Polar funding policies are closing the gap between East and West

In The Birth of the Modern World, University of Cambridge historian Sir Christopher Bayly puts forward two propositions about globalisation.

First, since at least the early 19th century, there has been a global system of patterns and changes. Every nation and every city watches others. Ideas freely jump borders. Ours is a world of norms and imitative responses.

This does not mean that all nations behave the same way in a unilateral world. Policy agendas are common, but global patterns are just as likely to generate specificity and local variation as they are sameness. In fact, the greater the global convergence, the more visible national differences become and the greater their knock-on effects.

The second point is that world history has always been "multi-centred", not Atlantic-centred. Developments in Africa, Asia and elsewhere readily take on global significance.

In relation to global higher education in the wake of the financial crisis, Sir Christopher's propositions are looking good. We see a powerful convergence of patterns. We see sharp differences. The rise of the Far East as the third great zone of activity has accelerated.

There is not one but two policy responses to the recession. They are polar opposites and reflect divergent political cultures as well as differing stages of economic development.

In the English-speaking countries and most of Europe and Latin America, higher education is driven by fiscal politics. Government budgets are in a parlous state, varying from a sharp decline in revenues to temporary catastrophe. The result is public disinvestment.

In the United States, public universities have never faced a crisis like this, and there will be long-term damage to capacity. In the world-leading University of California system, the freeze on student places, tuition-fee hikes of a third or more and staff furloughs - compulsory reductions of paid working days - are not enough to cover the revenue gap.

This does not mean the US will vacate world leadership in the knowledge economy: its total investment in higher education remains six times that of China and Japan, its closest competitors based on Organisation for Economic Co-operation and Development data. But the balance of public and private funds is changing. In many American states, public higher education budgets are in freefall. Governments have discovered they can cut funding and get away with it. High tuition fees and high aid will become the norm, not just in the Ivy League institutions, but also for many in-state first-degree students.

Many European systems are experiencing large-scale cuts. Nations such as the Netherlands, poised between the Anglo-American market philosophy and the central European tradition of first-degree education as a public good, may have to introduce higher student fees to maintain teaching standards.

While fiscal collapse is the immediate driver, the underlying condition is a long-term change in Western political culture - the weakening of public consent for taxation and the idea of higher education as a shared benefit. States are falling back on the alternative model of education as an investment by families and students.

In the Far East it is different. China, South Korea and Taiwan are increasing their public investment in higher education, as is Singapore. China sees the recession as an opportunity to close the gap with the West. Public funding is not replacing the deeply entrenched tradition of private investment by students and families: both public and private investments are growing, and participation rates are surging towards European levels.

It is a bipolar world. In Far Eastern nations, public faith in educational investment is increasing while the West withdraws. As Asian systems work to improve social inclusion, Western systems are likely to generate more uneven patterns of student participation and labour productivity.

Yet there is a global convergence around the model of first-degree higher education as a family investment, although the drivers differ by country. Everywhere, the first degree is becoming more tuition-heavy and marketised, oddly sandwiched between predominantly state-funded schooling and graduate research.

The other element of global convergence is related to state investment in research. The Obama stimulus package doubled National Science Foundation and National Institutes of Health grants. In Europe, research budgets have proven more robust than education ones. In China and the "tiger" economies, research funding and outputs are climbing steeply. China's research and development budget may reach US levels in the next generation. Everywhere, the nexus between higher education and research is being pushed apart by divergence in the funding base.