The impact of global financial crisis on the West will help Asia, especially China, rise in the field of higher education

The impact of the global financial crisis on public finances in the West has been devastating and will be felt at least over the next decade. Recession is changing lives on a scale not seen in a long time and unemployment, especially among young people, can have tragic consequences.

But what does this mean for the globalization of higher education? Will the fallout from the crisis halt the process or will the dynamism of Asia, especially China, be sufficient to sustain it?

Higher education has become more globalized in recent decades. In 2009, 3.3 million students studied outside their country of domicile, six times the number a generation ago. Member states of the Organization for Economic Cooperation and Development host about 80 percent of these students but supply just 20 percent.

Host countries are dominated by the English-speaking world, with the United States, the United Kingdom, Australia, Canada and New Zealand being home to almost half of all international students.

Of the countries sending students overseas, China and India combined account for 20 percent.

But these patterns are changing and are likely to continue changing over the coming years as the global center of gravity shifts eastward. Researchers are cashing in on plummeting costs of communication. In the decade between 1996 and 2006, the number of collaborations between researchers in China and India and other countries more than doubled. Even in countries like the US, the UK and Germany, international collaborations increased by 50 percent.

Collaboration has become astonishingly easy because transaction costs have become "vanishingly" small. Notwithstanding the unintended consequences of new immigration measures in some countries such as the UK, there has never been a better time to ship ideas around the world at more or less zero cost.

The global financial crisis has posed risks to higher education in the West. The combination of crisis-induced bank bailouts and recession, on top of structural deficits in some countries, has exposed unsustainable public finances in many countries.

These pressures will have an impact, directly and indirectly, on higher education. In the UK, the coalition government has announced deep cuts in spending. For higher education, this is likely to mean cuts in teaching budgets of up to 70 percent. In the US, direct funding to state universities has fallen sharply.