from Owners Equity = Owners Equity/Total Expenses. Liquidity analysis: (3)Current Ratio = Current Assets/ Current Liabilities (4)Cash to Average Daily Expense = Cash Balance/(Total Cash Expense /365) (5)Cash to Total Cash Expenses = Cash Balance/ Total Cash Expense (6) Operating Cash Flows to Current Liabilities = Operating Cash Flows /Current Liabilities Solvency analysis: (7) Debt to Total Assets = Total Liabilities/Total Assets (8) Operating Cash Flows to Total Liabilities = Operating Cash Flows/Total Liabilities Profitability analysis: (9) Net Profit Margin = Net Income/Operating Revenues. (10) Return on Total Assets = Operating Income/Total Assets. (11) Return on Equity = Net Income/Total Owners Equity

0,55 19,9 0,05 0,92 0,5 0,73 17,80% 16,60% 36,90%

0,84 16,2 0,04 1,09 0,27 0,93 0,10% -0,20% 0,20%

1,05 48,2 0,13 1,55 0,45 0,88 18,30% 19,00% 35,30%

0,79 29,8 0,08 1,18 0,42 0,83 13,20% 13,30% 24,40%

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Table 3. (contd) (b) Common size financial statements from combined data of all institutions for the period 2004-05 Income statement: - Operating revenues - Operating expenses - Operating income - Net income Balance sheet: - Current assets - Non-current assets TOTAL Assets Current liabilities Long-term liabilities TOTAL Liabilities Owners equity 100 88 12 13 23 77 100 30 12 42 58

d.

Financial statement items for all institutions were combined and used as a basis of

computing combined common-size income statement and combined common-size balance sheet for all institutions, averaged over the years 2004-06. Combined financial statements for each year were used to compute financial ratios for the whole sector of private higher education institution in Kuwait, for each of the Fiscal Years ending 31 August i.e. 2004, 2005, 2006 (With the exception of AOU which has a calendar year ending 31 December). The combined statistics appear in the above Table 3(a-b)). Analysis of strategy: Each institution, for the purpose of applying for a license to the PUC, is required to submit a detailed technical and economic feasibility study, in order to demonstrate the economic and financial viability of the project. Economic feasibility entails preparation of a detailed market study which projects the demand expected for each degree programme proposed by founders. The proposed plan for the institution is subjected to a careful analysis by the PUC through its standing committees before granting approval. The following observations pertaining to strategy analysis of the five private institutions now operating in Kuwait are presented below: (a) Based on recent market studies for higher education in Kuwait, it is noticeable that the

gap between supply from existing institutions, public or private, and total demand by high

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school graduates justifies the founding of private institutions. The gap is widening over time due to demographical factors. (b) (c) Programmes of study currently offered by private institutions tend to be concentrated Quality Assurance (QA) of degree programmes offered by private institutions is in areas of liberal arts, business administration, and computer science and technology. assured through the requirement imposed by the PUC for institutional accreditation within two years of the starting date, and the requirement for licensing of having a plan for programme accreditation by relevant internationally recognized agencies. Some institutions plan additional institutional accreditation from international accrediting agencies. (d) Association with a reputed university on an affiliation bases through a joint degree agreement, or operating as a branch represents a strategy by private institutions for creating a product differentiation, and is thus considered as a market strategy. Operating as a branch of a foreign internationally recognized university gives private institutions the advantage of granting their graduates internationally recognized qualifications, thus enhance the demand on its educational services notably the case of the Kuwait-Maastricht Business School (KMBS). (e) Analysis of the fee structure of private institutions indicates that the variation in pricing educational services is limited (tuition fees per credit hour is around KWD 130-160 for undergraduate degree programmes). This suggests that private institutions in Kuwait did not consider so far pricing of services as a strategic tool for attracting students. (f) It is noticeable that private institutions, by concentrating on liberal arts and business studies programmes in degree offerings, to their students, may reflect the strategy by these institutions to avoid the need for investing and providing finance for establishing degrees in engineering and medical sciences and similar programmes which require relatively high costs. Accounting analysis: Private universities and colleges in Kuwait are required by Law 34/2000 and its Executive by-laws to have its annual financial report audited by an external auditor, and approved for release by the Board of Trustees of each institution. All financial reporting for Kuwaiti firms should be prepared in accordance with international accounting standards. External auditing is conducted according to international auditing standards by professionally- qualified auditors. The following are observations regarding the financial reporting by private institutions: (a) Financial statements for the institution, as an entity separate from its parent company or headquarters are usually extracted from the financial records of the parent company or headquarters, and in some cases without having a separate set of accounting records in 63

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accordance with generally accepted accounting principles. This phenomenon was diminished in later years after intervention of the PUC towards more autonomy in the financial records. (b) Inter-company transactions among the institution and its parent company or headquarters tend to be priced on the basis of management estimates and internal transfer pricing, without full disclosure of these bases, and usually without reference to the approval by the Board of Trustees. The effect of these transactions on income statement and balance are significant in most cases. This may be related to the fact that the parent company is the one responsible on land grant management and contracting. The PUC took action to resolve this situation in the near future. (c) Although the by-laws and accountability rules set forth by the PUC clearly establish the importance of the role of the Board of Trustees in planning and approving dividend policy by the institution (or the management of fund transfer in the case of not-for-profit institutions such as AOU), financial reporting by institutions gives little in the way of disclosing these policies and the bases for transfer of funds among the institutions and their headquarters. This reflects a light touch monitoring on the part of the PUC. (d) The accruals (differences between cash flows and accrual basis) regarding expense and revenue items play a limited role in the case of educational institutions in general (with the exception of depreciation and amortization charges for institutions with relatively high investments in plant assets and intangibles). This suggests that management manipulation of earnings measures through accruals is at minimum in the case of these institutions, and thus a higher quality of earnings. (e) Disclosure of information in financial reports, though it follows international accounting standards, does not cover areas of significant importance in analyzing financial statements of educational institutions. A notable example is lack of details on cost items necessary to assess performance of the institutions in areas such as research and community services as well as detailed costs per each educational programme. Average revenue generated per each faculty member is another example which cannot be measured directly from financial reports. Most of data needed for this purpose are available from the internal information system of the institution if it is separately maintained, as well as from budgetary planning and control systems if properly maintained. This suggests that the PUC, as the regulatory and governing agency may seek to reinforce its accountability and governance rules through additional disclosure requirements from private institutions. 64

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Financial analysis: We may draw the following observations on the basis of financial statements of private institutions during the period of 2004-06, and financial ratios as shown in the aforementioned Table 3 (a-b): (1) In Table 4 we compare average accounting returns actually achieved by each

institution by the relevant return figure expected at time of licensing in its financial feasibility study. It is noticeable (with one exception) that private institutions manage to achieve a higher return than they expected in early years of operations. Taking into consideration the typical profitability profile for similar institutions in the first (introductory) stage of their product-life cycle, which usually exhibits a negative return, private institutions managed to achieve better than expected in terms of profitability (more noticeable in the case provider of the Arab Open University (AOU) in its first few years of operation, due to the lower base of investment). Profitability figures for the net income margin, return on assets and return on equity, shows an increasing pattern which may shed light on expected profitability in future periods. The noticeable drop in return measures in the second year of operation for most institutions may be related to the need for compliance with several governance rules stipulated by the PUC, particularly in the course of institution accreditation, which may have resulted in incurring additional costs (e.g. hiring additional faculty members or adding more facilities). This suggests that compliance and strengthened governance rules by the PUC have a direct effect on the profitability profile of private institutions.

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Table 4. Assessment of financial performance of private higher education institutions in Kuwait, 2006-06 Expected versus Actual Profitability Average for the first three years of operations [as measured by the Average Accounting Rate-of-Return (ARR)] Private higher education institutions A 15% B -22% C 19% D 0.5% E 20% 128% 5.3% -28% -13.8% 26% Expected ARR (percentages) Actual ARR (percentages)

(2)

Analysis of liquidity for private institutions, individually and collectively, reflects a

weak liquidity position and an above-average liquidity risk. The liquidity measures, both on accrual basis and cash basis, reflects the lack of enough cash and near cash assets to meet short-term obligations. On the other hand the trend in liquidity is rising in general from one year to another. This probably results from the monitoring process by the PUC through reviewing annual financial performance, and the move on the part of institutions to comply with requirements imposed through institutional accreditation process by the PUC. (3) Asset structures, as reflected in the common-size balance sheets, show that on average 77 per cent of total assets are invested in non-current assets. Most private institutions so far are operating in temporary buildings, until they move to permanent cites which are currently under construction. Non-current asset figures include investment in constructions in progress. It is noticeable also that most institutions elected to capitalize pre-operating costs and some intangibles, the costs which are being amortized over a limited number of years (usually 3-5 years). This reflects a less conservative accounting policy which defers some items of costs as intangible assets, which alternatively could have been treated as expenses during the year of cash outflows. 66

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(4)

Financial Structure as reflected in the common size balance sheets shows relatively

low figures for long-term liabilities (average of 12 per cent of total assets), and rely more on equity financing than debt financing. Of the average of 42 per cent total liabilities for all institutions, short-term financing plays a more significant role in debt financing than longterm borrowing. This indicates the need for placing more emphasis on monitoring liquidity rather than on solvency in credit analysis. (A noticeable exception is the Institution # C, the balance sheet of which exhibits lower degrees of both liquidity and solvency). The trend in liquidity and solvency for all institutions reflects an improving trend over time. (5) Due to the existence of financial leverage as a result of debt, financing return on equity is significantly higher than return on total assets. This should be interpreted with caution, as private institutions tend to have higher credit risk in the short-term due to reliance on shortterm credit more than long-term, which may not be typical for institutions in the introductory stage of development. (6) Through decomposing return on total assets into its two main components: Return on Assets = Total Asset Turnover x Profit Margin, it may be noted that private institutions rely more on profit margin in achieving profitability due to the relatively low asset turnover (from combined data, average annual return on total assets of 13.3 per cent was achieved through an asset turnover of 1.07 and a profit margin of 13.2 per cent). As institutions will increase their investment base in plant assets when moving to permanent sites and introduce more engineering and science programmes which require adding more facilities, this may affect the structure of assets and debts, and profitability of these institutions, and need to be looked at from a strategic point of view. (7) Capital adequacy and growth in equity as a result of earnings retention seems to need a careful analysis. With the exception of the providers: numbered C and E , equity coverage of total expenses exhibits a normal range for the activity level of institutions. However, the trend of negative growth in equity requires a red flag. Investigation of this important issue points to the need for considering dividend policy (or to be explicit fund transfer to parent companies), and increasing owners investment to support a higher adequacy level of equity finance in order to achieve better sustainability and financial stability of private institutions over the long-term.

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X.

Conclusions and comments

A brief account of funding strategies and financial analysis of private higher institutions in Kuwait has been presented. Generally speaking, the strategy and economic analysis adopted by the founders have proven valid and worthwhile vis--vis the investment that was allocated. In many cases the turnover of students and enrolment as measured by gross revenue, was better than expected. This should only be taken into account with caution since the leading institutions have not yet been challenged by sufficient local competition, which is expected in the near future. Accounting analysis shows that disclosure is still in an evolutionary phase with Financial analysis shows that while return on investment improves with time, most improving transparency as governance activity is enforced. institutions show a shortage of liquidity. This is probably a deliberate strategy from headquarters to not supply more funds than necessary, as financial decisions are still controlled by the parent companies. The governance actions by the Private Universities Council (PUC) are still evolving, as mentioned in

Appendix I. The PUC should be adamant and insist on a higher sense of security on the part of the founders which should be obliged to provide more liquidity in the institutions accounts. The study also showed considerable discrepancy in the ownership capital than what was actually paid out.. This probably reflects lack of financial experience on the side of the regulatory agency in the early licensing stage.

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Appendix I
Accountability and governance rules for private higher education institutions in Kuwait stipulated by the Ministry of Higher Education, Private Universities Council (PUC), Kuwait

I.

Ownership Restrictions on changes in ownership during the first five years since licensing:

Founders must pay in full their capital shares, in an account controlled by the institutions Board of Trustees, in accordance with the financial plan approved, and during the period determined, by the PUC. Founders representation on the institutions Board of Trustees is restricted to no more than half of all members of the board, plus one. The corporation that owns a private institution is not allowed to be listed on the stock exchange before the period stipulated by the PUC, and that, pending its approval. II. Management

Paid-in-capital of the institution should be made available and controlled by the Board of Trustees (BT) of the institution. The institutions Board of Trustees has the upper hand in policies regarding dividend distribution and profit retention, and restrictions in form of reserves. The institutions Board of Trustees should observe rules and regulations set forth by the PUC in carrying out its responsibilities and managing the institutions funds, in accordance with the Executive bylaws of the Private Universities Law in Kuwait. III. Financial reporting

An Annual Financial Report prepared by the institution should be audited by an independent auditor in accordance with International Auditing Standards (IAS). The Audit Report should include the auditors opinion as to the institutions adherence to the Law of Private Universities in Kuwait and to its Executive by-laws. The institution should maintain regular financial and accounting records in accordance with generally accepted accounting principles, which permit the preparation of its own financial statement as an entity separate from its owner or from its headquarters. An Annual Financial Report, externally audited by an independent auditor, should be approved for issue by the institutions Board of Trustees, which determines the necessary rules for distribution of profits and use of surplus from activities; in keeping with its rule of managing the institutions funds

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IV.

Annual review of financial performance

A four-member Standing Committee has been set up by the Private Universities Council (PUC) to monitor the financial performances of private institutions. The committee membership comprises independent professional and academic experts in accounting and finance. Each institution is required to submit its audited annual financial report to PUC, together with any data and explanations as requested. A Report is then prepared by the Standing Committee, for each institution, reviewing its financial performance, and gives opinion as to: (a) (b) (c) The institutions compliance with accountability and governance rules required by PUC. The implementation of any conditions imposed by PUC in the course of institutional accreditation granted or resulting from previous annual review. An assessment of the institutions financial position, financial viability and sustainability in terms of return achieved and expected risk. The Financial Committees Report is presented and reviewed by the Accreditation Committee of the PUC.

Observations and the result of assessment by the Committee are communicated to the institution, requesting explanation if need be. The Financial Committee studies the institutions reply and reports to the Accreditation Committee, recommending any necessary actions to be taken. The outcome of the financial review process is periodically reported to the Private Universities Council (PUC). * * *

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Bibliographical References Al-Atiqi, Imad, Lafi Alharbi and Faridah Ali. 2004. The Evolution of Private Higher Education in Kuwait. Paper presented to INQAAHI Annual Conference, Toronto, Canada. March 2007. Banks, W., Banks, J. and Thompson, P. 2004. Significant Improvement in Canadian University Accountability Disclosures. Administrative Sciences of Canada Annual Conference, 2004. Canadian Association of University Teachers (CAUT). 1993. Governance and Accountability. The Report of the Independent Study Group on University Governance (Report Series). Committee of Vice-Chancellors and Principals of the Universities of the UK (CVCP). 1985. Report of the Steering Committee for Efficiency Studies in Universities (The Jarratt Report) London. Engstrom, J. H. 1988. Information Needs of College and University Financial DecisionMakers, Government Accounting Standards Board, USA, 1996. Fischer, M., Gordon, T. Greenlee, J. and Keating, E. 2003. Measuring Operations: An Analysis of the Financial Statements of U.S. Private Colleges and Universities. Working Paper No. 17. The J.F. Kennedy School of Government, Harvard University, 2003. Geiger, R. 1986. Private Sectors in Higher Education: Structure, Function, and Changes in Eight Countries. University of Michigan Press, USA, 1986. Governmental Accounting Standards Board (GASB) 1987. Encyclopaedia of Business and Finance, p. 56-58. Gray, R. and Haslam, J. 1990. External Reporting by UK Universities: An Exploratory Study of Accounting Change, Financial Accountability and Management Journal, Spring 1990, pp. 51-72. KPMG LLP, Prager, McCarthy and Sealy, LLB. 1999. Ratio Analysis in Higher Education: Measuring Past Performance to Chart Future Direction for Independent Institutions, 4th edn, 1999, KPMG LLP. Lane, F.S., Lawrence, J.S. and Mertins Jr, H. 1987. University Financial Analysis Using Interinstitutional Data, New Directions for Institutional Research, Vol. 4 (Spring), pp. 83-101. Moodys Investors Service. Corporate Finance, Banking Managed Funds.

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Nelson, M., Banks, W. and Fisher, J. 2003. Improved Accountability Disclosures by Canadian Universities, Canadian Accounting Perspectives, 2(1), 2003, pp. 77-107. Palepu, K.G., Healy, P.M. and Bernard, V.L. 2004. Business Analysis and Valuation, using Financial Statements: Texts and Cases. 3rd edn, Southwestern Publishing Co. 2003. Peat Marwick International (PMI), Mitchell & Co., 1982. merger KPMG LLP. Pena, D.M. 2000. Higher Education Finance Variables: An Analysis. The National Education Association Almanac of Higher Education, 2000. Phillips, S. 2007. The Times Higher Education Supplement, London, 20 April 2007. Wild, J., Subramanyam, K.R. and Halsey, R.F. 2007. Financial Statement Analysis. 9th edn, McGraw-Hill, 2007.

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Keynote Address Globalization and education

Darim Albassam Chief Adviser United Nations Development Programme (UNDP) New York, USA

Distinguished Forum Members and Guests, It gives me great pleasure to join all of you in this highly important and timely meeting. I am very grateful to the UNESCO Forum for inviting me to address this 2nd Regional Research Seminar for Arab States. Today we are united here to look at the impact of globalization on education systems in the Arab Region and reflect on what reforms and adjustments need to be achieved in the future. The momentum occasioned by the recent Resolution emanated from the Arab Summit in Riyadh, which calls on Member States to have a fully-fledged review of their education systems in order to face the realities of the new millennium, will help us in our stocktaking. At its core, this Resolution established that education systems in Arab countries share common concerns that should be addressed regionally. More importantly, it is unequivocal in its assertion that reform should cover all aspects of the education system. This is a core business Agenda of fundamental change covering all critical areas of concerns that we should work upon seriously together. On a personal note, I was privileged to participate in the preparatory research and dialogue conducted within and among concerned regional organizations [the Arab League Educational, Cultural and Scientific Organization (ALECSO), the Arab League General Secretariat and the

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UNESCO Regional Office] ahead of the summit meeting, and to take the role as a lead author for the document submitted by ALECSO to the Heads of Arab States. In my opinion, your platform can play a critical role in moving this Agenda forward, and in energizing the debates on all issues of reform. Equally significant are your roles in monitoring commitments made by Arab governments. Your Forum, I believe for a variety of reasons, can serve as a meeting point for research and scholarly discussion, not only analytical and critical, but also as a means of providing education leaders and policy-makers in the Region with insights, tools and strategies for action that offer new directions and possibilities for Arab education in this twenty-first century: the age of globalization, knowledge and information. All of us agree I believe that education in our Region seems to lack vision policy and is in a state of disarray at a time when global transition is at its utmost. Nowhere is it that evident than in the slow response of our educationalists who are lagging way behind compared to their counterparts in other regions of the world. In fact, there is an urgent need from the Arab intellectual community and especially those who are majoring in social sciences to address the dramatic changes inflicted on and promised to our era: (i) philosophically; (ii) sociologically; (iii) culturally; (iv) politically; (v) economically; (vi) physically; and (vii) aesthetically. Above all, revitalization of our most important or central beliefs, values, morals, and ethical heritage with a philosophical depth of our culture must be the core business that binds the Arab World together at this epoch. The challenges we face in education in the new millennium are indeed monumental endeavours for all of us. This world of a new mainstream socio-economic and political order affects every community and region. It is a world that seeks a new balance between global and local values, thoughts and ways of life amidst existing national and cultural diversity. Truly, the era of globalization has arrived with many implications on national and regional stability. Only those countries and regions, which take pre-emptive measures but are endowed with vision, strategic thinking, and determination to understand the globalization 76

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process and, nevertheless, its oncoming threats and opportunities, will be able to secure a strong foothold and productive co-existence in the global pluralistic international community. I firmly believe that the globalization we are experiencing today is not cyclical, as some might argue. No, indeed it is here to stay, and we are obliged to adjust to and manage in a different way. By this, I mean that we should address the challenges of globalization to education in the Arab Region, not only to chart the future of this field, but to study the relationship in as broad a societal context possible, and to treat this in various perspectives, through different disciplines and topics, within which the challenge of globalization is conceived as the most profound dynamic of this historical moment. Let me begin by exploring the term Globalization, or AWLAMA, as is translated into Arabic. How will it be approached and tackled, when this meeting contemplates its impact on education? While the term is nowadays the leitmotiv of almost every discourse within all fields of social science, including that of education, there are confused and often conflicting definitions and conceptions of the phenomenon. In order for this concept to maintain any analytical usefulness, it must be unpacked, carefully defined and examined regarding its impact on society, the economy, and the world system in general and, for our intentions, on the education system in particular. Let us agree on the following: At its most organic and fundamental level, globalization is about the monumental structural change occurring in the process of production and distribution in the global economy. One critical issue that emerges from all these restructuring processes is the central role of knowledge, education and learning. These are becoming increasingly crucial factors of production, more important, some analysts would argue, than the traditional production function factors: (i) land; (ii) labour; and (iii) capital. The global system of production and distribution is now progressing from the FordistTaylorist development model to one based on Innovation-Mediated Production. FordismTaylorism was the dominant paradigm of the twentieth century and rested upon three major pillars. The first pillar was the factory system and mass production. The second pillar was the

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application of scientific management. And finally, the third pillar was the moving assembly line. These practices enabled by this model to more efficiently harness physical labour of huge masses of relatively unskilled shop-floor workers. Although it was only fully implemented in the advanced industrialized countries, the implications for the developing countries were tremendous. The newly emerging Innovation-Mediated Production model refutes those imperatives, and rebels against them. This new model is based, instead, on the blurring of the distinctions between mental and physical labour and the increase in the application of knowledge to the production process itself. This change is so significant that it represents a fundamental shift, for much of the world, in the underlying techno-economic paradigm of industrial organization. As the economies of the world shift steadily away from the force of things into the powers of the mind, from resource-based bulk processing into knowledge-based design and reproduction, so it is shifting from a base of diminishing returns to one of increasing returns. Knowledge in this emerging techno-economic paradigm is increasingly seen as both the raw material and major products of organizations. The competitive advantage of an organization is deeply affected by its capacity to learn. The underlying assumption here is that, in the new context of intense competition, rapid change, and increased interconnections between geographically different parts of the world, organizations are living systems, and therefore, smart, creative, adaptive, self-organizing, and value-seeking organisms. Accordingly, success does not come about through blueprints that are perceived a priori correct. Exploration and experiments can only make way for new opportunities and venues that are different and that give successful results. They are not necessarily better or worse paths to take, but they work well at this moment in time. Today, there are increasingly fewer things which have clear-cut boundaries and multiplicity of connections, this makes for greater uncertainty and speed of change. This condition demands adaptability, rather than dogged pursuit of efficiency. The simplest reason for the obsolescence of the machine metaphor, as a guide to modern thinking, rests with intelligence. In the ideal machine, the intelligence runs itself and there is no need for redesign. In 78

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intelligent systems, characteristic of human societies, everything can be redesigned and everything is of a temporary nature. Each element in the system is capable of thinking, as well as taking action. Societies function, as a result, more as a form of parallel, rather than serial, processing. The second critical component is the idea that we live in a relational world with increasing connectedness and that symbiosis is strength. The increasing connectedness of the world also brought to the fore the growing awareness of interdependence of existence. The modern world is increasingly shaped, in its essence, as a dynamic system. In such a closely connected world, many more things interact and shape each other and many more domains of activity take on the properties of a complex system. Every organization struggles to find its niche. Many of the concepts that one used in the schools curricula to understand such dynamically changing societies and conditions, however, are pre-systematic and flow from an image of the world as a self-contained static machine. This leads us to the conviction that not only do living systems contain their own solution within themselves, but also the solution always works to bring various parts of a system together so that it can learn more about itself from itself. Again, in systems or organizations, one works with webs of relationships. It matters not where the solution or change begins: it will work its way to the rest of the system in the most innovative and remarkable of ways, since healthy relationships within the system plus the spirit of teamwork are a source of great energy. In sum, what matters the system should be provoked and/or stimulated rather than ordered about. The real transformation in life occurs when the nature of relationships has been revisited and the members of any given system share new meanings. Hence, systems work best through partnership as opposed to hierarchical structures: in partnership people create meanings and set regulations together, instead of having others impose them. Change truly comes about when old meanings are questioned and no longer work. Life is intent on finding what works, not what is right. It is a truism to say that we must learn new ways of living in the context of what are called self-organizing systems: systems that are static and in motion simultaneously. These new 79

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habits of mind require toleration for, and understanding of: (i) ambiguity; (ii) complexity; (iii) interrelatedness; (iv) change; (v) uncertainty; and (vi) flow. Traditional institutions and models of education, however, still prepare people for the world of passing on recipes for thinking, seeing and living. This focus on recipes rests on an assumption that learners seek reassurance and answers from their learning experience and would somehow be troubled and anxious in the face of uncertainty and ambiguity. These recipes or algorithmic ways of approaching problems and understanding the world, however, are increasingly maladapted to a world characterized by rapid, never-ending, pulsating and interconnected change. In fact, when recipes and recipe-learning no longer provide a basis for making sense of the world let alone assigning meaning anxiety and fear are the end result. It is for this reason that there is emerging a view, at all levels of education systems, of the need to develop new habits of the mind for a new world. Part of this appreciation entails a moving away from recipes and algorithmic thinking toward complexities and complex thinking. An example is clearly evident of this movement towards non-algorithmic thinking and an embracing of complexity in what has come to be called problem-based learning (PBL), and the formation of students with problem-solving capabilities and critical minds. PBL, an approach that is being applied to all levels of education and professional raining has, at its organizing centre, an ill-structured problem which is messy and complex in nature; requires inquiry, information gathering and reflection; changing and tentative; and has no simple, fixed, formulaic or right solution. Such an ill-structured problem becomes the focal point for all subsequent learning in this method. Teachers assume the role of the cognitive and meta-cognitive coach, rather than knowledge holders and disseminators. Students assume the role of active problem-solvers, decision-makers, rather than passive learners. In the teaching and learning process, information is shared, but knowledge is a personal construction of the learner. Thinking is fully articulated and held to strict benchmarks.

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As it happens, this instructional approach is not necessarily interdisciplinary, but is always interactive. In what is called running the problem teachers constantly ensure that the situation is problematic, ill-structured and that students approach different problems, with different problem-solving and strategic-thinking strategies. In short, there is no single problem-solving methodology that is utilized. Recent evaluation research has empirically shown that problem-based learning promotes: Motivation: by engaging students in learning, resolving dissonance, and feeling that they are empowered to have an impact on the outcome of the investigation. Relevance and Context: PBL provides students with an answer to the questions: Why do we need to learn this information? And also: What does, what I am learning in school or university, have to do with the real world? Higher Order Thinking: The ill-structured problem scenario calls forth critical and creative thinking by suspending the guessing game of: What is the right answer the teacher wants me to find? Instead it orients students toward meaning-making over fact-collecting. Learning to Learn: PBL promotes meta-cognition and self-regulated learning by asking students to generate their own strategic definition, information gathering, data analysis, and hypothesis building, and sharing them with other students, teachers and mentors. Authenticity: PBL involves students in the types of problems faced in real-life settings.

Let me now shift to the second part of my speech where I intend to elaborate on another feature of globalization and share with you the discussion of its possible impact on education. By this I am referring to the information revolution and the information age that it engenders. We all know that formal systems of education came about largely through a context of information scarcity. It is not surprising then, that one of the key functions of such systems historically has been the storage, codification and transformation of information. Indeed, one of the functions of credentials in education systems is to indicate the degree to which an individual has closed the information gap between his/her bank of knowledge and the knowledge resident within the institution of learning.

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The old assumption in this regard is the one that views the students mind as a container and teachers as wise sages on the stage, delivering data, information, knowledge and wisdom, to the eagerly awaiting students, whose minds were empty vessels waiting to be filled. This approach is also a holdover from the Fordist-Tylorist industrial organization model, when only a few people, that is, the heads were required to plan and innovate, while the rank and file, that is, the hands, were expected to execute boring and repetitious tasks. Schools were therefore the perfect selection and hierarchical mode of individual management. As a result of this modality prescribed to education a number of assumptions continue to survive, rendering many aspects of todays schooling systems irrelevant to the world we actually live in. It is worth mentioning in this regard that while other disciplines are relatively adjusting their paradigms to the new demands and realities of globalization and making great strides forward, education theory and practice continues to lag far behind. Policy-makers in our region should wake up to the warning call that with increasing intensity today, information scarcity is being replaced by information abundance, a process that inevitably should force our educational planners and policy-makers to coin a new definition of the role of formal-learning institutions. Accordingly, the school should alter its function from being a primary provider of information and knowledge, to serving as a context in which one can learn how to: (i) organize; (ii) manage; (iii) analyze; (iv) verify; (v) apply; (vi) interpret; and (vii) give meaning to information. As we can see it, the actual learning paradigm will shift from information acquisition to information management on the part of the learner. This is indeed a profound shift in the core function of formal-learning institutions, the implications of which extend to all dimensions of educational enterprise in the countries of the Arab Region: curriculum, teaching, assessment, credentializing, organizational structure, as well as their relationships to time and space. Students usually are smarter than we think! They have a very clear, sometimes critical and demanding but also stimulating opinion of what they regard as quality education and what should be done to attain it. They like schools to teach them how to think, not only teaching them facts. Young people are not interested in learning experiences that simply lead them to reproduce information which moreover, will soon be outdated mainly because they are 82

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aware that they can find that information for themselves, provided that they have been taught to do so. They want to shift away from education for conformity to education for creativity. It is the sheer evidence of recent research that tells us how schools were increasingly observed to fail to produce self-motivated individuals who can live in the complexities and ambiguities of todays world. The new organizations of today need people with high cognitive and affective skills, who are creative and adaptable. More specifically, todays world requires individuals who possess: (1) an inner appreciation of inter-connectedness; (2) a strong identity of sense of being; (3) a sufficiently large vision and imagination to see how specifics relate to each other; (4) the capacity to go with the flow and to deal with paradox and uncertainty; and (5) a capacity to build communities and live in relationship with others. The stronger source of curriculum and instruction capable of harvesting those objectives is, in my opinion, through involving students in projects. More specifically, students exploration and experience can be the essence of any course of study. Everything in life is in constant process of discovery and creation. Hence sources of the curriculum should be diversified and not confined to textbooks. They could be national, communal and, thanks to the multi-media and to the abundance and easy accessibility of information, they could also be international. This normative outlook will help us reach the conclusion that in the information age, children do not learn in boxes, thus the strict division of curriculum into subject matters does not lead to effective learning. Thinking-based curricula, which encourage and allow children to think, if handled in an integrated fashion, yield the best results. Bearing this in mind, the sources for a relevant update curriculum in a fast-moving age will rely far less on standardized textbooks. Moreover, with regard to learning objectives, considerable emphasis should be placed on collaboration and teamwork in classroom interaction. Management experts worldwide have noted that behind the Japanese technological, economic, and educational success story has been the ability to work in groups and develop group loyalty. The ability to work in groups is now being recognized as an educational objective, just as important as literacy and numeracy. Also, important to group formation and on a par with literacy and numeracy are communication skills that are not necessarily reducible to reading and writing, such as planning, presentation, critical and logical thinking, and non-verbal communication. 83

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In knowledge-based societies and economies, another learning objective is not just clear access to and use of knowledge, but the processing of that knowledge: verification, analysis and interpretation, utilization and attaching deep meaning to it in the daily life activities of learners. To close, I would like to review a few lessons these conclusions teach us about what is required for Arab countries to reform their education system in order to meet the sweeping changes introduced by globalization and by radical shifts in the new systems of production and distribution based on knowledge in the first place. Let us agree that all societies evidence a learning architecture, that is through their conscious intentions, they establish the boundaries and rules of who learns what, with whom, where, when, how and for what purpose. The existence of a learning architecture is, thus, common among societies and nations. In the global and dynamic world of today, the pressures of such force and significance is to cause us to examine carefully our learning architecture and engage in an equally serious process of redesign. One of our greatest needs, now, is for what can be described as strategic imagination: the willingness and ability to envision new possibilities for the development of the new potential and, in parallel, to conceive, explore, test and demonstrate innovative strategies that can contribute toward making these possibilities a reality. In the document submitted to the Arab Summit meetings, I proposed the establishment of a wide number of regional working groups composed of Arab and international intellectuals, planners and experts to examine all components of the educational process and render alternative scenarios of reform. Planning in and for education as part of the development process today confronts the very same context as that faced by other institutions and organizations in society: A dynamic change process that interacts constantly producing a new stream of problems, issues and opportunities.

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Conventional Static models of planning are not able to cope with such dynamic complexity, and, for that reason, offer policy-makers only limited assistance in decision-making, crafting strategies and priority setting. The world changes so rapidly that the static plan loses its value as a guide to action and in many cases becomes a problem itself. Alternative conceptions and models of learning, which treat education and learning processes as a complex adaptive system, are desperately needed in the development process of our Region which is bombarded by vague alternatives and by fluid and uncertain opportunities, and alarming threats. One promising approach to this quandary is the use of strategic thinking and scenario planning and learning techniques. Scenarios help policy-makers to organize what they know and what they can imagine into a logical vision of the future and to discern and consider the implications and develop planned out alternatives and prepare medium-term and long-term agenda of reform to be adjusted periodically. In sum, the strategic thinking and scenario learning and planning process for education system reform helps policy-makers deal with two of the processes and conditions that most affect their decision-making in a globalized world: uncertainty and complexity. Some of you might argue, after listening to my speech, that most of the countries in the Region need to attend to first things first; that is, to ensure basic literacy, numeracy, and access and only when this is complete should they attend to the other matter that I have recommended and think on how to adjust their education systems to the dictates of globalization. The problematic aspect of such arguments, if any, is that it assumes that the world economy and the attendant pressure of globalization and knowledge intensity will stand still and wait for the first process to complete itself before further change processes are set in motion. This, of course, is highly improbable and flows against the grain of the extremely rapid changes occurring with the global economy and modern world. Thank you again for inviting me to join you, and presenting a united front, today. I feel truly honoured to stand here before all of you to deliver my Keynote Speech. * * 85 *

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Wail Benjelloun

Endnote Presentation Knowledge-based economies: globalization and the business of science

Wail Benjelloun, Dean, Faculty of Sciences, Mohammed V University - Agdal, Rabat, Morocco

I.

Introduction

The mind-boggling pace of recent progress in human knowledge notably in the basic sciences has impacted the world economy, consequently the economic growth and global competitiveness of Morocco and the Arab Region will depend on our ability to benefit from, and to add value to, scientific discovery. Professor Stafford Beer described this fastapproaching world as Absolutum obsoletum (if it works it is out-of-date) (Beer, 1985). In the face of this almost evolutionary trend the term knowledge-based economies takes on a special significance. Knowledge-based economies may mean enjoying access in real time to information (i.e. knowledge) necessary for making appropriate competitive decisions. The competitive edge is gained through the possession of information that others may not benefit from. To gain that edge, the information technologies (a product of scientific research) that involve computers, internet, satellite feeds, dedicated lines, telephones, etc. must be harnessed in the Arab Region there is no need to insist on how much progress has been made in this field. The concept of knowledge-based economies is most challenging when it involves entrepreneurship based on new high-end (state-of-the-art) knowledge, new research, and innovations. Though basic science has not traditionally had an immediate impact on industry or the economic world in general, and delays in return were often incompatible with the shortterm market expectations, recently the picture has changed. In the course of the last decade for example, the employment generated by start-up companies in the United States has more than compensated for the unemployment produced by the layoffs resulting from the restructuring of multi-national companies. Since the early 1970s universities and their incubators, particularly in North America and more recently in Europe and Asia, have been 87

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supporting young entrepreneurs in the start-up phase of their business endeavours. In addition, a culture of entrepreneurship has developed in major R&D laboratories worldwide, and startup companies resulting from these activities are flourishing. Which only goes to prove that the relationship between science and research, on the one hand and business on the other, is becoming more and more closely linked together. In the Arab Region, and specifically in Morocco where natural resources are limited, such science-business symbiosis needs to be recognized as one of the important keys to a better future. Our economic development must increasingly be based on the output of the most cherished resource, human capital. As a result, universities are initiating efforts to add value to the results of their research, with the establishment of University-Industry interfaces, and small business incubators. The Moroccan National Charter for Education and Training, and the resulting legal texts, has encouraged such entrepreneurship. On the other side of the fence, the appearance of the first timid venture capital funds has taken place and industry has responded with it own embryonic research and development (R&D) programmes. These trends must be encouraged and reinforced. Faculties of Science are increasingly including in their curriculum courses such as management and management information systems, entrepreneurship, marketing and finance (these would not have been deemed appropriate, or necessary, only a few years ago) besides the traditional offerings in mathematics, physics, computer science, chemistry, biology and geology. The Faculty of Science in Rabat has offered programmes in insurance statistics and a Masters programme in mathematics for finance has recently been accredited. This is in recognition of the fact that our products (the results of basic science research) are best exploited when placed in a socio-economic context. This recent scientification of commercial technology has brought the interface between universities and industry into sharp focus. In particular, academic entrepreneurship, that is, the variety of ways in which academics take direct part in the commercialization of research, is gradually becoming an integral part of university activity worldwide. The jargon of economics is fast invading the scientific research arena. Similarly, the most rapidly growing and wealth-creating industries such as biotechnology, computers and telecommunications are progressively more research-based. Such entrepreneurship already flourishes in some countries, and must now also be placed in the forefront of the public policy arena of the Arab 88

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States. It is understood that talking about science in such blatantly economic terms might be difficult for those used to a more traditional approach. really an older expression of this new reality. Strong national commitments are, indeed, necessary to encourage this science-business relationship if sustainable economic growth is to be ensured. As this commitment is developed, several key institutional factors, outlined as follows, will be crucial to our success. Firstly, heavy investment must be made in human capital formation and training. The percentage of populations receiving a university education is still dismally low. When this is considered in conjunction with the high rate of illiteracy and the fact that only 23.5 per cent of students entering primary school in Morocco, for example, eventually complete the secondary cycle, the magnitude of the challenge becomes evident (Prospective Maroc, 2030). Data provided in Table 1 below serves as the backdrop for human development activity in our Region. The existence of a wide range around the mean of Arab country indicators, with a high incidence of outliers and skew, rendered the mode a more reliable measure of central tendency (raw data were taken from the Human Development Report, 2006, UNDP). When compared to Norway the highest ranked nation or to South Korea (ranked thirty-three, a country within reach), Arab nations generally lag behind in terms of control of demographic growth, life expectancies and access to education. It, therefore, comes as no surprise to see that the technology indicators, also shown in this table, show a wide lag behind for the Arab Region. And yet our whole intellectual property system (IPS) which has been in place for some time, with its patents and royalties, is

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Table 1. Indicator HDI rank

Arab States Human Development Indicators Arab mean (range) 85 (33-153) 1.95 (1-3.1) 70.8 (52.5-74.2) 27.3 (7-78) 92.2 (73-100) 23.5 (6.7-48.8) Arab mode 82 2.0 72.5 21 96 20.5 Norway 1 0.5 79.3 4 100 0 Republic of Korea 26 0.3 76.9 5 100 2

Annual population growth rate % Life expectancy at birth Infant mortality /1000 births Grade 5 (% of Grade 1) Adult (15+) illiteracy % Technological indicators : Cell telephone subscribers/1,000 Internet users/1,000 Hi-tech exports (% of manufactured exports)

381.7 (53-908) 113 (5-321) 3.75 (1-13)

313 104

861 390

761 657

18

33

Source: UNDP Human Development Report, (UNDP, 2006). Beyond access to university education, programme adjustments both in educational curriculum and research orientations to meet demand in the private sector require a welcoming national policy environment and sufficient levels of public funding. It is now generally recognized that without educational investment and appropriate research funding no significant level of sustainable national economic development can be attained. Yet the Moroccan investment in research stands at only 0.6 per cent of gross domestic product (GDP) compared to 3 per cent in South Korea. In addition to a greater budgetary commitment to research, national decision-makers and universities must put in place mechanisms that adjust research funds and orientations to demand in the private sector and that facilitate facultys bridging of the gap between academia and the private sector. This can be ensured through an association of venture capital and shared salary schemes which encourage the private sector to feel it has a stake in the university. 90

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Secondly, incentives should be designed for young people to become entrepreneurs and encourage the expansion of existing entrepreneurial ventures (State of Virginia. 2007). In the Arab Region, this requires major changes in institutional mentalities in and out of academia. Given the proper encouragement, the university could ensure qualitative development leaps, bounds and innovations that accelerate economic development at a greater pace than that obtained through traditional macroeconomic measures. A hard look must be taken at the tax codes to include the necessary breaks for start-ups, university incubators and young businesses in general that add value to scientific production. Properly administered, entrepreneurial incentives can have complex repercussions, including orienting students educational choices towards scientific disciplines with an economic impact. In a country such as Morocco where the overwhelming share of research is carried out at universities it becomes even more imperative that the interface between university research and commercialization be well-developed, in order to maximize social benefits from research. In recent years university researchers have managed to significantly increase the Facultys operating budget, complementing state-provided funds with returns from the commercialization of know-how and research development activities. And yet, even if all other elements favouring science-based entrepreneurship are at hand, results in terms of economic performance are likely to be meagre, unless the appropriate climate is in place within the university system itself. A number of factors are likely to be crucial: (i) the degree to which up-to-date research results and methods are communicated to students as part of the regular instruction; (ii) whether the internal reward systems (be they monetary or nonmonetary) encourage excellence in both teaching and research, and (iii) the extent to which the university system allows for, and promotes, innovation and personal initiative.

II.

Conclusions

Innovation plays a crucial role in entrepreneurship, and scientific and technological innovations are the basis for development. Innovation may be defined as: The transformation of knowledge into products, processes, and businesses that create and sustain economic and societal well-being. Thus the three elements of innovation are: (i) knowledge; (ii) a workforce able to transform knowledge; and (iii) the infrastructure necessary for both. 91

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Scientific and technological innovations can provide the base for traditional manufacturing to move from low-skill to high technology sectors, allowing the creation of new highertechnology manufacturing industries. Currently, only 11 per cent of Moroccos exported goods may be considered as products of high technology (as compared to 33 per cent in South Korea and 31 per cent in Malaysia). Our service industries also need to move toward knowledge-based services, e.g. software, business, biomedical, and financial services. Finally, the legal system needs to address the issue of intellectual property and enforcement of patent protection. Innovation is not an end-game strategy. It is a modus operandi for an economy that can face the challenges of globalization. Succinctly put, successful knowledge-based economies require that universities be open to influences from the outside world and that they disseminate information about their teaching and research activities outside academia, and in so doing facilitate societys access to relevant information about research results. Likewise society must put in place the necessary instruments to encourage and expand this effort through taxation and other incentive schemes. * Bibliographical References Beer, S. 1985. The Preposterous Inference. In: Computer Networks 9. pp. 11-20. Prospective Maroc 2030. Haut Commissariat au Plan (HCP), 2007. Rabat, Morocco. State of Virginia. 2007. Guide to Establishing a Business. A Virginia Guide to Business Incentives. UNDP. 2006. Technology and Innovation Awareness Programme. UNDP Human Development Report, Power, Poverty and the Global Water Crisis. * *

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WTO/GATS: Possible implications for higher education and research in the Arab States
Abdalla R. Bubtana Consultant, UNESCO, Paris Former Chief of the Higher Education Section, Education Sector, UNESCO Former Director of UNESCO, DOPHO, and Representative of UNESCO to the Gulf Arab States

Abstract Higher education has been witnessing major transformations and facing enormous challenges worldwide in recent years. In spite of the fact that the number of students enrolled in this system has exceeded 100 million, the social demand has been also increasing, thus surpassing the capacity of national systems to respond adequately. The system is not only growing in terms of access but also in terms of financial investment and trade which were estimated to be US$30 billion in 1999 (Vlk, 2006 ). This figure may have exceeded US$40 billion in 2006. This reflects the increasing importance of this sector in terms of economic power. This was perhaps one of the reasons that motivated WTO and some countries to include higher education as one of the services to be covered by the GATS agreement concluded in 1995 as the first legal instrument focusing exclusively on trade in services through the removal of existing barriers on trade in this domain. It is to be also noted that research will be covered under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The inclusion of higher education in this agreement has been at the centre of heated debate among opponents and proponents from various regions of the world. While proponents claim benefits such as more diversified systems, greater efficiency and improved quality, opponents reject the idea of converting higher education from a public service to a commercial commodity. The pros and cons of the agreement and the conflicting views over its positive and negative consequences will be thoroughly analyzed in various sections of this paper.

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Most importantly, this paper will discuss the possible implications of the agreement for Arab higher education particularly policy, legislation, regulatory, and the educational, socio-cultural and financial aspects. Based on these analyses, the paper will attempt to draw conclusions and state some recommendations for possible future actions.

I.

Introduction

One of the main instruments of globalization and the emergence of the neo-liberal global economy is the creation of the World Trade Organization (WTO) and the launching of the General Agreement on Trade and Tariffs (GATT). Today, this organization, which administers the application of various agreements and regulations concerning the liberalization of trade, is consisted of more than 150 countries from all regions of the world. The initial responsibility of WTO was to administer the GATT agreement which dealt mainly with trade, commerce and finance in other words, with money, commodities and products. The services sector such as education, higher education, tourism, health etc. was not included in the provisions of GATT. The General Agreement on Trades in Services (GATS), which was negotiated during the WTO Uruguay Round and came into effect in 1995, is the first legal agreement focusing exclusively on trade in services through the removal of existing barriers to trade in these services. The liberalization of trade in higher education can be included in the negotiations of GATS. This agreement which was initiated by Australia, Canada, the United States and a number of European countries has been facing fierce resistance not only from the academic community but also from some powerful NGOs active in the field of education such as the European Institute (EI), the Advisory Centre for Education (ACE), the European University Association (EUA), the Council for Higher Education Accreditation (CHEA) and others. Even the European Union (EU) took a decision in 1993 not to submit higher education into the initial rounds of negotiations on GATS. In spite of this, as of February 2007, over fortyseven countries have made commitments to include education in the agreement, though only thirty-eight of those included commitments to higher education (Knight, 2006). These include some developing countries such as Congo, Jamaica, Lesotho and Sierra Leone.

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The debate over the implications of GATS on higher education and research has intensified during the last few years and is divided between the opponents and proponents of the agreement. The arguments focus on highlighting its possible negative or positive impact on the future of higher education. While proponents highlight the benefits that free trade can bring to higher education in terms of diversifying the providers and delivery modes, broadening access, promoting competitiveness and increasing financial and economic gains, opponents reject the idea of converting higher education from a public service to a marketable commodity. It is to be mentioned here that the amount of financial resources spent on higher education shows its increasing importance in terms of economic power. Opponents also fear that the agreement may constitute a pretext for the further shrinking of the government role and the possible take over of systems by the corporate community which is interested mainly in profit making with less interest in serving national interests and agendas. The fear in developing countries is that, in addition to these negative aspects, cross- and trans-border providers will lead to negative rather than positive consequences such as increased social costs for higher education, the return of the elitist systems and gradual disappearance of national systems that cannot compete with foreign providers. Some critics consider the agreement as a pretext for a total take over by the corporate community of higher education and for monopolizing research for commercial purposes. At the present time, jargons that were strictly used in business and commerce such as marketization, commercialization, commodification, Macdonalization and franchising are frequently applied to higher education. The debate extends beyond these issues to target the legal and political aspects of the agreement. On one hand, questions are raised about the possibility of governments to commit themselves to agreements which concern autonomous institutions such as universities. On the other hand, there is debate on what are considered to be ambiguous stipulations in the agreement that can be subjected to different interpretations (such as Article 1:3 which deals with the exemption of services supplied in the exercise of governmental authority).Throughout this heated debate, a legitimate question is: What are the possible policy implications of GATS on systems of higher education in developed and developing countries? There is no doubt that the commitments of governments to the application of GATS will require major policy revisions and provisions, at national level, so as to ensure conformity with the stipulations of the agreement. In addition to gradual diminishing of the role of the 97

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state in funding and regulating systems of higher education, policies must be adopted to allow both the private sector and foreign providers to freely compete at national level. The state control of quality, relevance and adherence to national priorities and agendas will drastically decrease. Furthermore, subjecting higher education to market forces will not face any limitations by state rules and regulations. Principles, such as equal access and the democratization of higher education, will be no longer policy priority. These aspects and others will be further elaborated in this paper. The possible impact of GATS on developing countries, including those in the Arab States region, has not yet been thoroughly assessed or analyzed. So far, the available literature indicates different voices and views. For some countries, the advantages are that foreign providers would increase access to higher and adult education programmes, develop advanced higher education and research infrastructures, increased the mobility of students, academic staff and researchers and increase competitiveness which leads to improved quality. For other countries, the disadvantages are also numerous such as the fear of losing control over higher education through deregulation, foreign dominance and exploitation of national systems, inability to compete in global trading systems and the threat to national systems that cannot compete with foreign providers. These advantages and disadvantages will also be analyzed in this paper. Without adhering to GATS, some Arab countries have been witnessing an apparent increase in the number of cross-border institutions. Examples are Egypt, Qatar, the United Arab Emirates and others. The trend towards privatization has also been increasing in almost all Arab countries during the last ten years and government support to higher education, although not totally diminished, is gradually decreasing to be substituted by the private sector. The application of GATS may lead to further reduced state involvement in higher education. Although the challenges posed by GATS will be major for Arab systems of higher education, it is evident that neither policy-makers, nor the academic community, nor the stakeholders have seriously analyzed this aspect to assess the future impact and implications. This is the present state of affairs, although a good number of Arab countries have joined WTO and will be obliged to enter into actual negotiations on the application of GATS. This paper will be a good opportunity to raise awareness among all Arab stakeholders concerning the agreement and what it represents for the future of Arab systems of higher education and research. 98

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Based on the analyses in the various sections, the paper will attempt to state some conclusions and recommendations which may help policy-makers to deal with the possible future challenges and implications of GATS.

II.

Legal and political contexts of GATS

As an international instrument approved by governments, GATS has certain stipulations which must be respected. So, legal and political action must be taken to implement this instrument at the national level under the strict control of the WTO. Any violations by national governments will be referred back to this body for judgement regarding disputes between governments and institutions. From the political point of view, only governments can enter into negotiations affirming the political sovereignty of the states party to the agreement. In the case of higher education, academic institutions, in spite of their autonomy, are rarely called upon to participate in the rounds of negotiations. Nor are NGOs active in this field. Adhering to GATS is thus a political decision which has policy, legal and administrative consequences. Although the political context is clearly defined and concerns national governments which are members of WTO, the legal context remains unclear and subject to different interpretations particularly in terms of services that can be included in the negotiation plans or schedules of governments. Although in principle GATS applies to all services sectors, Article 1.3 excludes services supplied in the exercise of governmental authority. These are services that are supplied neither on a commercial basis nor in competition with other suppliers. This is perhaps the most controversial article that has triggered most of the debate over the inclusion of higher education in the agreement. For the Arab Region, the interpretation of these exclusion phrases may be positive or negative. Since most Arab countries presently allow the establishment of private institutions, higher education services are not totally the responsibility of government. Furthermore, a part of higher education services is being provided on commercial and competitive basis. However, all these services are provided in conformity with the strict rules and regulations of government in terms of licensing and accreditation. Moreover, some private institutions receive government funding and some public institutions receive private funding. This

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situation may lead to a more complicated interpretation of Article 1.3 of the agreement. Hence, it extremely difficult to clearly define which education services are supplied strictly on commercial basis due the public/private mix in all systems and within many institutions of higher education (Gilles and Lambert, 2003). The Arab countries, according to the above analysis, may seem unable to benefit from the exemption of Article 1.3 and may be obliged to include higher education in their negotiation schedules. However, they may put limitations on various modes of trade in this domain such as cross-border supply or commercial presence. It must be said that a number of Arab governments may see benefits in making a full commitment to GATS, including in the higher education field, particularly as related to cross-border providers, consumption abroad, commercial presence and presence of natural persons. In some Arab countries, all these modes of supply applicable under GATS are being adopted on a bilateral basis. This is the case in Egypt, the United Arab Emirates (UAR), and Qatar. It is worth mentioning here that in some countries, such as Greece and Israel, there is almost total opposition to including non-national providers in the national higher education system or to recognizing their diplomas and degrees (Padayachee, 2003). It is very important to note that if major international NGOs such as the European Universities Association (EUA) consider the legal aspects of GATS to be ambiguous and request more discussions particularly on Article 1.3, Arab governments should not rush into making unrestricted or full commitments to the agreement before its possible consequences are clarified and understood.

III.

GATS: pros and cons

There is no doubt that GATS, like any other trade agreement, has both various advantages and disadvantages of its course of action. The debate over these aspects has escalated during the last decade involving not only policy-makers but also different stakeholders. The most outspoken of these are the academic community and NGOs active in the field of higher education. It must be said here that, under GATS, governments have complete freedom to choose which services are to be involved. Also, in their negotiation schedules, they can put some restrictions 100

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on the extent to which free trade is allowed with regard to certain services. This arrangement thus allows Member States to negotiate conditions which maximize the advantages of the agreement and minimize its disadvantages.

III.1

The Pros

Some advocates of free liberalized trade consider it important for countries to adhere to GATT, GATS and other agreements concluded within the framework of WTO. Although they recognize some negative consequences, they estimate that the advantages are enormous and in the interest of Member States. They consider that a refusal to adhere to agreements will lead to the total isolation of a country within the international trade system. WTO itself has indicated six benefits of trade liberalization. They can be summarized as follows: (1) (2) Economic performance: an efficient services infrastructure is a precondition for economic success. Development: access to world-class services helps exporters and producers in developing countries to capitalize on their competitive strengths, whatever the goods or services they sell. (3) (4) Consumer savings: there is strong evidence in many services that the liberalization of trade leads to lower prices, better quality and wider choices for the consumers. Faster innovation: countries with liberalized service markets are those which benefited more from greater products and process innovations such the explosive growth of the internet in the US. (5) Greater transparency and predictability: a countrys commitments in its own WTO services schedule amount to legally providing a guarantee indicating that foreign firms will be allowed to supply their services under stable conditions. (6) Technology transfer: services commitments at the WTO help to encourage foreign direct investment (FDI). (WTO, 2007). As seen by the proponents, advantages include: (a) greater student access to higher education to help meet increasing demand; (b) innovation through new providers and delivery modes; and (c) increased economic gains (Knight, 2006). But, although these benefits may be valid 101

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in their economic and commercial aspects, they tend to ignore the cultural and social dimensions of free trade. While some of them are applicable to the education and higher education services, there are other aspects of greater importance such as promotion of cultural identity, developing national citizenship and nation building which cannot be commodified, marketized or traded by foreign investors.

III.2

The Cons

In spite of the proclaimed benefits, many experts in developing countries are skeptical about them. For them, globalization has not brought the promised economic gains. On the contrary, it has led to greater inequality for developing countries. These experts think that, in spite of opening up of the international trade, the absolute numbers of poor in the developing countries have been constantly increasing. They call upon policy-makers and GATS negotiators to learn from lessons learnt from the applications of the agreement before pledging unrestricted commitment to it (Pially, 2003). Opponents of the agreement, from both developing and developed countries, have been strong voices which maintain that increased trade, in higher education may: (i) (ii) Threaten the role of governments to regulate higher education and meet national policy objectives; and Jeopardize the public good and quality of education (Knight, 2006 p. 137). For them, converting higher education from a public service to a commercialized commodity must be totally rejected. They also fear that the agreement may constitute a pretext for the further shrinking of the government role and the possible take over of systems by the private sector and the corporate community which are interested mainly in profit-making with less interest in serving national interests and agendas. The fear in the developing countries is that, in addition to these negative aspects, cross- and trans-border providers will lead to negative rather than positive consequences such as increased social cost for higher education, the return of elitist systems and the gradual vanishing of national systems that cannot compete with foreign providers. Some critics consider the agreement as a pretext for a total take over by the corporate community of higher education and for monopolizing research for commercial purposes. The brain drain was cited as one of the negative consequences of the agreement which allows for,

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under its Mode 4: The presence of natural persons. Thus permitting greater mobility for academicians and researchers. To avoid the negative consequences for those governments that are obliged to include higher education in their negotiation schedules some conditions are needed in relation to certain aspects which allow for restrictive or gradual liberalization of trade. These include limiting the number of branches to be operated by cross-border providers at national level, setting a ceiling or percentage on the amount of profit they can make, or applying tight controls on licensing and accreditation regulations. In general, very influential NGOs such as the European University Association (EUA), the Association of Universities and Colleges of Canada (AUCC), the Advisory Centre for Education (ACE), the Council for Higher Education Accreditation (CHEA) and others see no need for applying this new agreement to higher education and instead, they call for the promotion of bilateral cooperation and those agreements reached within the framework of multilateral organizations, such as UNESCOs Conventions (UNESCO, 2002) on the recognition of degrees and studies in higher education (Breton and Lambert, 2003). It must be said that any agreement which is ambiguous, that does not gain consensus and serves the interests of only certain stakeholders is likely to operate imperfectly. This seems to be the case vis--vis GATS. This agreement has been criticized for representing only the views and interests of developed countries with less say or influence from developing countries (Tortian, 2003).

IV.

Possible implications for higher education in the Arab States

Among the 150 members of the WTO, there are eleven Arab countries with full membership and three with observer status (WTO, 2007). It is known that so far among the thirty-eight countries which pledged commitments under GATS, there is only one Arab country (Bahrain). However, it is not easy to verify whether Bahrain has already submitted its national schedule for the forthcoming rounds of negotiation and whether education and higher education have been included. There is a possibility that a number of Arab governments will be pressured to open their higher education to free trade. It has been mentioned before that a number of countries have 103

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already opened their markets for cross-border providers on a bilateral basis, even before adhering to GATS. It is important at this stage to speculate on the possible future consequences and implications of adhering to GATS for Arab higher education. There is a fear that Arab negotiating teams, mostly economists and planners, are not really aware of the negative consequences which may result from unrestrictive commitments to GATS in a sensitive field such as education. These teams are usually concerned with economic and financial benefits rather than social and cultural priorities. Also, it is crucial that all higher education stakeholders must quickly launch awareness campaigns, through meetings, seminars and conferences with the intention of drawing authorities attention to the negative and positive aspects of joining GATS. In other regions of the world, controversial debates about these issues have taken place during the last decade. Even very powerful NGOs active in higher education from developed countries have issued declarations deploring the idea of including higher education in the negotiation of GATS and warned governments about the possible catastrophic consequences. The Arab Region is far behind in this domain and the present meeting should constitute a point of departure for specialized future meetings focusing on GATS and Arab higher education. This meeting may wish to issue a declaration to promote this idea and trigger awareness about the importance of this issue among policy-makers, the academic community and all stakeholders.

IV.1

Policy implications

Any Arab country which includes higher education in its future negotiations related to GATS will be required to make certain revisions to their current educational polices. For example, allowing foreign providers to freely compete with national institutions of higher education would require certain revisions to policies, which restrict these services to national entities and citizens. Admission polices must be also adjusted to fit the requirements of cross-border providers and those of non-conventional institutions of distance and virtual higher education. The principle of free and equal access to higher education, which is dominant in Arab higher education policies, will be less important under GATS. In financial terms, the spread of private and foreign providers may gradually shrink governments support to higher education, leaving it totally to market forces. 104

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Unless Arab governments put restrictive clauses on the liberalization of trade, higher education will be gradually converted from a public service to a marketable commodity open for competition between national institutions and foreign providers. The fear is that in the long run national institutions which cannot compete in free trade markets will vanish from the scene to be replaced by foreign providers for whom cultural and social agendas are not important. What is important is profit making!

IV.2

Legislative implications

In most Arab constitutions and educational legislation, higher education is a basic human right and is the sole responsibility of the state. Hence, in most countries, higher education is free. As a result of the tremendous pressure caused by social demand and the inability of state institutions to meet this, almost all countries have revised their legislation to allow the development of private institutions which are owned by nationals. In some countries like Egypt, Qatar, and the UAE, cross-border providers were allowed to operate due to exceptional legislation and within the framework of bilateral agreements. Once commitments are made within the framework of GATS, Arab legislation must undergo major revisions to offer fair, unrestricted and indiscriminate treatment to foreign providers as stipulated by the agreement. This can only be avoided if governments indicate in their negotiation schedules some restrictions which will apply once the agreement is enforced. Examples of such restrictions are: (a) to limit number of foreign providers; (b) to limit the profit margins; (c) to limit the number of students to be admitted to foreign institutions.

IV.3

Regulatory implications

It is well known that most Arab countries [and also African countries (Mihyo, 2004)]lack sound mechanisms and frameworks for accreditation, recognition and quality assurance of institutions of higher education, despite the importance of this aspect for all countries whether they are importing or exporting educational services. Before liberalizing trade in higher education, it is vital to set up national mechanisms which can address accreditation and 105

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quality assessment procedures for the academic programmes of new and foreign providers. This is very important for preventing foreign providers from offering programmes of dubious quality (Pially, 2003). The ever increasing expansion of distance and open higher education with major investments in the utilization of information and communication technologies (ICTs) has resulted in new types of higher education represented by virtual universities, e-learning institutions and open universities. This has undoubtedly changed the whole landscape of the higher education systems. All these types of providers are capable of crossing borders without adhering to the rules and regulations of any state. In the absence of national and international regulatory frameworks, the concepts of quality, accreditation and recognition of studies and degrees remain questionable areas. The absence of these mechanisms and frameworks constitute major obstacles for Arab States with regard to liberalizing trade in higher education. However, this can be used as a valid argument by academics and stakeholders for convincing governments to delay the inclusion of higher education in their commitments to GATS and, instead, to opt for more gradual liberalization in future negotiation rounds.

IV.4

Educational implications

A consistent criticism of the liberalization of higher education is that it will curtail a nations ability to develop its own system, thus reflecting its unique social, cultural and political characteristics (Pially, 2003). There is also a risk of homogenizing national education systems. Foreign providers bring with them foreign curricula which mostly have limited relevance to the importing countries socio-cultural contexts. This is in contradiction with the national mission of higher education which seeks, among other functions, to preserve and promote national cultures, instil cultural identity and educate for citizenship. The most important and crucial fear is that flooding a country with foreign providers, based on GATS, will force national institutions, which cannot compete with foreign providers in free-trade markets, to gradually disappear from the national map of higher education. This situation may lead in the long run to a total take over by cross-border providers with no interest in serving national objectives and agendas.

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IV.5

Financial implications

It is a fact that globalization and its instruments such as GATT and GATS seek first and foremost to decrease the role of the state not only in commerce and services but also in almost all human activities. In other words, it seeks to end the concept of the welfare state which is dominant in most Arab and developing countries. In these countries, the public funding of higher education is witnessing either zero or negative growth despite the rising social demand. This is why most of them have recently allowed the private sector to share the financial burden. The role of this sector in funding has greatly increased in recent years, thus, giving governments reasons to reduce its public funding to higher education. The question to be raised concerning funding vis--vis GATS is whether cross-border providers can mobilize alternate funding sources or whether they are there to gain access to financial resources. Although in both cases the answer is Yes, they will signal to governments that they can decrease funding for higher and adult education, thereby jeopardizing domestic publicly-funded institutions (Knight, 2006). Allowing free trade in higher education with foreign providers charging high tuition fees will both increase the cost of education, thus paving the way for the return of the elitist systems, and increase the financial burden on the society as a whole.

IV.6

Socio-cultural implications

The mission of higher education is not restricted to training professionals and serving economical objectives only. As well, it must instil cultural values and social equality. Education being a basic human right must be made available to society either free or at affordable cost. This is a principle which has prevailed in Arab countries since the postindependence era. However, there is a fear that converting higher education into a marketable commodity will endanger this cherished principle. Higher education must assume the responsibility of preserving and enriching the national culture, preparing for citizenship and serving national social and economic objectives and agendas. There is a doubt that foreign providers will be interested in catering for these objectives. On the contrary, they may contribute to the homogenization of cultures and focus

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on economic returns and profits. Experiences have often proved that foreign providers are insensitive to the national, cultural, educational and social ethos of other countries. It is clearly stated in most Arab legislation that education is responsible for instilling Arab and Islamic values and ethics and for contributing to the preservation and enrichment of social and cultural traditions. Foreign providers will be less interested in serving these objectives for two reasons (a) their interest is mainly in programmes which can be saleable on the market; and (b) they bring with them cultural values that are predominant in their countries of origin. This will certainly contribute to the homogenization of national cultures and therefore threaten the concept of cultural diversity. A relevant question, particularly in the cultural domain, is whether Arab governments will be able to force foreign providers to customize their programmes, curricula and content to fit and be more relevant to their national contexts. Therefore, any Arab country deciding to adhere to GATS and including education in this agreement must be aware of the possible negative cultural and social consequences and attempt to lay down some limitations and restrictive measures to preserve its social and cultural identity.

V.

Conclusions

From the previous analyses of the nature and objectives of GATS, the following conclusions may be drawn: The debate over the implications of GATS on higher education and research has intensified during the last few years and is divided between the opponents and proponents of the agreement. The arguments focus on highlighting the possible negative or positive impact of the agreement regarding the future of higher education. Within the Arab Region, very limited debate has taken place on GATS. The amount of trade in higher education was estimated to be around US$ 30 billion in 1999. This amount may have increased by the year 2006 to reach over US$ 40 billion. This indicates

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the increase of higher education in terms of economic power. This is one of the reasons to include it into GATS negotiations. There are ambiguous stipulations in the agreement that can be subjected to different interpretations such as Article 1:3 which deals with the exemption from the agreement of services supplied in the exercise of governmental authority. There is no doubt that GATS, like any other trade agreement, has some advantages and disadvantages. There is a need for the Arab countries to undertake negotiations which will lead to maximize the benefits and minimize the disadvantages. Although the proclaimed benefits of GATS, on which most of the proponents focus their arguments, may be valid in their economic and commercial aspects, these tend to ignore the cultural and social dimensions of free trade. Opponents of the agreement, from both developing and developed countries, maintain that increased trade, in higher education may: (1) threaten the role of governments to regulate higher education and meet national policy objectives; and (2) jeopardize the public good and quality aspects of higher education. There is a fear that Arab negotiating teams, mostly economists and planners, are not really aware of the negative consequences which may result in making unrestrictive commitments to GATS in such a sensitive field such as education. These teams are usually concerned with economic and financial benefits rather than with social and cultural priorities. It is important, at this stage, that all Arab higher education stakeholders launch awareness campaigns, through meetings, seminars and conferences with the intention of drawing authorities attention to the negative and positive aspects of joining GATS. In other regions of the world, debate on these issues has been controversial over the last decade. Any Arab country which includes higher education in its future negotiations of GATS will probably be required to make certain policy and legislative revisions to current educational polices to offer fair, unrestricted and indiscriminate treatment for foreign cross-border

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providers. This may lead to the disappearance of national institutions that cannot compete on free-trade markets. Before liberalizing trade in higher education, it is vital to have national mechanisms which address accreditation and quality assessment procedures for the academic programmes of new and foreign providers. This is very important for preventing foreign providers from offering programmes of dubious quality. A consistent criticism of the liberalization of higher education is that it will curtail a nations ability to develop its own system reflecting its unique social, cultural and political characteristics. There is also a risk of homogenizing national education systems. Foreign providers bring with them foreign curricula which mostly have limited relevance to the importing countries socio-cultural contexts. Allowing free trade in higher education, with foreign providers charging high tuition fees, will on the one hand increase the cost of education, thus paving the way for the return of the elitist systems, and on the other, will lead to shrinking government funding thus increasing the financial burden on society as a whole. Higher education must assume the responsibility of preserving and enriching the national culture, preparing for the citizenship and serving national social and economic objectives and agendas. There is a doubt that foreign providers will be interested in these objectives. On the contrary they may contribute to the homogenization of culture and focus on financial gains. VI. Recommendations

The following recommendations can be proposed: Due to the apparent lack of awareness and knowledge about GATS among Arab States policy-makers, it is recommended that a series of meetings, debates and consultations be organized involving all stakeholders with the purpose of discussing possible negative and positive implications of liberalizing trade in higher education in Arab States. The Arab academic communities and NGOs active in the field of higher education must regularly place GATS on the agenda of their meetings and debates, and issue relevant 110

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declarations and appeals concerning the GATS agreement for the attention of their respective governments. If any Arab country decides to include higher education in its GATS agreement it must either opt for gradual liberalization or lay down some restrictions and limitations that preserve national interests and maximize the benefits of the agreement. Before entering into commitments, Arab countries must seek clarifications on the ambiguous phrases stipulated in the agreement such as Article 1.3. Since most Arab countries have not so far been able to establish efficient frameworks or mechanisms for accreditation and quality assurance in higher education, this may lead to the inability of governments to adequately regulate the quality of cross-border and foreign providers. It is, therefore, recommended that Governments delay actions to include higher education in the GATS negotiations until these measures are in place. Arab Governments must explore the possibility of entering into negotiations of GATS as a regional group, within the framework of the Arab League, such as the case with the European Union (EU). Arab governments should assess the impact of GATS and learn lessons from its applications, in terms of positive and negative consequences, before committing themselves to this or other trade agreements. * * *

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BIBLIOGRAPHICAL REFERENCES

Breton G. and M. Lambert (Eds) Universities and Globalization: Private linkages, Public trust. UNESCO, Paris 2003 Knight Jane, Higher education in the trade context of GATS. Presentation at Unesco Regional scientific committee for the Arab States , Al-Ain, United Arab Emirates , 2006 Mihyo, P. GATS and higher education in Africa: Conceptual issues and development perspectives. Paper presented to the Association of African Universities workshop on the implications of GATS for higher education in Africa, Accra, Ghana, 2004 Neave, G (Ed.) The Universities Responsibilities to Society: International Perspectives. International Association of Universities, Paris 2000 Padayachee, L The treatment of higher education within GATS: the present status of negotiations. Trade Law Centre for Africa, 2003 Tortian Hassmik, The impact of globalization on higher education. Masters thesis presented to the University of Westminster , 2003 Vlk, A . The negotiation of higher education under GATS. Legal and regulatory consequences and stakeholder responses. Centre for higher education policy studies CHEPS, Twente University, 2002 UNESCO Proceedings of the first global forum on International quality assurance, accreditation and the recognition of qualifications in higher education. UNESCO, Paris 2002 WTO: The general agreement on trade in services (GATS): objectives, coverage and disciplines. http:// wwww.wto.org

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Funding higher education in the Arab States: thoughts and reflections on the topic
Ali El-Hawat Professor of Sociology, Faculty of Literature, Sociology Department University of Al-Fateh Tripoli, Libya Libyan Arab Jamahiriya National Commission for UNESCO

I.

Objectives
In this paper an attempt is made to achieve three inter-related objectives: The first objective is to draw a comprehensive image of the funding strategy of higher education (HE) in Arab States. The second objective is to account for the growing changes in this funding strategy. These changes are seen in the partnership of the private sector in higher education and the growing forces of globalization. However, the trend has a significant impact on both higher education in the form of institutions and on the Arab society at large, particularly in the scientific, social and political arenas. The third objective of this paper is to see how Arab higher education planners and decision-makers look for ways and means to fund higher education outside the public sector and to re-orient it in order to produce better-trained graduates and knowledge that serve the need for their development in a very dynamic, twenty-first century global society.

It should be noted that it is difficult to cover all Arab societies in this short paper. Therefore, the focus and analysis are directed only to the general trends of funding higher education in Arab societies and the possible impact that could be seen as a result of these changes. Finally, this paper will seek to make recommendations toward financing the growth and development of HE in Arab societies in the twenty-first century, especially with regards to developing the quality of higher education and the knowledge base that is required to help

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secure a truly global society, culture, and economy as well as a global mind and vision of the Arab student.

II.

Methodology

In order to achieve the objectives of this paper, the methodology utilized is based on situation analysis, and the assessment of the prevailing conditions of Arab higher education in broad terms. For this purpose, some indicators and classifications are designed to analyze the growth of higher education in Arab countries, and to evaluate the changing patterns and/or the expected changes in the funding of higher education. There is growing change and this will have its strong impact in the near future. This change might be more noticeable in areas other than at present, but it is growing fast with regard to the funding strategies of higher education. The authors long experience as a university staff member in an Arab society is included in this papers methodology, analysis and interpretation.

III.

Funding strategy

During the 1950s and 1960s after their independence, most Arab countries struggled to develop systems of higher education that would enable their societies to build education systems that would flourish and grow. The search to develop such education systems was consistent with a global trend in which the expansion of higher education was the most important single post-war trend worldwide (Abdalla Abu Batana, 2006). Arab governments have rapidly established a great number of universities in recent decades. In 1950, there were no more than ten universities scattered across the Region. Today, however, the Arab Region has more than 200 higher education institutions, universities, and colleges, and has witnessed an unprecedented increase in enrolment rates in higher education institutions. This increase resulted from a growing social demand for education and the governments commitment to render higher education as accessible as possible. However, all of these higher education institutions were funded through public sources (Ahmed Hassan
Mohammed, 2006).

Most Arab governments spend between 10 to 20 per cent of their annual budgets on education, including HE. Arab governments have many other competing obligations, some of which include building a modern state, ensuring equal opportunities to citizens, and the offering of free basic and secondary education free for all to citizens (as stipulated in the constitutions 116

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of most Arab countries). However, this trend can no longer be sustained due to several constraints such as: (i) population growth; (ii) limited financial resources; (iii) foreign debt and (iv) political problems in the Region, which draw significant amounts of capital for buying arms to the detriment of building schools, hospitals and providing social services. As a result, higher education in the Arab Region has fallen short of meeting its social and economic goals. Some of the main factors that have been identified as putting a strain on higher education in the Region include the following: 1. 2. 3. 4. 5. 6. Increased population growth and the massification of secondary education. Inadequate financial resources. Inflexible and centralized management. Lack of diversification in the programmes/ and institutions of higher education. Inability to meet students needs; and Weakness of the links between higher education institutions, general and secondary education institutions, local communities and societal and human development needs. These factors formed the basis for policy-makers at the Arab Region Conference on Higher Education in Beirut 1998 (UNESCO, 2003), in preparation for the World Conference on Higher Education, to state the need for: (1) (2) (3) (4) New teaching and learning methods and processes. New education technologies. New scientific and analytical thinking skills; and New ways and programmes for financing and managing HE institutions.

In addition, the most notable change in the last two decades has been the establishment of a sizeable number of new providers of higher education both at the university and the technical levels. In fact, of the 203 universities in the Arab Region today, 62 were established during the fifteen year period from 1975 to 1989, while 54 were established during the 1990s, and 32 since 2000. To these, one should add the numerous community colleges, technical higher education. Institutions and colleges of technology established in many Arab countries show that almost 30 per cent of all such institutions were established during the last decade, totalling no less than 170 institutions throughout the Arab States with a concentration in Algeria, Egypt, Lebanon, Libya, Oman, Palestinian Territories, Sudan, and the United Arab Emirates.

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Another feature of this new trend is that a large number of the institutions constitute private non-governmental institutions, many of which are being established in partnership with American or European institutions of higher learning, and most of which are for-profit institutions and, therefore, are accessible only to those who can afford them. During this period, the number of students has also grown from less than some thousands to more than 5 million university students at the present time. This development in the number of universities and students has rendered Arab governments unable to find financial resources to manage such an education system alongside other social services such as health and social welfare programmes. Arab governments, including oil producing countries, find themselves in a difficult situation since they are committed, at least in theory, to providing equal opportunities in education. But in reality they are no longer able to provide or offer such education freely. The cost is very high, requiring budget cuts for other social services like health care and social welfare programmes. As a result of such strains and pressures Arab governments have attempted, to: Allocate a percentage of their national budget to higher education and scientific research; however, this budget is very small and does not exceed 5 per cent of the national budget. This decrease in financial resources has led to budget cuts on different higher education programmes, including reform programmes related to the quality of higher education and programmes related to infrastructure development. Limit the admission of students at the higher education institutions, so as to limit and Integrate some public universities and colleges in one university, in order to reduce reduce the total cost of higher education. expenditure. For example, Libya adopts this strategy and has reduced public universities from fourteen to nine universities, but is allowing private universities. Impose fees on students, especially those relating to registration, library services, Reduce expenditure on some scientific research programmes, especially, research that books, and other social services. does not serve development. Theoretical, and basic research, as a result is very much reduced and therefore is absent in Arab universities. Request financial funds from foreign countries and international organizations like UNESCO, the World Bank, and other Arab development organizations, especially Arab oil countries like Libya, Saudi Arabia and other Gulf States. 118

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Obtain income from consultative services offered by universities to different

organizations, public or private, and reinvest this income in higher education programmes. Such a strategy is adopted in many Arab countries such as Egypt, Jordan, Libya, Morocco and Tunisia. Reduce daily management expenditure such as office furniture, transportation, paper and building maintenance. [Information concerning these strategies is taken from ISESCO (2003)]. All these strategies have had a direct effect on higher education and scientific research, but translate to a lack of funds for higher education growth, especially with regard to its quality and knowledge production. In addition, this change of funding on higher education will affect students from poor families and low socio-economic classes in Arab societies, which means creating more social gaps between different groups of the society, especially students who can and those who cannot access private higher education. The best thing families can hope for is to pay for their childrens education, but most poor families will be unable to afford the cost of sending their children through higher education, thus many of these children are likely to enter the labour market at a very young age or end up without work as is the situation in many Arab countries today.

IV.

Growing changes and higher education (HE)

Arab societies and their education systems are facing dramatic changes. To account for such changes, the following trends can be observed: Encouragement of the private sector, local or foreign, to invest in higher education. Insufficiency of budget allocations to social welfare programmes including higher education. Imposition of fees on higher education, and other social services. Unemployment of many university graduates. Employment in the Arab States is at least in the range of 15-20 per cent of the labour force, a great percentage of which pertain to graduates of different educational levels. Lack or delay of many plans of reforming higher education, especially aspects of quality, and introducing modern educational technology.

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Widening of the gap between the university curriculum, and the labour market, especially in the modern sector of the economy which depends heavily on the knowledge economy and information technology.

Growth of religious fundamentalism among university students, and the absence of cultural dialogue among different groups in Arab societies. Brain drain of educated graduates looking for a better lifestyle, income, and better opportunities for self-development, and personal freedom.

V.

Funding higher education: changes and crises

Funding higher education in Arab countries is facing new challenges and requires new funding sources to continue in size and quality. These challenges are growing mostly for the following reasons: 1. In general, higher education is under-funded, except in some Arab oil countries. At

present, most higher education institutions are unable to meet the increasing social demands for higher education or the support which is necessary for reforming and modernizing the programmes in order to cope with the challenges imposed by globalization and socioeconomic develop. 2. In view of recent national and international development, the role of the state in developing countries to finance public services, including higher education, is diminishing. Recent national and international reports refer to a continuous decline in financing higher education, especially in countries implementing a new structural adjustment and/or privatization (Abdalla Abu Batana, 2006). 3. Instead of concentrating on improving higher education infrastructure and research projects administrations focus more on the daily management of HE budgets in many Arab States. Furthermore, this problem is being exacerbated by increasingly crowded classrooms, a lack of modern education technology, unqualified staff and high drop-out and repetition rates. Under such circumstances, higher education has become a real challenge to making way for development and to policy-makers, rather than becoming a tool of development. Perhaps only now it is becoming a veritable tool for social and political instability in the region. 4. The crisis is building up and the private sector has now become an alternative to HE funding. Many private or semi-private universities have sprung up in Arab countries without sufficient planning, capital, or qualified personnel. The problem is that these private universities were not created following the models of western countries. Instead, they were

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established in haste to try to solve a social problem rather than to improve higher education research activities and the quality of education. Consequently some remarks should be brought to light and noted concerning these new private universities in Arab countries. They were not well-planned and could be compared to fast-food stands in the crowded streets of western cities; whose role is to provide food to appease hunger. Another major problem should be pointed out and that is the lack of available transparent reliable statistics on the private funding of higher education and research activities in Arab countries, even as the number of private universities increases. However this type of education is severely criticized and opposed by many, on the grounds that private higher education will create many social and cultural problems. The most important of these criticisms is that: 1. Some consider private education to be against social justice because private higher education will lose its role as a mechanism for social mobility in Arab societies and as a tool for improving the low standards of living of vulnerable groups, for the simple reason that only the wealthy can afford to pay for their childrens higher education 2. Some also see it, right or wrong, as a cultural privilege for the wealthy. It will also introduce other cultural values and norms that are different from the national culture, especially in the case of foreign-funded universities, and higher education institutions. As a result, it is believed that Arab governments are still reluctant and hesitant to accept private HE especially those which are totally funded, and supported, by foreign capital and funds. Furthermore, Arab governments may put considerable preconditions on opening private universities of higher education. In addition, the private sectors contribution to education, including higher education, is something new to the Arab mindset and the value structure of the Region. Wealthy Arabs and organizations usually invest in land, real estate and trade but never in education and higher education. Therefore, the private sector is quite hesitant to invest in higher education. This is contrary to what is going on in western countries, especially in Canada and the US. Also, it could be considered that those Arab governments which encourage private sector investment in HE do not wish to acknowledge their social, economic and cultural influences. 121

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It will take a very long time to convince wealthy Arab businessmen, individuals or organizations to put their capital in human development projects (HDP). Unless the Arab mindset changes and accepts investment in education, Arab higher education will continue to depend on government sources and will continue to face financial difficulties and challenges of quality relevant to societies contemporary needs.

VI.

Changes of funding patterns: impact and consequences

There are changing patterns of funding higher education, be it: reducing public allocations; decreasing the financial services for education; allowing the private sector to take up the responsibility of HE.

Higher education will be affected as an institution; and society at large also. As an institution or a system it will be distanced from achieving any higher education excellence, and will not be able to admit and/or meet growing social demand. The impact can be observed in the following three areas: 1. Social impact a. The absence of the role of higher education as a mechanism to upgrade the social mobility of many vulnerable groups especially the poor, women, and rural populations. b. The reproduction of illiteracy at least in the sense of technological illiteracy and modern specialities. c. An increase in unemployment, which will lead to more poverty in the Arab modern society, simply because the youth lack modern technological education necessary for the modern labour market whether inside Arab societies or abroad. d. Widening the gap between Arab societies and advanced developed societies worldwide. This gap will further isolate Arabs from modern economy and culture. e. A growing prevalence of social problems in Arab societies, such as crime, social disorganization, corruption, possibly religious fundamentalism, and political unrest.

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f. The widening gap among people who benefit from university education, and people who are unable to do so. The result is a lack of consensus among the citizens of one nation: the immediate result of which is backwardness of nation building in the modern sense. 2. Scientific impact

Decreasing funds for higher education limits and even prevents necessary reforms especially in the areas of quality and knowledge production. If the alternative is private higher education, this will foster moreover the type of knowledge and reform that serves its goals and economic interests. So the dilemma in supporting only the public sector is that HE will not receive the funds needed to carry out its needed reform, and the private sector will care only for certain aspects of reform that serve its goals and interests. For example, the public sector cannot finance major reforms in educational technologies and education infrastructure such as good libraries, advanced laboratories and educational university campuses while the private sector does not take into consideration the cultural and social role of HE in the overall development of the country. The private sector is usually motivated by profit or ideological interests. This is exemplified by the Arab student who studies in a private university and is not trained for the real needs of his society. He is usually trained to benefit foreign economy and not society operating in his home country; consequently he will go abroad to live and work in the west.

As for the consequences of the lack of funds for HE, the unqualified teaching staff and limited resources available for research activities, the result is twofold: a slowing down process of building knowledge-societies in the Arab World and a system that remains traditional and incapable of preparing students in the modern technological sciences. Instead it will concentrate on social sciences, art, law, and classical sciences which are not really needed in the modern labour market as mentioned previously. Private universities will tend to concentrate only on limited subjects that serve their goals for-profit or serving certain social and cultural purposes. A typical example is that many private universities in Arab countries teach only business administration, social science and some technological sciences that are needed either in the local labour market, or on the international market. While these subjects are, indeed, needed, development and nation-building still demand a wider range of specialties and subjects.

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3.

Political impact

Lack of public funding for HE has led to encouraging the private sector to invest more in same. And this, in itself, has led to relaxing the heavy hands of governments on the minds, curricula and research activities of the universities. Also it has opened the way to different cultural effects of higher education, in particular, the influence of foreign capital, which has resulted in a gradual change in HE of its goals, roles and purposes. Perhaps as a result, Arab societies are now divided into two opposing political forces the national goals of nationbuilding and the international interests of the global market and economy. Also, the HE system becomes a platform for political debate and, to some degree, a forum for ideological conflict between global views and local national views. However, scarcity of funds may have several consequences: (1) Diversification of political culture inside universities, especially between

public and private higher education, especially if the private is funded by foreign capital. (2) Growth of a sub-political culture within the national culture. This sub-culture may have different views and come from different walks and talks of life, which vary from the prevailing national culture. (3) Growth of new political concepts relating to human rights, womens freedom, democracy and freedom of the individual and the economy, while these concepts may be spreading not due to HE, but rather because such concepts gain more strength in private higher education institutions than in public universities. Again, the encouragement of the private sector to invest in higher education is very recent in Arab countries. It is not fully adapted in Arab education systems as many planners, policymakers, and the public oppose it on the grounds that private universities will widen social differences among people (i.e. between the haves and the have-nots in society), that their motive is for-profit and not quality higher education, or that they seek to gain some ideological influence. Whatever the case, the foreseen results of private higher education will be the commercialization of higher education rather than its protection as a human right. It will become a commodity, subject to market laws and mechanisms.

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The outcome is that education will no longer be a tool for human development, but rather a tool for profit and injustice in Arab societies. Probably 60 per cent of the Arab population is below the poverty line by international standards. So how can this widespread population adopt a better standard of living, free from economic poverty if public funds dry up in education and other human development areas?

VII. Funding higher education and scientific research: plans and actions
In the light of a possible further scarcity of state funding caused by certain inescapable factors such as the inability of states to increase financial allocations, foreign debt and the gradual disappearance of covering social services including education, health and social insurance, efforts must be directed to diversify sources of funding. However, the World Conference on Higher Education (Nettleford, 1998) and its subsequent meeting of partners (WCHE+5, 1998) affirmed that while seeking the contribution of all stakeholders, including the private sector in the development of HE, states and governments should fully pursue their responsibility and engagement for its support not leaving higher education to be shaped solely by the market, because this will create an unpredictable situation (UNESCO, 1998). In view of the previous comments, the author identifies three scenarios that could help deal with the problem of funding HE and scientific research in the Arab States. Maintain the prevailing funding pattern as such, but supervise closely the

Scenario 1:

management of higher education budgets, reverse the spending from daily administrative cost such as salaries and transportation etc. in order to improve the quality of higher education especially in teaching technology and research activities. In this scenario, it is important to take further legal and financial measures to re-direct expenditures, the most important of which includes the following policies: 1. Impose new taxation on luxury goods and invest the revenue on the development of HE; and create more infrastructures to meet the growing social demand on higher education. 2. Allocate more financial resources from the public budget to higher education and scientific research. 125

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3. Use the revenue of obligatory aims (Zaqaat in Arabic) in HE development. 4. Allocate part of the oil revenue in oil-producing countries to developing public education in general and particularly in higher education; and 5. Establish a national fund for higher education and scientific research. This fund should only be confined to HE and research projects.

Scenario 2: Create a higher education system owned by both the public and the private sectors. In this scenario, higher education institutions should be established, financed and managed in a partnership arrangement. To ensure this, certain measures have to be taken: a. b. c. Students should pay reasonable fees but within the financial abilities of their families. Students from low socio-economic categories should be supported by the state as a way of developing society; and Local economic establishments, companies, banks and businessmen should contribute to HE development according to pre-arranged conditions or contracting out research to benefit them and the students. Scenario 3: Allow the establishment of private universities that are financed either by local markets, or through foreign capital. These private universities should put emphasis on high quality HE and scientific research. In these universities, students would have to pay fees and have obtained higher scores in secondary education prior to entry. Brilliant students who come to study in these universities should be excused from paying any fees (through scholarships from their countries or even from foreign sources). These universities must take the following measures: 1. Teach Arabic, Arab history and cultural heritage, though other foreign language courses may be part of the curricular.. 2. Conduct advanced research related to national or internal economy. 3. Ensure that their boards are represented by national governments and the national economy especially from the manufacturing, agriculture, trade and new technology sectors.

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4. Ensure that the presidents of the universities or vice-presidents are nationals of the country hosting the university. 5. Establish scientific and teaching relationships with national or international institutions and admit a percentage of students from foreign countries. Likewise, this applies to developed or developing countries. As for the practical implementation of these three scenarios, and in authors order of preference:

Scenario 1: The Prevailing Funding Pattern could be implemented as follows: 1. Design a five-year strategy, at the end of which all three scenarios are to be put into practice. 2. Set up a national fund implementing these scenarios. This fund receives financial allocations from the state and other national allocations earned from luxury goods taxation. 3. Receive capital from the revenue of research done by the university and its research centres. 4. Set up a national board, or authority in charge of implementing all stages, and changes demanded by these scenarios. 5. Issue administrative and legal programmes required by these scenarios. 6. Organize workshops, conferences, and expert meetings to make the public aware of this alternative to higher education and to evaluate the outcome of implementing these scenarios.

Scenario 3: Private universities could be implemented as follows: 1. The state should free itself completely from HE responsibility, and leave the job to both the national or foreign markets. 2. The state shall only monitor higher education from the perspective of quality assurance (QA), and other legal aspects such as a company working, or investing, on its territories. 3. The state shall offer scholarships to its students to study in these universities. 4. The state should have neither control over the curricula, nor the teaching staff. But it is obligatory that these universities teach national history, culture and language.

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5. A university could be established as a branch of a foreign one, teach in any language and conduct any desirable research. 6. Along with these scenarios, the state should establish a national system of the community college type of HE. This system should be funded, managed, and geared towards the national needs of labour, and the national social and cultural aspirations of the country.

Scenario 2:

Partnerships of Both the Public and Private Sectors Fora could be carried

out as follows: 1. Design a five-year strategy at the end of which this scenario should be implemented. 2. Create a capital for this type of higher education through transferring universities into corporations of higher education, but with restricted and defined profit for their services. 3. Sell and transfer the capital of these universities into bonuses on the national and international market. 4. Admit only brilliant students who can contribute to research, and knowledge production. 5. Establish a national board for over-seeing these universities academically and also policywise. 6. A total of 50 per cent of the board members, and the presidents of these universities, should be nationals of the Host Country.

Deciding the preference among these three scenarios constitutes a difficult decision, and may, therefore, require further research and thinking, but primarily Scenario 1: The prevailing funding pattern, is, the author believes, the most suitable one for Arab society, culture, and economy. The rationale behind such a choice can be explained given the following considerations: 1. Arab societies need to invest more money, effort, time and thinking on education in order to meet the needs of the twenty-first century, including achieving better standards of human development. At present, there are more than 70 million illiterate persons in Arab countries, eight million of whom are children.

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2. Higher education is the road map to building knowledge-societies in the Arab States, and constitutes the only way to establish knowledge-societies and knowledgeeconomies and train modern nationals to think, live and work in a global world. 3. Private higher education is a good choice in any society, but the majority of the Arab population lives below the poverty line and cannot afford to pay for their childrens education, so there is no choice but for the state to contribute to its citizens education, at least for the poorest and most vulnerable. 4. Higher education is always a public affair, so the private sector can contribute to higher education, the state being responsible only legally and morally by offering education to its citizens, especially in Arab societies where the citizens can hardly manage to live as dignified human beings. In addition to the aforementioned scenarios, one of the ways to minimize social demand on higher education is to encourage the public and the private sectors to establish higher education of the community colleges type. These colleges should be linked directly to local labour markets and the community and in accordance with the social and economic needs. These colleges can be financed in cooperation with or owned and managed by nongovernmental organizations (NGOs). These colleges should be somehow between university education and secondary school education. Their main purpose is to admit students who seek some kind of higher education and who are keen to enter the labour market as soon as possible and become good, hard-working citizens of their local communities. As higher education in the Arab Region is generally, with some exceptions, of lower quality and similar to that of many developing countries, any strategy for funding higher education in Arab countries must be devoted to quality assurance (QA). Arab higher education should also introduce many reform programmes in curricula and teaching technology.

In addition, Arab countries should design plans and programmes for creating higher education institutions in order to meet the growing social demand on higher education, update the university and provide different programmes of HE and university programmes.

VIII. Summary and concluding remarks

This paper attempted to discuss the funding of higher education strategies and scientific research in Arab States. It can be concluded that Arab higher education is undergoing drastic change and transformation due to the forces of globalization and the dynamics of the twenty129

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first century. This trend affects not only funding patterns but also every aspect of Arab higher education. In order to cope with societal patterns and demands, Arabs must adapt their traditional higher education systems in not only terms of funding patterns, but also in almost every aspect of the education system. Perhaps the most urgent area besides funding is the quality of higher education (HE) and teaching methods. This paper is concerned primarily with funding strategies and has concluded that funding strategies, carried out in any form will have major impacts on both HE and society at large. As for higher education itself, it must be transformed in philosophy and practice, and if it continues as it is now, it will become an education system serving society in times past, not modern society. of today. In addition, such higher education will create more social problems than offering solutions to these problems. Unless the whole education system, higher education included, is transformed and modernized, further development, in other domains, of Arab countries will be of no avail.

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The major conclusion reached in this paper is that reform/funding strategies of higher education, whether as a result of shrinking funds or the participation of private sector, will have over the long-term three major impacts: I. A social impact as observed as some kind of disorganization and the growing gap between different social groups. II. A scientific impact as already observed by the growing gap between knowledge-societies and poorer knowledge-societies; and III. A political impact as observed in the growing political unrest and lack of stability Finally, this paper holds the assumption that it is too early to evaluate the situation, but that regardless as to whether Arab societies adopt private or public higher education it is thought that three scenarios could be followed: The first to maintain the public higher education as it is but to allocate more funds to meet the needs of quality and social demands on higher education. The second to have higher education funded and managed by both the public and private sector. The third scenario to allow the private sector to open private universities that are designed basically to produce knowledge and modern technology, and possibly to establish community colleges to satisfy the needs of the labour market and promote good citizenship. These community colleges can be established by either the public sector or the private sector provided that they correspond to the Social, Cultural and Economic Needs for Development of Arab countries in the twenty-first century.

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Bibliographical References Ahmed Hassan Mohammed. 2006. Distance Higher Education in the Arab Regions: The Need for quality Assurance Frameworks, Internet:http://www.westgaedDistanceojdla/sprig81/Mohamed81.htm. Abdalla Abu Batana. 2006. Education, Higher Education, and Scientific Research in Islamic Countries: Status, and Future Prospects, Paris, Research Project in progress (Data and materials of the project). ISESCO. 2003. Higher education financing in the 21st century, Rabat, ISESCO publication. (in Arabic). UNESCO Cooperation Programme 2002-2003. Nettleford, R. 1998. Mobilizing the Power of Culture in Higher Education. Paper presented at the Free Roundtable debate at the World Conference on Higher Education in the 21st Century (Vision and Action), UNESCO, Paris, 5-8 October 1998. UNESCO. 1998. World Conference on Higher Education, (WCHE, 1998) Higher Education in the Twenty-first Century, Vision and Action Framework for Priority Action for Change and Development of Higher Education (Draft) Ed98/con(202)7 Provisional. (Draft) ED-98/Conf-2022/7in press). UNESCO. (2003). Higher Education in the Arab Region 1990-2003. Meeting of Higher Education Partners, Paris, 23-25 June 2003.

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Research and development in the Arab States: the impact of globalization, facts and perspectives
Albert Sasson, Member, Hassan II Academy of Science and Technology, Rabat, Morocco Senior Visiting Professor, United Nations University Institute of Advanced Studies (UNU-IAS), Yokohama, Japan

I.

Research and development in the Arab States: an overview

In 2007, the Arab World accounted for twenty-two countries with a total population of approximately 300 million people. Striking contrasts exist among these countries in terms of revenue, socio-economic development and per capita income. Arab countries with significant oil and natural gas resources benefit from high income, thus contrasting with the financial revenue of countries with limited or no such resources. Human resources, despite the endeavours made to date, are insufficient or even lacking in several areas, especially in the scientific and technological ones. The Arab States have a low ranking in research development and technological innovation. The overall spending in R&D is about 0.15 per cent of the gross domestic product (GDP), compared with an average of 1.4 per cent in the world, and 2.5 per cent in Europe. This spending is provided by the public sector to a very large extent (97 per cent). Covering the period 1990-2000, there were about 500 scientists and engineers involved in R&D per million people in the Arab States, compared with more than 4,000 per million people in North America, 2,500 in Europe and about 700 in South and East Asia. The world average was around 1,000 per million. By the end of the twentieth century, the number of publications original writings and translations per million people was around 0.05 in the Arab World, compared with an average of 0.15 worldwide and 0.6 in the industrialized countries. In Africa in 2006 and in terms of scientific publications, Egypt ranked first, followed by Morocco and Tunisia. In addition to universities, there were about 280 scientific research institutes or centres in the Arab States, while the number of patents registered in the United States by Arab countries

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over the twenty-year period 1980-1999/2000 amounted to 171 for Saudi Arabia, 77 for Egypt, 52 for Kuwait, 32 for the United Arab Emirates, 15 for Jordan, 10 for Syria and 6 for Bahrain, compared with 16,328 for South Korea, 7,652 for Israel and 147 for Chile.

II.
1.

Case Studies
Biotechnology Among the key factors that determine the successful development of biotechnologies

in emerging countries, the following are worth mentioning: Strong political should be expressed over the long term (for at least 20 years). Selection of biotechnology as a major priority sector among a few priority areas. Design of a consistent strategy for short-, medium- and long-term policies, involving all the actors and entities such as financial, educational and R&D institutions, as well as providing for the formulation and enforcement of laws, regulations and procedures. Setting up a strategy that enables focused R&D to lead to specific products that meet a demand in the local market or in the regional and international ones. Coordination of the whole R&D and production system at the highest level of the government (e.g. in the Prime Ministers Office) so as to ensure an effective coordination among all the institutions involved, to avoid duplication of efforts and to develop synergies. Mobilization of the private sector, which should find good reasons for association and be convinced that it is crucial in its own interests. Collection of sufficient resources for investing in R&D and production. Among the Arab States, Egypt, Tunisia and, to some extent, Jordan and the United Arab Emirates (UAE), have tried to fulfil some of the above-mentioned criteria and be present in the field of medical biotechnology. However, far less than other developing countries such as Cuba (which invested more than US$1 billion over 20 years in the development and production of bio-technology derived diagnostics, vaccines and drugs, and continues to work hard on new processes of drug development), or India, Brazil or the Republic of Korea. Agricultural biotechnology, in its simplest techniques such as in vitro micropropagation of crop species and their commercial clonal multiplication, is carried out in several Arab States, e.g. Morocco, Saudi Arabia, Tunisia, and the Gulf Arab States (particularly for the date palm). But, except for Egypt, no genomics work is being carried out, nor is there any development of transgenic crops which are more resistant to pests and tolerant to abiotic stress. However, the impact of globalization can be perceived through some multilateral or bilateral assistance 136

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programmes and cooperation, which include the advanced training of scientists so as to initiate more sophisticated R&D projects. An illustrative example is that of the Pasteur Institute of Tunis, founded in 1893 by Dr Charles Nicolle, who discovered the vector (lice) of exanthematic typhus (Rickettsia prowazekii). Nowadays, this institute employs 370 persons, including 60 scientists. In addition to its contribution to the implementation of public health policy, it is an R&D institution as well as a training ground for about 100 graduate students (Master and Ph.D. degrees) per year. Up until the end of 2005, the Pasteur Institute was also in charge of producing vaccines, controlling their quality and distribution. The number of publications in international journals by the Institutes researchers had reached 322 in 2003 but, thereafter, decreased to 27 in 2004 and 12 in 2005. The main R&D areas are tuberculosis, leishmaniasis, rabies, venoms and toxins. Patents have been awarded for the identification of a tripeptide in vipers venom having an anti-aggregation platelet effect; for the identification of molecules in scorpions venom with a pharmacological effect; and for the identification in Leishmania of virulence factors that could be a target for medicines. Other patents have been filed for Leishmania proteins that could be used in the development of a vaccine against this disease; such as a DNA anti-rabies vaccine with a high immunogenicity in a single shot. Research is being carried out on the production in the yeast Pichia pastoris of recombinant alphainterferon and of a molecule of Mycobacterium tuberculosis that could help to better diagnose the disease. Production capacity of the Institute is about 75,000 10ml-vials of anti-scorpion serum, 70,000 10ml-vials of anti-rabies serum, 40,000 10ml-vials of anti-venom (viper), as well as 10 million doses of BCG per annum. The research and development of the Pasteur Institute of Tunis are closely associated with cooperation involving overseas research groups or teams, particularly in France, where there is an important diaspora of Tunisian scientists, physicians and engineers. This is another important impact of globalization on the current and future evolution of R&D in Tunisia, and also in Algeria and Morocco, but much less for the Gulf Arab States and Egypt. These scientists who have made the decision to live and work in Europe have often kept close ties with their Maghreb countries of origin; and not only they can assist assist in various teaching and training tasks locally on a part-time basis, but also help in designing and implementing cooperation agreements.

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Another example is that of the Faculty of Medicine and Health Sciences (FMHS) of the United Arab Emirates (UAE) University. Although biomedical research publications in the Arab World mostly focus on the relatively cheap curative/comparative clinical services rather than the more expensive research and development aspects (Tadmouri et al., 2003), a small number of people at FMHS/UAE University produced significant contributions over the period 2000-06 in the areas of clinical research, basic research and translational or applied research. For instance, in clinical and molecular immunology, this was carried out in cooperation with Italian teams in Milan, Italy. Cooperation has been established with the Terry Fox Cancer Research Fund on cancer immunotherapies, for the early diagnosis of Parkinsons disease; with the Wellcome Trust and the University of Cambridge, UK, and with the Michael J. Fox Foundation for Parkinsons Research in the US. There is also a significant increase in funding for biomedical research. Despite the lack of a national strategy for funding scientific research, there is a nascent post-graduate education programme and opportunities for mutually beneficial scientific exchanges, both amongst the Arab States and internationally. There are fellowships available to support exchange visits by European students and postdoctoral fellows to laboratories in the UAE and vice versa. The UAE is considered an attractive geographic location with modern facilities. Well-trained young scientists are increasingly being recruited. Hiring on soft-money has become possible and the UAE University Office of Research is very active in engaging industrial and private support for research funding. Globalization has an obvious impact, due to the pro-business approach of the government and its forward-looking mindset and to the favourable labour market conditions. This is quite striking in the area of information and communication technologies (ICTs), and the setting up of Dubai Biotechnology Park (Dubiotech) and of the Arab Science and Technology Foundation (ASTF) could be considered good steps in the right direction. 2. Pharmaceutical industry This is an area which is closely associated with R&D in the biomedical sciences and biotechnology and on which globalization has a profound impact. By 2005, the market value of pharmaceutical products in the Arab States was estimated at US$6.2 billion, i.e. 1.5 per cent of the world market, for 6 per cent of the world population. Jordan was the first exporter of pharmaceutical products for about US$280 million in 2003. There were about 230 producers, private or public companies, working in association with foreign partners. While some 90 per cent of raw materials are imported, R&D is at an 138

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embryonic stage and corresponds to less than 2 per cent of revenues. Products are mainly generics manufactured under license and the formulation and reformulation of these products is an important activity. A major challenge relates to the respect of intellectual property rights (IPRs) and to the duration (up to two years) of registering a new drug with the Ministry of Health (MOH). In Jordan, the pharmaceutical industry occupies second rank in the countrys economy. About sixteen factories, including eight private and six public, have a turnover ranging between US$4 million and US$40 million, which is far below the minimum efficient scale in Europe or the US (around US$500 million). Invested capital is about US$400 million and the number of workers totals 5,000. In 2005, total production reached a value of US$275 million, 77 per cent of which was exported. A total of five companies dominated the local market (90 per cent), and the sector grew by an average 15 per cent annually over the decade 1995-2005. Ventures of Jordanian companies outside the country exist in Algeria, Bosnia, Egypt, Italy, Libya, Morocco, Portugal, Saudi Arabia, Sudan, Syria, Tunisia and Yemen. The pharmaceutical products are: 60 per cent antibacterials, antirheumatics and pain killers; 30 per cent hormones, ophthalmic preparations, anticancer and cardio-vascular drugs; and 10 per cent over-the-counter (OTC) products. The pharmaceutical sector has become the second largest export earner (US$193 million) behind textiles (US$673.5 million). Among the Arab States, Jordan is the first exporter of pharmaceuticals. The main importers are Arab countries (90 per cent), especially Algeria, Saudi Arabia, Sudan, Iraq and the United Arab Emirates. Jordans pharmaceuticals are registered in more than 60 markets worldwide, including Europe and the US. It is expected that Europe will be Jordans main export destination and North America the second, thus shifting the balance away from the traditional Arab markets. Henceforth, the establishment of alliances to better meet the challenge of globalization which include licenses with Takeda Pharmaceutical Co. Ltd. (Japan), Fujisawa (Japan), Pfizer (UK), Roche and Bayer (US), packaging with Novartis, co-marketing with Eli Lilly (US) and established Watson in Jordan. Also, all companies have the local and regional good manufacturing practices (GMP) accreditation, and six of them have the European Union (EU), US Food and Drug Administration and GMP accreditation. In addition, Jordan has four clinical research 139

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organizations (CROs) meeting international requirements.

Eight pharmaceutical colleges

graduate about 800 pharmacists a year (55 per cent of them are Jordanians) and there is a Centre of Excellence in Healthcare (CEH). Jordan has gained good experience in drugs registration in the region, in Europe and in the US. However, despite the registration of forty patents by the Jordanian pharmaceutical industry in Europe, the US and Japan, R&D corresponds to only 2 per cent of total sales, compared with over 17 per cent in industrialized countries. The limiting factors are the financial resources and the infrastructure for clinical testing. The owners of Jordans pharmaceutical industry try above all to satisfy the shareholders by giving dividends of more than 50 per cent of the annual net profit, although they do not spend more than 2 per cent on R&D itself. This is generally the case for all Arab countries. Dar Al Dawa (DAD, Home of Medicine), Jordan, established in 1975 as a public shareholding company, has been considered number one for six consecutive years in the Jordanian market and number sixteen in Saudi Arabia and number fourteen in the UAE. With a total registered capital of around US$28 million, DAD employs 800 workers, produces 200 pharmaceuticals (with annual sales of US$66 million in 2005), and exports to twenty-five markets. DAD has partnerships in several companies: DADVet (Veterinary and Agricultural Industrial Co., Ltd., 33 per cent ownership), SAIPH (Socit Arabe des industries pharmaceutiques), Tunisia; SAIDAL Pharmaceutial Production, Algeria; JORAS Pharmaceutical Spa, Algeria (with 70 per cent ownership). Strategic alliances include licensing with Pfizer Inc.-US, Novartis-Switzerland, Taisho-Japan, Octavis Island-Turkey; contract manufacturing and supply with Australian, Dutch, French, Irish, Swedish and Turkish companies. DAD has developed a new anti-bacterial molecule, the patent for which has been filed in Europe, Japan and the US, with the preclinical studies looking promising. in Europe and Australia. Jordans pharmaceutical industry owners are currently convinced that they should invest more funds in R&D areas, because of the harsh competition and penetration of the regulated markets. On the other hand, the cost of developing a generic product in Jordan is far less compared to that of Europe and the US and consequently more European companies have 140 One product, registered in Sweden, is expected to be marketed in 2007, while 12 other products were submitted in 2006

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started cooperating with the Jordanian ones to develop products for the European market. Codeveloping technology in Jordan, then outsourcing to Europe or the US, will lower the cost of the operation. Managers need more training in order to penetrate the industrialized countries markets. Companies, mostly owned by families, must open up to face competition and be present in the new regulated markets. Mergers will help to achieve a capital size that can attract multinationals and thus increase the competitiveness of these companies. Moroccos pharmaceutical industry is another good example of a sector that is striving to

develop locally and, at the same time, to adapt itself to globalization. In addition, it is an example of an incipient collaboration between the private sector and the academic one in R&D. The Moroccan pharmaceutical sector is considered as one of the most mature in Africa, the Arab World and the Maghreb. In 2006, it included twenty-seven industrial sites where national laboratories and multinationals are manufacturing their products under certification by French regulatory bodies and by Canadian and British bodies in several cases. The sector plays an important socio-economic role: 35,000 persons employed directly or indirectly, including 20 per cent managers and executives; 10 per cent of the whole production is exported, mainly to French-speaking African countries; drugs represent 37 per cent of health care expenses by households. About 80 per cent of national needs are met by the pharmaceutical sector. The antibiotics share of the market value is 16.5 per cent, followed by anti-inflammatory and antihypertension drugs. About 40 million are invested annually by the sector, mainly for improving production and quality. R&D is incipient and illustrates the pioneering activity of some national laboratories. Current challenges are the following: How does one cope with the small size of the national market? Drug expenses amount to MAD200 (about US$20) per capita per annum; the number of drug units sold has been stagnating since 1998; the whole annual turnover is around 500 million, with annual growth not above 2-3 per cent over the last five years (2001-05). One solution is to expand the business internationally and in so doing be in tune with globalization. How to anticipate the impact of the compulsory illness insurance set up in Morocco in October 2005?

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How to support the growth of generics locally? Generics made up 23 per cent of How to benefit from globalization through playing a more active role in the

Moroccos pharmaceutical market in 2004, compared with 18 per cent in 2000. international market? For example, drawing on the free-trade agreement (FTA) concluded in 2004 with the US, the European Union (EU, to be in place in 2010), or with Turkey which is an important and promising market. Even if it is true that the size of the Moroccan pharmaceutical market and the profits generated, both locally and internationally, cannot support the costs of developing new drugs, some R&D work can still be carried out nevertheless. For instance, clinical research can be done in collaboration with multinationals, or efforts can be made to produce botanical drugs from medicinal plants or plant extracts. Since 2006, an agreement has been concluded between the Faculty of Pharmacy of the University Mohammed V, Sousissi, Rabat, and the private laboratory of the pharmaceutical firm Cooper Maroc, to carry out research on the argane tree (Argania spinosa), which is an endemic tree species growing in the southwest of the country (Souss Region, Morocco) exploited for its edible oil. This R&D work is supported by the Foundation Mohammed V for national solidarity. As the argane oil has been used in cosmetics and skin ointments, the objectives of the collaboration between Cooper Maroc and the Faculty of Pharmacy are to: (i) develop physicochemical studies; (ii) examine galenic preparations; (iii) identify market needs and translate them into upstream research on the most appropriate galenic preparation (cream or gel, for instance, and concentration of saponines); and (iv) file the relevant patents.

3.

Renewable energy Abu Dhabi, the capital of the United Arab Emirates (UAE), the fourth largest OPEC

oil producer with about 10 per cent of known reserves, is seeking to become a centre for the development and implementation of clean energy technology. In 2006, the Emirate of Dubai launched the Masdar Initiative (masdar is the Arabic word for source), which has signed up major oil and technology companies and universities around the world, as well as UAE ministries, so as to help develop and commercialize renewable energy technologies backed by heavy funding from Abu Dhabi.

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The UAE has been singled out as one of the worlds highest per capita emitters of carbon dioxide and other greenhouse effect gases. The UAE has an especially high energy demand to maintain a luxurious life of air conditioning, cool swimming pools and even an indoor ski slope in Dubai. But the UAE is the most serious among Persian Gulf oil-producing countries whose consumption for electrical power has spawned efforts to find other sources of energy to save high value fossil fuels for export. Masdar has drawn up a US$ 250 million Clean Technology Fund and begun construction of a special economic zone for the advanced energy industry. In February 2007, Abu Dhabi announced plans to build a 500-megawatt solar power plant in the area one of the most ambitious of its kind in the world. It should be operational in 2009, either as a stand-alone plant or as part of a desalination project. Furthermore, Masdar announced an even more ambitious project to develop a graduate-level research centre in association with the Massachusetts Institute of Technology (MIT) and to focus on renewable energy technologies. Scientists who join the programme will be able to attend MIT courses in Boston and will be assisted in developing research and courses at Abu Dhabi. The MIT administrators likened the endeavour to one that the university spearheaded in Bangalore during the 1960s that helped create the high-technology corridor in India. This is the first oil-producing state that has accepted and agreed with the concept that oil may not be the only source of energy in the future, stated Professor F. Moavenzadeh, Director, Technology Development Programme at MIT. In a decade, Masdars executives and MITs administrators predict that Abu Dhabi is likely to have expertise in solar energy, photovoltaic, energy storage, carbon sequestration and hydrogen fuel. Consequently, Abu Dhabis expertize will be in energy, not just in oil. Sultan A. Al-Jaber, Chief Executive of the Abu Dhabi Future Energy Company (ADFC), the government arm that manages the Masdar Initiative, stated: We realize that the world energy markets are diversifying, so we need to diversify too. We see the growth of renewable energy as an opportunity, not as a problem. Abu Dhabi is undoubtedly a forerunner, but other Arab countries (oil rich and exporters of oil and natural gas) have also dabbled with renewable energy. The Bahrain World Trade Centre (BWTC) Project includes wind turbines that, developers say, will meet up to 35 per cent of the Projects power needs. Solar heating in houses is encouraged, while desalination of sea or brackish waters is benefiting from technology advances aimed at saving energy. Last but not least, Saudi Arabia and other Gulf Arab States have begun research programmes to look into nuclear energy. 143

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III.

Conclusions

National and regional studies, carried out by Arab experts, expatriates, or foreign specialists (including from the United Nations specialized agencies and the United Nations Development Programme (UNDP) have concluded that scientific research, development and technological innovation in the Arab States needed a major whiplash to become closer to the world average indices, such as the: (i) expenditure as a percentage of GDP; (ii) number of scientists, engineers and technicians per million inhabitants; (iii) number of scientific publications in peer reviews; and (iv) number of patents filed and of technological innovations that improve the quality of manufactured products. However, despite the wide range of social and economic situations, there is an increasing awareness of the need to invest in R&D, in higher reduction, and in the training and retraining of highly-qualified personnel and skilled labour, in addition to building the effective infrastructures necessary. Certainly, foresight and political business acumen will play a key role in this endeavour. This is witnessed, for instance in the case of launching the Masdar Initiative in Abu Dhabi; in the case of the Education City in Doha, Qatar, which owes a lot to Her Highness Sheikha Mouza Bint Nasser Al Misnad, Chair of the Qatar Foundation, and her successful efforts to attract some of the best universities in the world; witnessed also in Jordan, in the area of information and communication technologies (ICTs), as well as in the pharmaceutical sector; and in Morocco and Tunisia, which are striving to undertake good and relevant research aimed at supporting social and economic development with practically no support from oil revenues in health care, medicine and pharmacy, as well as in agriculture, forestry and fisheries. Globalization plays a key role in this awareness and policy-making because it can offer opportunities and benefits to those: Who would like to penetrate markets, using their competitive advantages (skills, labour, geographical position, free-trade agreements, etc.). Who seek to build alliances and make joint ventures; and those Who are willing to adapt their technology and production to international standards and regulations.

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To these ends, research, development and innovation are key factors. This trend is obvious in the case of pharmaceuticals: the prospects for the development of the pharmaceutical sector in both Jordan and Morocco are not only to meet local needs, but also to move towards the international arena. Likewise, nowadays certain multinational pharmaceutical groups (mainly European and North American) are trying to conclude cooperative agreements and joint ventures with Indian firms world champions in generics development, manufacture and sales often considered as foes (because they sell their generics at cheap prices, and may infringe on the patents of drugs produced by the big pharmaceutical companies and thereafter sell generic equivalents). However, enemies may become allies in the globalized pharmaceutical market. Thus, Indian firms can develop new drugs (and even blockbuster drugs) from the multitude of molecules screened by the multinationals at a lower cost and even more rapidly, in addition to keeping their supremacy in the development and manufacture of generics. * * *

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Keynote Address Higher education, R&D, economic development, regional and global interface
Antoine B. Zahlan Science Policy Consultant, London, UK

Introduction
Knowledge and science are universal activities. Every society, however, has its own problems and its own challenges. An essential feature of knowledge is that it requires human capital (educated persons) for both its production and its application. The national systems of higher education and research and development (R&D) are the quintessential tools for the creation and application of knowledge. Although knowledge can be stored indefinitely on paper or discs, it is of little value unless appropriately educated and skilled persons can access and transform this knowledge. Even then, knowledge is ineffective unless the persons seeking to use it are appropriately organized and supported by suitable institutions and policies. Thus, an apparent knowledge gap between countries may arise because of a variety of reasons, such as: Shortage of human capital. Limited access to recorded knowledge. Absence or weakness of the organizations necessary to enable human capital to function. Absence of the vital economic and science policies by which to enable the acquisition, accumulation and application of particular knowledge. Absence of the organizations and/or supporting institutions which provide the necessary legal and financial services. This Seminar is concerned with Arab States. Thus, our first task is to pinpoint the causes of the prevailing knowledge gap and consequent crises in development in the Arab countries and to figure out how to bridge this gap.

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The author has organized this paper in two parts: Part I presents data and analysis through which the nature and extent of the Arab knowledge gap can be pinpointed. Part II discusses measures that, if adopted, would enable the Arab countries, singly and collectively, to work towards overcoming their developmental crises through an effective use of their human capital and resources. The central problem in the interface between higher education and R&D on the one hand and the application of knowledge, on the other, is that the former has no direct influence on the latter. The influence that systems of higher education exert on society and the economy is through the research that they produce and through the employment of their graduates. The limited amount of research and the high level of brain drain curtail this influence. Yet this situation can be readily reversed.

Part I. Nature of the Arab knowledge gap

Knowledge is a complex entity. The indicators that specify the relative standing of countries include: (i) human capital; (ii) funding of R&D; (iii) yearly number of publications in refereed journals; (iv) population of scientific and engineering workers; (v) quality of the education system; (vi) number of patents registered annually; (vii) export of products of advanced technologies; and (viii) rate of change of these indicators. In this paper, the author examines only the first four of these indicators. It is difficult to define the magnitude of those indicators which are associated with specific levels of development. However, there is universal acceptance that certain countries have attained take-off in terms of economic growth. It is, for example, accepted that China and India are in such a state of take-off. International discourse today is no longer concerned with the underdevelopment of China and India, but rather with when they may be expected to join the club of industrial nations. Thus these two countries provide a useful yardstick with which to compare other countries.

The Organization of Islamic Countries (OIC) published a volume (Naim and Atta-ur-Rahman, eds., 2006) on scientific activities in all Islamic countries which accounts for roughly 25 per

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cent of the world population. This volume includes a chapter on each Member Country which covers basic information on: (i) population, (ii) changes in literacy during past decade; (iii) information on the top ten scientific disciplines, (iv) areas of scientific research during past five and ten years, (v) productive universities, (vii) names of leading authors by university, (viii) number and trends in scientific publication during the past decade, (ix) exports and GDP). The OIC reports that their share of the worlds research output during the past decade was roughly 2.5 per cent of world output. The UNESCO Science Report (UNESCO, 2005) gives an account of science in the Arab World. Additional sources of information will be cited in this paper to enable us to compare and to make a contrast of the performance of Arab countries.

1.

Comparative status of Arab human capital

Arab countries emerged from their colonial period with very low levels of human capital. After independence, all Arab States expanded their education systems dramatically, investing heavily in infrastructure and study abroad. In 1949, there were only ten universities in the Arab World and some 30,000 university graduates. Since then, over 300 universities have been established and they have graduated an estimated 15 million students. Table 1 shows that enrolment in national universities in the Arab World per million inhabitants was higher than that of either China or India (year 2000). Research and graduate work in Arab universities, however, are still carried out on a limited scale. Teaching loads are at a high level and research funding (as shown further on) is almost non-existent. As a result, Arabs have continued to depend on study abroad for their postgraduate education. According to UNESCOs latest (1999) statistics, the total number of Arab students enrolled in universities outside the Arab World was 120,602, compared with 106,036 Chinese and 52,932 Indians (see Table 1). Clearly, then, there are far more Arabs undertaking foreign study than either Chinese or Indians. About 82 per cent of these Arab students are pursuing post-graduate education in OECD Member Countries. European universities are the major destination of Arab students.

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Table 1. Study abroad for Arab States and selected countries Population 1999 per (3) million (Corrected) 1997 (4) 120,602 106,036 52,932 253.4 1,227.0 962.0 Study abroad per million (5) 476 86 55 Study at home per million (6) 3,168,445 7,364,000 9,834,000 Study at home per million (7) 12,474 6,002 10,223

Country (1) Arab World China India Source:

1999 (2) 111,854 95,899 48,348

Compiled from UNESCO (2005) statistics amongst others. Second column shows UNESCO data. Third column shows corrected UNESCO Data with EU statistics.

On the basis of incomplete UNESCO statistical information, the author estimates that 12,000 Arabs are awarded Ph.Ds. abroad annually and that 85 per cent, or more, of these brain drain. This is a loss to the Arab World of around 10,000 Ph.D. graduates annually. Consequently, there are 60,000-70,000 Arabs having Ph.Ds. working in the Arab World compared with an estimated 150,000 abroad. Of the scientific human capital holding a Ph.D. in the Arab World, only about 10,000 publish one or more scientific papers in a refereed international periodical per annum. Most of the remainder have no opportunity to become research active because of poor working conditions and a lack of R&D funding. China and India are currently considered the champions of rapidly developing countries. They have taken the place of Korea and Taiwan who have now joined the ranks of OECD Member Countries. As can be noted from Table 1, Arab countries have invested more in education, at home and abroad, than either China or India. Obviously, it is not the amount of human capital that is making China and India the champions of development and the Arab countries slow developers. As we shall note later, in greater detail, it is rather the national science and economic policies adopted by Arab States that deprives them of the benefits of their substantial human capital.

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The total number of Arabs who brain-drained to OECD Member Countries by 1999 was 967,548, which is roughly 300,000 more than Indians, and only slightly lower than Chinese (see Table 2). Table 2. Number of Highly Skilled Personnel (HSP) in OECD Member Countries, 1999 HSP Country Arab World China India Expatriates 4,462,391 1,928,199 1,649,711 Percentages 22 51.9 39.6 HSP Number 967,548 1,000,735 653,286

Source: SOPEMI. 2004. Trends in International Migration Annual Report, OECD, 2004. Table II.A2.6, NB: The term now in common use for university graduates is Highly Skilled Personnel (HSP). Before the importance of gender issues the term in use was High Level Manpower (HLM). On a per capita basis, the Arab brain drain is four times greater than that of China; and five times that of India. Overall emigration from China and India is 3.6 million compared to 4.5 million from the Arab World. Thus, China and the Arab World export an equal number of Highly Skilled Personnel (HSP). But in terms of total emigration (skilled and semi-skilled, and dependents) the Arab World exceeds China and India combined. Arab professionals perform very effectively in OECD Member Countries; this is attested to by the continuing brain drain as well as by the prominent positions held by Arab professionals. No comparative surveys of the performance by national groups are available; although there are major differences between different groups; one cannot say that any one group has outperformed another. Deriving economic growth from human capital depends on the methods utilized during the execution of economic activity. Investments made through turnkey contracts that make little provision for technology transfer to national and regional organizations do not generate local employment. They result in a low multiplier factor. If we examine the behaviour of China, India, Korea and others we find that these countries pursue specific policies which use every

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activity as a mechanism to acquire and accumulate technology. They thus learned to: (i) maintain; (ii) operate; (iii) innovate; (iv) upgrade; and (v) duplicate all their investments. This is the main reason for the rapid growth registered by China and India. Their adoption of the requisite science and economic policies has promoted the utilization and development of national organizations to acquire, accumulate, apply, and adapt technology. Arab countries have not adopted similar policies and practices (Zahlan, 1999). Planners expect to recover the cost of educating human capital from the contributions made by graduates to the national economy. Thus, the ability to employ graduates productively is of central economic importance. The brain-drain phenomenon has shown that a country may educate its youth, but without employing this youth productively, it cannot derive the desired economic benefits from its investment in education. National policies regarding the processes of production, innovation and investment determine the extent to which economic growth may be derived from human capital. Investments made through turnkey contracts that make little provision for the employment of national organizations and labour result in a low multiplier factor. Furthermore, the Arab World is a vast market for technological investments. The oil and gas sector, the construction industry, transport, manufacturing industries, ICT and many others have led to massive investments of over US$3,000 billion between 1980 and 2000. Yet there has not been a corresponding increase in per capita income. Once again, a more efficient use of human capital would produce better results. Clearly, the problem facing the Arab countries is not one of a shortage of capital, human capital or even R&D. A solution to this problem undoubtedly lies in a better utilization of human capital (Zahlan, 1999).

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R&D Funding The only way to retain research quality personnel (Ph.D. level) and keep them fit is by enabling them to conduct research; this means that R&D funding is a critical factor.

In Table 3, the author summarizes some of the comparative data presented in the UNESCO Report, and finds that the Arab countries, along with the least-developed countries (LDCs) (which happen to be the poorest in the world) allocate the lowest proportion of their GNP to R&D. The Gulf Cooperation Council (GCC) countries [Bahrain, Kuwait, Qatar, Saudi Arabia, the Sultanate of Oman and the United Arab Emirates (UAE)] are amongst the lowest supporters of R&D in the Arab World in terms of the percentage of their gross domestic product (GDP) devoted to R&D. The major area where the Arab countries are in deficit in comparison with China and India is in research funding. The Chinese and Indian governments devote far more towards R&D than any Arab government (see Table 3). This is, of course, an important reason why the Arab brain drain is much higher, on a per capita basis, than that of China or India. China spends ten times more than the Arab countries on R&D per inhabitant; India spends three times more.

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Table 3.

Comparative support for R&D (2002) in Gross Expenditure on R&D (GERD) GERD percentage of GDP 1.7 2.3 1.0 0.1 0.2 0.1 0.2 1.0 1.2 0.7 4.9 540.4 42.8 0.7 6.5 6.2 6.4 75.0 56.2 19.8 922.4 Researchers per million inhabitants 894.0 3.272.7 374.3 4.5 159.4 93.5 136.0 314.9 633.0 112.1 1 395.2

Country World Developed countries Developing countries Less-developed countries Arab States Africa Arab States Asia All Arab States Brazil China India Israel

GERD US$ billion 829.9 645.8 183.6 0.5 1.2 0.6 1.9 13.1 72.0 20.8 6.1

GERD per inhabitant US$ 134.4

Source: UNESCO. (2005), Table 1, p. 4.

2.

Comparative research output

A useful gauge for assessing scientific activity is to compare the number of research publications in refereed international journals per country and per million populations. From such comparisons, it can be seen that Arab output increased from eleven publications per million populations in 1981 to 33.2 in 2003. The Republic of Korea output was only six per million in 1981 it equalized with the Arab World in 1985 and was thirteen times larger in 2003. Indias output appears to have remained constant at seventeen to nineteen publications per million over the period 1981-2003; while that of China increased from a low of one to 36.1 in 2003. China equalized with the Arab World in 2003. Since 2003 both China and India have dramatically increased their R&D appropriations and deepened their science policies to accelerate the rate of economic development (see Table 4).

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Table 4. Publications per million populations (1981-2003)

Country Arab World Brazil China France India Korea (Republic of) Netherlands Switzerland Source:

1981 11 16 1 496 17 6 567 1 202

1985 15 19 3 593 15 15 768 1 406

1990 21 25 7 628 16 42 932 1 352

1991 21 27 7 627 17 48 920 1 361

1992 21 31 8 686 17 58 1 009 1 525

1993 21 31 8 721 17 74 1 098 1 622

1994 24 34 9 768 18 97 1 166 1 780

1995 26 42 11 840 19 144 1 252 1 878

2003 33.2 74.8 36.1 826 19.4 433 1 209 2 005

Institute of Scientific Information (ISI), Philadelphia, US. (Compiled by the author).

The Arab countries in 2007 are roughly at the same level as 2003 of India and China in R&D output and human capital. China, like Korea before it, is moving very briskly ahead. It is very likely that China has already moved far ahead of the Arab World during the past four years.

3.

International cooperation amongst Arab researchers

The enormous scale and complexity of knowledge makes it imperative for knowledge workers to cooperate. In order for cooperation to take place, enabling social and political conditions are required to facilitate these processes. (See Table 5)

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Table 5. Regional and international cooperation of researchers in the Arab World, 1995. Total Country Number N. Joint Papers % Algeria Bahrain Egypt Iraq Jordan Kuwait Lebanon Libya Mauritania Morocco Oman Palestine Qatar Saudi Arabia Somalia Sudan Syria Tunisia UAE Yemen Total 328 106 1 999 114 266 290 73 58 7 536 84 16 59 1 240 6 112 134 342 137 30 74 (66) USA 10 (14) 45 (61) 11 (15) 44 (86) 122 (83) 0 3 (2) 13 (18) 2=ICARDA 17 (12) 6 (11) 4 (14) 223 (10) 36 (54) 294 (24) Egypt 23 (64) USA 72 (25) 9 (25) 24 (67) 161 (55) 79 (27) 2 (6) 26 (9) 395 (74) France 214 (61) 37 (45) 314 (80) 2 (0.5) 61 (15) 227 (69) 29 (27) 585 (29) 34 (30) 95 (36) 117 (40) 32 (44) 35 (60) N. Main Partner % France 151(65) UK 7 (24) USA 154 (26) USA 5 (15) USA 23 (24) USA 25 (21) USA 14 (44) UK 9 (26) N. OECD % 187 (81) 11 (38) N. Arab % 3 (1) 3 (10) 6 (21) 49 (8) 0 12 (13) 17 (15) 4 (13) 4 (11) N. Multinational %

367 (63) 123 (21) 20 (59) 12 (35) 58 (61) 18 (19) 56 (48) 26 (22) 27 (84) 16 (46) 1 (3) 7 (20)

81 (60)* France/UK 16 ea 147 (46) 55 (40) 28 (83) France 87 (59) Egypt 11 (20) Egypt/UK 6 ea 849 (33)

26 (47) 22 (40) 15 (54) 8 (29)

5937 2 301 (39)

1,478 (64) 342 (15)

Source: Zahlan, 1999. NB: Including twenty-nine publications by scientists at the International Centre for Agricultural Research in Dry Areas (ICARDA).

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The extent of cooperation between researchers is reflected in the conduct of scientific research resulting in co-authored publications. Table 5 above shows that researchers in all Arab countries were involved in international cooperation in 1995. There are major differences between Arab countries in the level and patterns of cooperation. Cooperation in science and technology are of vital importance to the quality and success of the scientific enterprise. The reason is that scientific progress depends on high quality expertise that is a scarce commodity. Hence the importance of cooperation between the relatively small number of scientists working in each specific field. The trend towards the increasing dominance of teams in the production of knowledge in all fields is supported by extensive recent studies (Wuchty, Jones and Uzzi, 2007). Increasingly these teams have a multi-organizational complexion. International cooperation between scientists and technologists takes many forms. One of the most basic forms of cooperation is the exchanges that take place at scientific meetings: in 1995 for example about 18,000 scientific meetings, whose proceedings were published, took place around the world. These meetings provided opportunities for scientists to meet and exchange information. Scientists based in Arab countries do not have a satisfactory rate of participation in such meetings. They contributed only a total of 200 papers to the 18,000 meetings that were held worldwide in 1995. In other words the connectivity link-up of Arab scientists with the international community is at a low level. Another level of cooperation consists of research collaboration between scientists in two or more countries. The author undertook a detailed analysis of Arab scientific output and discovered that cooperation between Arab scientists is almost non-existent despite the presence of a number of Arab regional organizations whose objective is to promote such cooperation. Neither national nor regional Arab organizations devote serious resources to promote cooperation. The Arab States share a wide range of common scientific and technical problems. Thus there should be considerable incentives for co-operation. Most of the Arab World is in a dry zone where water is scarce; this dictates certain research issues in water use in agriculture and in 157

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water management. Likewise several Arab countries are oil and gas producers; this provides common technological challenges and opportunities for sharing experiences. Moreover they all share a number of problems in health, and in the application of codes and standards as well as in many other fields. Scientists in GCC universities published 1,722 papers in 1990 and 2,716 in 1995. Of this one quarter were co-authored with scientists in non-Arab institutions. In 1990 collaboration within the GCC was only 2.7 per cent of all co-authored papers; this increased to 6 per cent in 1995. See Zahlan (1999) for detailed information on R&D regional and international collaboration. Scientists in the Maghreb countries (which generally apply to Algeria, Morocco and Tunisia) exhibit a high level of international collaboration but a very low level of regional collaboration. The level of international collaboration in four Maghreb countries underwent some changes between 1990 and 1995: Algerian collaboration fell from 80 per cent of all publications to 69 per cent; Libya increased from 31 per cent to 60 per cent Morocco from 64 per cent to 74 per cent and Tunisia from 29 per cent to 64 per cent. The average rate of international collaboration for the Maghreb countries increased from 54 per cent to 64 per cent during this period. Scientists in Algeria, Morocco and Tunisia published a total of 1,264 papers in 1995; of these some 804 were co-authored with scientists outside their own countries. Very surprisingly only eleven of the 804 publications involved scientists from two Maghreb countries. Of these eleven only one paper was conducted fully by Maghreb scientists. Regional collaboration is thus exceedingly meagre. The rate of international co-authorship in the Mashreq countries (Egypt, Jordan, Lebanon, Syria and Palestine) is close to the world-wide average of 25 per cent. Cooperation within the Mashreq is also very limited.

4.

Arab science and technology systems

The crisis in Arab development arises from the fact that Arab countries are not receiving the returns normally expected from their investments in human resources, R&D and Gross Fixed Capital Formation (GFCF). This is largely due to the underdeveloped condition of national science and technology systems (S&T-System).

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The S&T-System consists of a complex knowledge-intensive system of organizations and institutions. An important function of the S&T-System is to enable the production, accumulation, acquisition, diffusion and conversion of knowledge into useful and desired outputs. The quality and efficiency of the connectivity that links up the various components of the S&T-System with each other as well as are as critical as the components themselves. In other words the components are of little benefit without the associated connections. These issues are discussed at length in Zahlan, (1983, 1990, and 1999). A factor impeding the formation of connectivity is the prevailing national economic and science policies combined with the weaknesses (and often non-existence) of Arab professional societies and scientific associations and the lack of funding to support the travel of Arab scientists to participate in national, regional and international scientific conferences and activities. The extent of articulation of the skills, education and management of labour force with the S&T-System determines labour productivity and the ability to acquire and accumulate new technologies. A concern with labour productivity and performance is central to the international competitiveness of a nations economy. In 1970 the Arab States were close to European and Japanese levels of labour productivity. It is interesting to note that the decline took place after the first oil boom in 1974 after an investment of US$2,000 billion in GFCF by 2000 and after a massive expansion in education systems at all levels (Zahlan, 1994). It is estimated that at the moment Arab countries are investing between US$2,000 and US$3,000 billion in new projects almost exclusively through the technology free turn-key approach. The declining performance of Arab labour is a unique phenomenon. It is related to the increasing dependence on turnkey and client-in-hand forms of contracting which have grown alongside the increasing numbers of professionals and financial resources! This is the consequence of the lack of integration between the education systems, the economy and the labour market.

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Very briefly, the main barriers to development are, the: (1) Public sector policies of pursuing technology-free turnkey contracts with international Consulting Engineering Design Organisations (CEDOs) with limited attention paid to the acquisition of knowledge. (2) Vertical integration of major national industrial firms and their heavy dependence on international Industry Related Services suppliers thereby giving little attention to national and regional organisations. (3) (4) (5) (6) (7) (8 (9) (10) (11) (12) Limited adoption of out-sourcing and sub-contracting by parastatals and private firms. Weaknesses of national and regional professional and scientific societies. Limited efforts to un-package technology and undertake reverse engineering. Very limited number of science policy studies undertaken in the region. Limited number of science and technology parks around universities and technical schools to promote technology transfer to small- and medium-enterprises. Poor quality of statistical and technical information services; there are of course some exceptions to this. Low level of incentives to encourage innovation. Low level of mechanisms to promote the diffusion of best practice. Limited attention paid to the promotion of competition. Low level of concern for labour productivity and quality control; although some efforts
have been made in several Arab countries to improve standards and quality control.

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Part II. Conclusions: Measures to overcome current difficulties

It has been noted in Part I above that Arab human capital, R&D capabilities, financial and natural resources are equal to or higher than those of China or India on a per capita basis. Yet the performance of the Arab countries is far inferior to them. The reform of existing policies cannot take place without a thorough understanding of the causes for the poor comparative performance of Arab countries. Understanding current difficulties in all their complexity requires a massive amount of research especially in the economic, management and science policy spheres. Only then will it be possible to define the wide variety of problems that confront us and to define operational methods for overcoming them. There are well-known methods for rapid and low cost methods to diffuse expertise and to promote research in these practical areas, on a step-by-step basis. The adoption of these methods is facilitated by the rich abundance of Arab human capital and the large number of universities. An essential measure to increasing employment and reducing cost consists in the training and certification of the labour force. The objectives of this measure would be to increase labour skills and productivity in technologies which are in big demand; and to increase their mobility through their endowment with certificates that reflect their levels of skills. Consulting and contracting organizations are basic instruments for converting investments in education and R&D into economic benefits. Thus measures to enable Arab consulting and contracting industry to increase market share should have high priority. This would entail increasing the ability to compete with international contractors in the home markets. The measures include improving financial services, establishing an efficient legal system, labour training and certification, accurate and efficient statistical and information services. These measures would transform and strengthen the weak linkages between contracting and consulting firms, professional organizations, universities and Arab human resources (Imad, 2002). This measure should yield considerable socio-economic benefits and profits.

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1.

Funding scientific meetings

The paucity of scientific cooperation and collaboration between scientists in the Arab World is a major obstacle to benefiting from available human capital. Scientific meetings provide a low-cost mechanism to effect exchanges between professionals. An increase in the funding of scientific conferences in the Arab World would enable scientists to network more effectively.

2.

Information and Communication Technologies (ICTs)

Arab countries lag behind other nations in developing their ICT sectors. Yet they are purchasing a wide range of ICT services, hardware for military telecommunication, TV and radio services, industries, government departments, airports and airlines, banks, etc. A concerted effort to un-package the ICT components of large contracts would promote local participation in technology transfer and innovation in this vital domain. Bridging the knowledge gap should be straightforward and low in cost and would contribute immensely to national well-being, self-reliance and prosperity. NB: Keynote Address presented at the 2nd Regional Research Seminar for Arab States on The impact of globalization on higher education and research in the Arab States, Rabat, Morocco, 25-26 May 2007. UNESCO Forum on Higher Education, Knowledge and Research, UNESCO Headquarters, Paris, France. * * *

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Bibliographical References Imad, M. 2002. Organizational Context of Knowledge Acquisition, Transfer, Management and Localization of Technology. Background paper prepared for the Arab Human Development Reports (AHDRs), 2003. Naim, S.T.K. and Atta-ur-Rahman (eds.) 2006. Status of Scientific Research in OIC Member States, Committee on Science and Technological Cooperation (COMSTECH), Pakistan, (in press, 2006). UNESCO. 2005. UNESCO Science Report 2005. Paris, UNESCO. Wuchty, S., Jones, B.F. and Uzzi, B. 2007. The Increasing Dominance of Teams in Production of Knowledge. In: Science 316, No. 5827, pp. 1036-39, 18 May 2007. Zahlan, A.B. 1983. The Arab Construction Industry. Croom Helm, London. Also published in Arabic by the Centre for Arab Unity Studies (CAUS), Beirut. ______. 1990. Acquiring Technological Capacity: A Study of Arab Consulting and Contracting Firms. Macmillan, London. Also published in Arabic by the Centre for Arab Unity Studies (CAUS), Beirut. ______. 1994. Labour Productivity and Competition. In: Al-Mustaqbal al-Arabi, No 2, pp. 98-112. ______. 1999. Science and Technology in the Arab World: Progress without Change. The Centre for Arab Unity Studies (CAUS), Beirut. (in Arabic).

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Appendix

PowerPoint Presentation on New Roles for Arab Schools and Universities in a Knowledge-Based Society

Professor Abdullateef H. Haidar Al Hakimi

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9.RABAT.MAY2007.HAIDAR.DIAPOS.ENGLISH.FINAL1.ph.25.09.07 25 pages

New Roles for Arab Schools and Universities in a Knowledge-Based Society KnowledgeProfessor Abdullateef H. Haidar Al Hakimi, Ph.D. Hakimi, Dean, College of Education, United Arab Emirates University (UAEU). UNESCO Forum on Higher Education, Research and Knowledge 2nd Regional Research Seminar for Arab States on The Impact of Globalization on Higher Education and Research in the Arab States States Rabat, Morocco 25-26 May 2007 25-

Definition of a Knowledge-Based Society KnowledgeThe term knowledge-based society refers to the dissemination and production of knowledge and its efficient utilization in all societal activities: the economy, civil society, politics, and private life, in a continuous quest to advance human development (Arab Human Development Report, 2003, p. 55).

Introduction
In 1997, American sociologist Daniel Bell introduced the concept of a Knowledge Society Society to describe the transformation of todays society today from an industry-based society to a knowledgeindustryknowledgebased society. A Industry-based society focuses on the Industryproduction of goods and marketing them. However, a knowledge-based society focuses knowledgemore on the production of knowledge and translating it into commercial products. In 1993, management guru Peter F. Drucker developed the concept further and introduced the concept of Knowledge Workers. Workers

Characteristics of a Knowledge-Based Society Knowledge1- Specialized Knowledge: Knowledge: Knowledge is described as high-level specialized highknowledge. Drucker (1994) called it even Knowledges. Knowledges It has value only if it has practical application Knowledge in Action, i.e. when it is applied to society, economics, or Action in the development of knowledge itself. Drucker called people who lead knowledge-based knowledgesocieties Knowledge Workers. They include: surgeons, Workers lawyers, accountants, engineers and teachers. Such people depend on their minds, more than anything else, to carry out their duties satisfactorily.

Characteristics of a Knowledge-Based Society Knowledge2- Learning Organizations: Organizations: For Knowledge Workers to develop knowledge and turn it into products, they need to belong to Learning Organizations. Learning Organizations will provide most of the services that society will need in the future:
Health. Education. Trade. Industry, etc.

Characteristics of a Knowledge-Based Society KnowledgeA Learning Organization is: a group of individuals who interact with each other and the surrounding world. They work within an organization, in which they feel they belong to. Such organizations provide Knowledge Workers Workers with opportunities to work in teams to:
- Discover new knowledge. - Produce it, and - Apply it.

In such organizations, they are described as being:

- Motivated. - Life-long learners, and Life- Open minded.

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Characteristics of a Knowledge-Based Society Knowledge3 - Teamwork: Knowledge Workers will face unique Workers challenges. Therefore, they need to work in teams. It is well known that people work together as a team when they are faced with a task that is not within an individual persons person ability or when the deadline is too short. Mustang provides an excellent experience in the application of teamwork in industry.

Characteristics of a Knowledge-Based Society Knowledge4- Inquiry: Inquiry:

Inquiry is essential to discover new knowledge. Companies that adopt the concept of Learning Organizations will provide their employees with ample opportunities to inquire in order to find solutions to the problems they face. Inquiry is essential for professionals achievements professionals because it requires reflection, which is the backbone of professional growth. Inquiry also helps professionals to identify the best practices and consequently develop standards for their profession. It is an agent of improvement.

Characteristics of a Knowledge-Based Society Knowledge5- Life-Long Learning: LifeLearning: Today, knowledge is described as being in constant change. At the same time, it provokes changes in other directions. If a professional is not ready, and willing, to be up-to-date regarding new up- todevelopments in his/her field, he/she will not be suitable for the profession. This shows the importance of life-long learning lifefor professionals.

Characteristics of a Knowledge-Based Society Knowledge6- Extensive Use of information communication technologies (ICT): (ICT): It would not be worthwhile providing evidence concerning the widespread use of ICT in our lives. Nowadays, most professions depend heavily on the use of ICT. Distances among nations and individuals have disappeared. Businesses work for 24 hours a day. Companies need employees who are skilful in using ICT to accomplish their tasks faster and better, some would even add anytime, anywhere.

Characteristics of a Knowledge-Based Society Knowledge7- Globalization

Nowadays countries do not have the choice of closing their borders or even selecting countries which they would like to deal with. Companies work on an international basis. Some enterprises have uprooted from their home countries and established their businesses abroad. There are multinational companies. Consequently, business is becoming more and more international.

Factors contributing to the widespread of Knowledge-Based Societies Knowledge1- Advancement in ICT: ICT: Technologies be it information technology, biotechnology, or even nanotechnology have influenced all aspects of our lives. Due to this advancement in ICT the world is becoming smaller and smaller. It also transformed the economy from a labour-based to an intellect-based labourintellecteconomy. This even affected the nature of products seen in the market.

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Factors contributing to the widespread of Knowledge-Based Societies Knowledge2- Globalization: Globalization: Although there are many definitions of globalization, the author of this paper is using today the following definition: the flow of technology, economy, knowledge, people, values, ideas,across ideas, borders. Globalization affects each country in a different way due to a nations nation individual history, traditions, culture and priorities (Knight and de Wit, 1997, p. 6). priorities

Factors contributing to the widespread of Knowledge-Based Societies Knowledge3- Interaction between ICT and Globalization: Globalization: The advancement in ICT has helped to connect up the world. ICT made the spread of Globalization faster. Globalization in turn, through international agreement, made it possible for countries to acquire new ICT and participate in world economy. Bangalore in India and Dalian in China. People are free to move around the world and compete for jobs.

Factors contributing to the widespread of Knowledge-Based Societies Knowledge4- International Events: Events: 9/11 is another factor that contributed to the spread of knowledge-based societies knowledgeas well as globalization. People in developed countries became interested in other peoples cultures. peoples Governments, especially in developed countries, realized that events in other parts of the world have also an influence on their states.

Changes in the Nature of Professions

New developments in ICT and globalization influences the nature of knowledge and skills that professionals need. Professions require more and more ICT skills, something that high school graduates lack. ICT increases the effectiveness of workers which encourages companies to move towards non-centralized systems. non-

Nature of Tasks carried out by Knowledge Workers

1- Comprehending deep knowledge and understanding. 2- Acquiring high-level thinking skills, such as: high- Ability to deal with non-traditional problems. non- Use of expert thinking, complex communication. - Use of argument, negotiation and mediation. 3- Using ICT in-depth to be able to: in- Deal with a large amount of knowledge. - Work in real and virtual worlds.

Nature of Tasks carried out by Knowledge Workers

4- Being proactive is one who is able to: - Get actively involved in a task not just follow instructions. - Be in control of the task. - Be creative and free-minded. free- Work in teams. 5- Being able to deal with change: - Acquire the life-long learning skills. life- Capable of working in a changing environment. - Be ready to change profession if necessary.

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Proposed New Roles for Arab Schools and Universities

1- Revise Missions: Missions:

Proposed New Roles for Arab Schools and Universities

2- Become Learning Organizations: Organizations: Current learning institutions in the Arab Region follow the same factory-type model: factory- type Students are the raw materials. Teachers are the labour force, and Administrators are just supervisors to ensure instructions are followed and certification produced. In Learning Organizations, Hierarchy is NonNonExistent, everyone is a learner intent on improving the professions.

Schools and universities revise their missions to become Centers of Enlightenment in Enlightenment society, which:
Provide high-level specialized knowledge. highProvide professional development to professionals in the field. Help professionals to change professions if necessary.

Proposed New Roles for Arab Schools and Universities

3- Revise Learning and Assessment Methods:

Proposed New Roles for Arab Schools and Universities

4- Condense the use of ICT:

Current learning and assessment methods in the Arab World are traditional in nature. They could be described as follows:
Do not help students to learn how to learn. learn Do not help students develop upper-level upperthinking skills. skills Do not inculcate inquiry, and inquiry Do not develop reflection in students thinking. reflection students

Technology could participate in solving many of the current problems of learning such as passive learning, and shortage of resources. It could also enrich the learning process to make learning meaningful.

Proposed New Roles for Arab Schools and Universities

5- Respond to the Requirements of Globalization: Globalization: No country has the choice of falling by the wayside and not participating in globalization. Learning Organizations will need to respond to globalization and even have an influence on it.

Proposed New Roles for Arab Schools and Universities

6- Quality Assurance Efforts: In this competitive world, Arab Learning Organizations are obliged to adopt suitable systems of quality assurance (QA) to help their graduates acquire knowledge and skills that will make them highly competitive in world markets. This will require ensuring the following: Are the organizations objectives appropriate? Are their plans suitable for these objectives? Do their actions conform to their plans? Are their actions effective in achieving their objectives? What is the measure of their objectives? (Linn, 2003).

Proposed New Roles for Arab Schools and Universities

7- Reform Administration: Administration: Today, the world is becoming more and more complex. Its problems are getting more complex as well. Professionals need the freedom of quick decisiondecisionmaking to solve problems as soon as they are faced with them. They need to be equipped with adequate knowledge and skills to do that and to have the freedom to do as such. To respond to these requirements, Learning Organizations, themselves, need to shift to the decentralization of administration.
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