Myths, Beliefs and Realities:

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1


Myths, Beliefs and Realities:

Public
-
Private Competition and Higher Education’s
Diversification


Pedro Teixeira

a
,b
*
, Vera Rocha

a
,b
, Ricardo Biscaia

a
,b
,
Margarida Cardoso

a,
c,d


a
CIPES, Center for Research in Higher Education Policies, Rua 1º Dezembro,

399, 4450
-
227 Matosinhos, Portugal

b

FEP


Faculty of Economics of University of Porto, Rua Dr. Roberto Frias, 4200
-
464 Porto, Portugal

c

ICBAS


Instituto de Ciências Biomédicas Abel Salazar, Largo Prof. Abel Salazar, 2 , 4099
-
003 Porto, Portugal

d

CIIMA
R

-

Centro Interdisciplinar de Investigação Marinha e Ambiental,

Rua dos Bragas, 289, 4050
-
123 Porto, Portugal



Abstract


E
conomic debates about diversification are significantly linked to

mar
ket structure and
competition. Alt
hough
competition traditionally plays a less significant role
in higher
education systems, it is expected
that
the worldwide development of private higher
education will stimulate increasing
public
-
private competition

with effects in

higher
education
’s

supply
. T
his study analyzes the specialization and horizontal differentiation
patterns
in

both sectors, using a sample of countries
where private higher education
assumes great

relevance
. Our results
suggest

that p
rivate institution
s
tend to
offer a low
-
quality and

low
-
cost product
, while
public sector
covers

more costly or risky areas
.


Keywords:

competition, diversification,

higher education,
privatization
,

specialization

JEL Codes
:
I2
,
L3



*Corresponding author

Pedro Nuno Teixeira (
pedrotx@fep.up.pt
)

Faculty of Economics

of University of Porto

4200
-
464 Porto

Portugal

Telephone: 00 351 229 398 790

Fax: 00 351 229 398 799

2


In many countries
,

modern higher education has traditionally been strongly
regulated by state authorities. Seen first as an instrument for promoting the
modernisation of society, and later as an instrument for promoting social mobility and
wealth, higher education has not e
scaped from tight state regulation and the dominance
of public ownership (Neave and Vught, 1991). However, recent developments
profoundly influenced the relationship between the State and
H
igher
E
ducation
I
nstitutions
(HEIs). Changes in public administrati
on and finance stimulated the
emergence of a different context for public intervention. Pressed by increasing financial
constraints and by an increasing cost
-
burden due to massive expansion of the higher
education sector, governments searched for ways of c
oping with this paradoxical
situation, redefining not only their financial role, but also their administrative and
political roles.
This has contributed to the growing role
that

markets or market
-
like
mechanisms have been playing in higher education, with
visible consequences both for
the regulation of, and governance mechanisms behind higher education insti
tutions
(Teixeira et al
.
, 2004
a, 2004b
).

One of the main dimensions for the introduction of market mechanisms has been
the growing privateness of higher

education system
s
. It has been argued that the private
sector, armed with greater administrative flexibility, and driven by financial incentives,
could be more responsive to both niche and new markets

(e.g., Geiger, 1986
; Teixeira
and Amaral, 2001; Correi
a et al., 2002)
. Thus, the private sector was expected to
supply
programs

with a better disciplinary balance,
to

reach a wider geographical area
and
also to
deliver graduates better suited to labor
-
market needs than more rigid public
institutions. There is widespread conviction that, in times of increasingly scarce
resources, markets are more effective than state regulation in promoting system
3


diversity, in te
rms of both institutional types and programs offered.
Moreover, the
emergence of the private sector would launch important competitive forces that would
stimulate the dominant public sector to adapt and become more responsive to societal
and economic needs
.

Recent research has
raised some
question
s about these beliefs on the potential
virtuous role of privatization in promoting increasing diversification in higher education

(
e.g.
,
Welch, 2007; Rossi, 2009
). Some studies have

suggest
ed

that private instituti
ons
were more likely to duplicate what public institutions were doing
, especially by

expand
ing

low
-
cost courses in areas with strong demand

(e.g.
Teixeira and Amaral,
2001
)
. These results
point out

the need
for more
systematic
research into the links
betwe
en privatization and diversification in higher education and for
an

analysis of how
a changing public
-
private mix may interfere with degrees of diversity in higher
education. This paper
discusses the various dimensions of diversity and
explores
empirically

the impact of private higher education development on

a specific type of
diversity


programmatic diversity
-

for
some

European and Latin American
countries
in which

the private sector
has
attained a significant level of enrolments. This is done
through a

set of statistical measures aiming at
quantifying

diversification in higher
education in order to assess empirically the links between privatization and diversity in
this sector.

I.

PRIVATIZATION AND DIVERSITY IN HIGHER EDUCATION

Several conditions
favored

t
he increasing
privatization

of the higher education
systems. One of the major forces promoting the role of private higher education has
been the continuous and strong expansion of th
e demand in th
is sector globally, even in
4


countries and regions where unti
l recently access to higher education was restricted to a
very small minority. This expansion of higher education has been fuelled by societal
and individual forces. At the policy level, governments have increasingly regarded the
advanced qualification of
human resources as a key factor in promoting national
economic competitiveness. In times of growing globalization, the improvement of the
qualification of human resources has become one of the few factors through which
governments can actually contribute t
o enhance national economic performance
(Blöndal

et al.,

2002). This expansion of higher education has also been significantly
pushed by the
behavior

of individuals, since a higher education degree has remained an
attractive personal investment, as shown b
y persistently high private rates of return
observable in many countries. For several decades, this has nurtured the view among
public that higher education graduates should expect enviable prospects regarding long
-
term income and employability, especially

when compared with individuals with much
lower formal qualifications (see Mincer, 1993).

Another critical factor to understand the relative decrease in the dominance of
public higher education is the fact that the recent expansion of higher education has
coincided with a period of increasing constraints on public expenditure that has affected
higher education as well. The difficulties in funding the continuous expansion of higher
education have been a problem for both richer and poorer countries alike. In
the case of
the former, the so
-
called crisis of the welfare state has challenged the sustainability of
the traditional financial reliance of higher education on public funding (see Barr, 2004).
In the case of the countries with lower levels of income, the
financial limitations
associated with a lower fiscal basis have been regarded as a significant obstacle to the
ambition of expanding the higher education system on the basis of public funding.

5


The changes about the funding of higher education were also in
fluenced by the
changing political mood that affected Western countries since the early eighties
that

progressively extended to other parts of the world, with an increasing debate about the
type and degree of government intervention, with the ideological pendulum swaying
towards increasing liberalization and market regulation and restrained govern
ment
reg
ulation (Middleton, 1996
). This was initially more visible in macroeconomic policy,
but then started to pervade social policy in general and educational policy in particular
(Barr, 2004). The discourse about public services became populated by managerial
j
argon and customer
-
orientation

due to

mounting pressures towards greater efficiency in
the allocation of public resources and in the management of public institutions (Cave et
al
.
, 199
7
). Although higher education institutions were recognized as a peculiar

type of
organization

(Win
ston, 1999), many policy makers
have been keen to promote a more
managerial
behavior

by higher education institutions (Amaral et al
.
, 2003). Moreover, in
several countries the promotion of private institutions has been regarded as

an
instrument to foster the assimilation of more efficient practices among public higher
education institutions through a better management of resources.

The arguments used in
favor

of the development of private higher education were
not only related to i
ssues of internal efficiency, but also related to the debates about the
degree of external efficiency of the higher education system (Levy,
1999
). The private
sector was supposed to demonstrate an increased capacity for exploring new market
opportunities a
nd for occupying market niches, by using its higher administrative
flexibility and financial motivation. Private and private
-
like institutions


meaning those
institutions treated as if they were privately owned


were to promote a better balanced
supply o
f higher education from a geographical and disciplinary perspective. A similar
6


rationale was present as regards
labor

market demands, as the expected greater
responsiveness of private
-
type higher education institutions was regarded as a powerful
force driv
ing institutions to supply qualifications more suitable to
labor

market needs.
The changes aiming at strengthening market forces and a greater role of private
initiative in higher education were expected to
favor

the emergence of innovative
behavior

(Geige
r, 1986).

The economic debates about diversification are significantly linked to issues such
as market structure and competition. These tend to have a more reduced role in higher
education, since the degree of market
behavior

and competition plays traditio
nally a less
significant role in higher education systems (Teixeira et al
.
, 2004
a, 2004b
). However,
the current increase in the degree of rivalry (e.g. for public funding for teaching and
research) was expected to promote a more
favorable

context for the development of
innovations. In fact, this is one of the few aspects addressed in the classic study of Ben
-
David (1972), in which he presented diversification/innovation as a result of both the
competition pressure and of the attempts to ga
in a monopoly situation (anticipated
monopoly power). There is a widespread conviction that the ‘market’ will be more
effective than state regulation in promoting diversity of higher education systems, both
in terms of institutional types, of programs and
activities. Geiger (19
8
6) considered that
at times when resources are scarce the fight for survival takes place under market co
-
ordination, and institutions would diversify in search of market niches and new
clienteles.

More recently some authors have ques
tioned this conviction. Meek et al
.

(1996)
considered that institutional responses to increased market competition could lead
institutions to diversify in an attempt to capture a specific market niche, but also to
7


imitate the activities of their successful

competitors.
Later,

Levy (1999) suggested that
under certain circumstances private higher education does not bring organizational
diversity. Hence, it becomes apparent that the complexity of the interactions between
higher education institutions and their

environment does not allow for simplistic
theoretical interpretations, and that it is necessary to collect more empirical evidence.

In the specific case of countries where a late process of privatization played a role
in the massification process, there a
re indications that private higher education has an
overall negative effect in the diversity of the system (Teixeira and Amaral, 200
1
).
Research focused on more recent waves of privatization in Latin America, Asia and
Eastern Europe, where higher education

evolved from a system of almost homogeneous
public or semi
-
public provision to one in which the private sector accounts for a
significant portion of students, has suggested the existence of common patterns of
development and behavior

(see Table 1)
. Privat
e institutions tended to compete for the
same potential students as public ones. In some cases, they were able to reach the
overflow of students from the public sector. In those cases where public institutions
remained the elite of the higher education sys
tem (based on selective recruitment
policies), private institutions catered for mature students or those with lower
qualifications who could not find a place in public institutions.

Table 1 here

The overall picture portrayed by most research analyzing patt
erns of specialization
in the private sector suggest that private HEIs seem to be very concentrated regarding
fields of
study
. Our summary overview of existing literature indicates that private
supply is mostly focused in Social Sciences programs, namely Business and
8


Management, Law, and Economics. Outside Europe it is not unusual that to this group
are normally added the cases
of programs in Computer Sciences and Information
Technologies. The literature comparing patterns of specialization between the private
and public sectors suggest that the former is more likely to either duplicate what public
institutions were doing or to e
xpand low
-
cost courses in areas with strong demand.
However, most of the existing literature has presented limited empirical data to illustrate
those patterns and even less in a competitive way. Thus, a more consolidated knowledge
of the role of privatizat
ion in the degree of higher education supply’s specialization
requires gr
eater attention to both aspects.


II.

MEASURING DIVERSITY IN HIGHER EDUCATION

Diversity has been an important topic of research in higher education for some
time.
Particularly i
n the US
,
the term “diversity” is most often applied to concerns about
the composition of the student body,
mainly

in terms of gender, or race (e.g., Hurtado
and Dey, 1997). In many other parts of the world
experiencing
more recently the
“massification” or expansio
n of higher education systems, the term

diversity


has been
emphasized with regard to variety in the organization or products of higher education:
differences among the programs or services provided by academic institutions and
differences among the types

of institutions themselves (
Van Vught, 2009)
.

The existing literature on diversity in higher education presents some significant
weaknesses. One of the major limitations has been its narrow focus of analysis,

often
ignoring that diversification can be understood at several different

levels (Dill and
Teixeira, 2000
).

H
igher education diversity can correspond to multiple activities, which
generally could improve the working of the system, with clear advantages
to HEI
s

9


themselves. First,
it
would be the development of new products, either in areas where
the
institution

currently operates (product differentiation) or in others more or less close
to those in which the
institution

already operates (exploring economi
es of scope) (Cohn
et al. 1989)
1
. Second, HEIs can diversify by developing more effective ways of
organizing the educational provision. This can operate either on the administrative or in
the pedagogical dimensions. Examples in the former are changes in it
s executive
structure, in its distribution of competencies and power that can turn the educational
branch

more flexible, more effective or more responsive to the institution’s users. In the
latter we can integrate those changes that promote a more effectiv
e learning or research
activity. Third, another possible dimension of diversification in higher education would
be the result of changes in the educational production function, by using new
combinations of inputs or new inputs. Changes can be due to a more

intensive use of
either labor or capital, by developing teaching programs that emphasize a more
personal/effective teacher
-
student relationship or a stronger emphasis on better material
conditions. Changes can also take place in the adoption of inputs tha
t are not usually
used in the higher education activities. Fourth and finally, diversification can occur by
the expansion of the academic activities to markets currently unexplored. The concept
of market is obviously not restrained to a geographic dimensio
n and can include the
integration of students of non
-
traditional groups, research activities or services to non
-
traditional demand.

In this study, we are interested

in understanding the different

specialization
patterns
and horizontal differentiation
-

in
terms of
educational fields

-

between public

and
private sectors
,
by
attending on a sample of countries where private higher education
has been gaining a rising role and relevance

over the past years
.
In particular, we
10


address whether private HEIs are all
supplying the same fields of education or, in
opposition, if they are specialized in some particular areas. Accordingly, we focus on
two particular interrelated measures: specialization and diversification. In brief, the
higher the specialization levels of

sectors, the lower will be their diversification, since
diversification captures how each specific sector is changing the mix of educational
fields

offered by each specific sector
. Thus, a sector will be more diversified if the range
of educational fields

offered
is wide

or more specialized
if it

suppl
ies

a narrower
combination of areas relative to the overall possible range of areas.

In order to make both concepts computable with synthetic indicators, we first need
to identify one or more HEIs’ characteri
stics of interest with respect to which the above
concepts can be applied. Due to limitations at availability and comparability of data
across the sample of countries considered, our analysis is restricted to the number of
enrolled students in each sector,

disag
gregated by educational field
s
.

To

measure in what extent each sub
-
sector is “specialized” in a particular
educational area relative to the national average, we follow

Rossi (2009)
by applying
the Revealed Comparative
Advantage
2


(RCA) index developed in international
economics by

Balassa (1965)
.

Accordingly, the specialization index of
sector

j

in
educational field
i
,
S
ji
, is defined as follows:

(1)


S
ji

= ((x
ji
/X
j
)/(x
i
/X)),



where:

x
ji

= number of enrolled students
in
sector
j

and
in educational field
i
;


X
j

= total number of enrolled students
in

sector
j
;

11


x
i
= number of enrolled students in educational field
i

from all institutions in both
sectors
;

X

= total number of enrolled students of all institutions
from both sectors
in the country
;

j

= legal status of the sector: {private
,

public}
;

i

= educational field according to the UOE manual
3
.

This index only takes positive values, so that
values smaller than 1 mean that sector
j

is relatively under
-
specialized in educational field
i
, whereas valu
es greater than 1
imply that sector

j

is relatively over
-
specialized in the area. However, to avoid problems
associated with the sensitivity of the index to the size of
sectors
, we normalized
S
ji

following

Brusoni and Geuna (2003, 2004)

as follows:

(2)



N
S
ji

= (
S
ji
-
1
)/

(S
ji
+1
),


Now, the index may take values in the ran
ge [
-
1,1] and indicates whether

sector
j

has a higher
-
than
-
average “activity” (
NS
ji

> 0) or a
lower
-
than
-
average “activity” (
NS
ji

<

0) in a particular educational field

i
.

To capture the level of diversification of
each sector
, we constructed a
“diversification index” based on the inverse of Herfindhal
-
Hirschman index

and
commonly used in
industrial organization to measure the market concentration

(Pepall
et al., 2008)
. Following Rossi (2009), we compute the diversification index for each
sector

as indicated below:

(3)


D
j

= (

i

(1/[(x
ji
/X
j
)]
2
)
-
1
,

12



where, as previously,
x
ji

is the number of
enrolled students

in

sector
j

and
in
educational field
i

and
X
j

corresponds to total number of
students

in

sector

j
. This
diversification index shows how wide the range of educational fields
of each sector

is,

based on
the relative weight of each educational field for the
sector

j
. Thus, low values
of
D
j

imply that
sector
j

is more specialized, while higher values mean that
the
sector

is
more diversified.
D
j

assumes values between
1

and
n

(the overall number of education
al
fields)
.This index can also

be normalized to take values in the range [0, 1] as follows:

(4)


ND
j

= (
D
j
-
1) / (
n
-
1)
.




These indicators provide a suitable quantification of specialization and
diversification in higher education and were considered in the analysis of the dynamics
of diversity and relative specialization of
countries’

higher education system
s
.


III.

SPECIALIZATION AND DIVERSIFICATION OF PUBLIC AND
PRIVATE HIGHER EDUCATION SECTORS

In order to perform quantitative analyses of specialization and diversification
patterns of public and private sectors, this study relies on data made available by the
statis
tical offices of
Albania, Argentina, Brazil, Chile, Mexico, Poland and
Portugal
4
.
For each country, we have used data on total enrolled students by educational field and
by sector, for the most recent year for which reliable data was available.

In Table 2
we present some statistics to briefly characterize the private sector of the
countries in the sample. Besides the information on the maturity of the private sector
and the period of its expansion, we provide data on
the dimension of the private sector,
13


bot
h regarding the number of private HEIs, but also regarding the volume and share of
enrollments absorbed by the private sector. The average number of students enrolled by
private HEIs corresponds to the ratio of total number of students enrolled in private
sector to the total number of private HEIs, in order to provide a measure of the average
dimension of private institutions in each country. Additionally, we present the growth
rate of enrolments resulting from the following expression:

Growth rate of
E
nro
lments
t
-
s, t

= (Total Enrolments
t



Total
E
nrolments
t
-
s
)/Total
Enrolments
t
-
s
5
.

In order to turn the results on the growth rate of enrolments comparable among
countries, we normalized the rates, by converting them into annual average growth
rates, which corresponds to the rate that enrolments would have grown if the growth
occurred at

a constant rate. This was obtained through the formula:

Average growth rate between periods i and j
=
,


with
X
j

and
X
i

corresponding to the total number of students enrolled in years
j

and
i
, respectively
.

Table 2 here

The choice of these
countries is related to the rising role and relevance that private
higher education has been assuming

in their higher education systems
. Furthermore,
as
the data on Table 2 indicates,
these countries have very different experiences, namely
concerning the
ir

national histories and traditions

of private higher education
, which
allows us to explore in what extent the specificities of each country’s private sector may
influence the respective patterns of specialization

and diversification
. Notably, the
14


countries

differ regarding

the relative weight assumed by private sector, as Figure 1
depicts.
In fact,
whereas

in countries like Brazil the private sector account for about
75% of total enrolled students, the share of private sector in Albania
is

less than 7%.
Bey
ond Chile, where private sector currently absorbs almost 50% of total students in
higher education, the relative weight of private HEIs range
s

between 20% and 35% in
the remaining countries.
These dissimilarities may, in some extent, explain the
potential
differences found at diversification patterns among private and public sectors within
each country.
In particular, the “age” of the private sector and the relative share it
assumes
in the system
may act as moderating factors of differentiation and
speciali
zation patterns among sectors.

Figure 1 here

Figure 2 illustrates the diversification levels of public and private sectors,
allowing
the observation of the
relative
distance among sectors within each country,
as well as an
international comparative portra
it.
Overall, the results show that the public sector is
much more diversified (thus,
less concentrated and
less specialized) than
the
private
sector, whatever the country analyzed.
This is even more striking since the share of
enrolments in the public

sector var
ies

enormously between these countries, and yet their
degree of
diversification
is rather similar.
In contrast, private HEIs seem to present
lower diversification, thus
higher concentration

levels
, being more focused on particular
educational fie
lds.

The disparities between private and public sectors are greater in
Albania, followed by Poland and Brazil, while in the remaining countries
less distant
diversification patterns

among private and public HEIs

are found.


Figure
2

here

15


Table 3 reports
the normalized average specialization index (
NS
ji
) for public and
private HEIs throughout the eight educational fields of UOE manual
6
.
As for the
computation of the diversification index
,

t
he
specialization
indexes were computed
using data on total enrolle
d students for the most recent year for which the data were
available. The shaded areas indicate the cases of relative over
-
specialization of each
sector.

Table 3 here

From the analysis of results, a clear pattern arises, as in almost all cases the index
highlights the over
-
specialization of private HEIs in Social Sciences, Business and Law,
as well as in Health and Welfare, in opposite to
H
ard
S
ciences
, where they tend to be
under
-
specialized. Similar outcomes were obtained for Argentina, where the private
sector has a definite specialization in
S
ocial
S
ciences, and Mexico, where
S
ocial
S
ciences,
E
ducation and
H
umanities constitute the fields where priv
ate HEIs are
mostly
concentrated. In some particular cases, we also observe a relative over
-
specialization of
the private sector, though weaker, in
E
ducation
and
S
ervices. In contrast, the main focus
of public HEIs, though less distinctive, seems to be the

H
ard
S
ciences and very often
the fields of
H
umanities and
A
rts.

Several aspects can be discussed when analyzing these different degrees of
specialization of the private sector vis
-
à
-
vis the public one
, namely
the different sectors’
specificities accordin
g to the country’s history, as we previously
advanced

in

Table 2. In
particular, s
uch differences between private and public sectors may be partly explained
by differences in

the maturity of private sector, in the

relative share of private HEIs, in
average

size and resources available for each group of institutions
, or even in the
16


specific setting analyzed
.
Next section raises the debate on this matter, by briefly
discussing each of these potential
explanatory

factors.



IV.

POTENTIAL EXPLANATORY FACTORS FOR
DIVERSIFICATION
AND SPECIALIZATION PATTERNS OF PRIVATE HEIs


The contrast between the results obtained and the widespread policy expectations
regarding the development of private HEIs
indicates the need of

significant reflection
about potential factors tha
t may help us to make sense of that apparent paradox. One of
the first aspects to consider

is the level of maturity of the private sector.

Rossi (2009),
for instance, recognizes that older institutions tend to reduce their diversification levels
and that p
ublic and private sectors’ diversification seems to have converged over time.
On the other hand, one can also argue that younger institutions may tend to concentrate
in a few areas of activity and with time eventually diversify their activity.

In our case,

if
o
n the one hand, the largest differences can be found for Poland and especially for
Albania, both of which have seen a more recent development of their private sectors
(especially the latter, which is also the one presenting wider differences)
;

o
n the
other
hand, other countries included in the comparison, such as Brazil, Mexico and Portugal
have experienced private higher education for several decades and
,

despite its earlier
development
,

large differences persist between the degrees of
diversification

of the
private and public sectors, as measured by our index. Thus, it seems that although
private sectors may reduce their levels of specialization in more mature stages, they still
present a much more significant degree of specialization
tha
n

their publi
c counterparts.

17


Another
explanatory
factor

worthy to be considered,
when analyzing
the patterns of
specialization of the public and private sectors, is

the
relative
size of the private sector.
In the case of the countries
analyzed
, c
ases
such as

Brazil and

Chile suggest that larger
private sectors tend to present a less specialized picture than countries like
Alban
ia

or
Poland, whose private sectors absorb a smaller share of their higher education
enrolments. However, this relationship between size and specialization is by no means
straightforward. In fact, Portugal and Argentina present much less specialized private
s
ectors than Brazil, despite the fact that their private sectors enroll a much lower share
of students
tha
n
the Brazilian private sector. Moreover, countries with similar shares of
students enrolled in the private sector, such as Portugal, Mexico and Poland
, present
noticeable differences regarding degrees of specialization.

Another relevant explanatory factor may be the size of higher education system and
the number of HEIs in a particular country

(Huisman et al., 2007
).

The countries
included in this study

suggest that a larger system does not necessarily imply a high
level of diversity. In particular, we see that Brazil and Mexico have the largest systems
but, in opposite, display very different patterns of diversity. In contrary, Albania has a
small highe
r education system and
presents a
much

diversified public sector and a much
more specialized private sector.

Another interesting aspect to
be
explore
d

is

to what extent the average size of
private institutions seems to matter for the levels of specializat
io
n.
Private HEIs are
often smaller than public ones, beyond their lower resources, which may justify their
stronger focus on educational fields where the average costs per course and the initial
investment are lower and withal have attracted the most enro
lments in recent years.

Accordingly, the great orientation of private HEIs towards comparatively stable and
18


underserved segments of the educational market
seems to be a natural outcome, thus
justifying their stronger specialization in Social Sciences, Business and Law.

Finally, the specific context observed
in the private sector, namely if the sector is
experiencing a stage of expansion, decline or stagnati
on, may influence the respective
patterns of diversification and specialization. This relationship
was not yet discussed in
the literature and the results obtained
in this study
do not allow
, for now,
a perfect
evaluation of this link. However, we raise th
e debate
and claim for deeper research
on
this issue, as declining private sectors may present a very distinct pattern of
diversification compared to the expanding private sector
, though the effects do not seem
to be straightforward
.
On the one hand
, a dec
lining private sector may stimulate
institutions to explore as much market niches as possible in order to minimize the
effects of overall decline.

On the other hand, an adverse demand situation may lead
private institutions to focus on their core areas of
activity. The countries
analyzed

in our
study confirm that both effects are plausible and that the strength of each may vary from
case to case.


V.

CONCLUDING REMARKS


The promotion of market mechanisms in higher education and the growing
visibility of private higher education worldwide were significantly based on a set of
expectations regarding the novel elements that more privateness could bring to higher
education. On
e of the main expectations concerned the emergence of more responsive
HEIs to higher education and labor market demands. It was argued that privatization
could make HE supply better balanced from a disciplinary perspective, reaching a wider
19


geographical ar
ea than traditional institutions and turn out graduates better suited to
foreseeable labor
-
market needs. Since recent research in higher education has
questioned the validity of those beliefs, we decided to explore further this issue.

In this paper we foll
owed a perspective slightly different from most of the previous
literature in diversity in higher education. By drawing some analogies with the literature
in innovation, we attempted to explore empirically a broader concept of diversification
(Dill and Tei
xeira, 200
0
).
Despite the increasing attention to diversity in policy debates,
few studies have hitherto attempted to address this issue from an empirical point of
view, either in the sense of cross
-
national comparisons or longitudinal analyses of
system d
iversity.
However,
empirical investigations of diversity are indispensable from
a policy perspective, as if it is not known how and why diversity evolves from country
to country, policies are ill
-
informed and run the severe risk of being ineffective
(Huism
an, 2000; Huisman et al., 2007)
.
In this study, (programmatic) diversity
was
assessed through a set of statistical indexes that aimed at measuring the degree of
diversi
fication and specialization

in the higher education system as a whole and in sub
-
sectors

for the aforementioned dimensions. Since our interest was basically in private
higher education, we systematically compared the same indexes for both public and
private sub
-
sectors, in order to improve our understanding of the complexities
associated with

privatization and diversity in higher education.

The results presented in this paper seem to confirm previous work that has
challenged some of the expectations surrounding the expansion of private higher
education. They nevertheless provide a far more sys
tematic tool of analysis of assessing
the patterns of diversity of private higher education

and its comparison with the
20


situation in the public sector
, as the approaches adopted in the literature were mainly
qualitative

or based on very basic statistics
.

A

possible explanation for this contrast between empirical results and beliefs about
privatization has to do with the context in which many of these private sectors have
developed. The pressure for expansion has created a favorable regulatory context to thi
s
pattern of development of the emerging private sectors, since the political and social
pressures for a rapid expansion were very strong. In weak regulatory frameworks,
private institutions tended to focus on short
-
term managerial solutions rather than on

academic goals, as shown by their poor (or even non
-
existent) research activity and
staffing policies (Teixeira, 2009). Private institutions tended to offer a low
-
quality, low
-
cost product that maximized short
-
term benefits, instead of a product that in t
he long
run would offer them better prospects of survival. Even when private institutions
achieved some credibility, they avoided certain areas of higher education provision and
certain students, replicating a narrow version of public sector supply instead

of
complementing it. To the public sector was left to cover more costly or risky areas.
Thus governments may count on the private sector to expand the system, but less likely
to increase diversity.

We trust this paper may provide a stimulus for a broader
approach
to diversity in higher education and for a more thorough and empirically
-
rooted analysis
of the profile of private higher education and its dynamics of development.





21


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26


TABLES

Table 1
.

Specialization patterns of private HEIs
-

cross
-
country comparisons


Country

Educational fields where the private sector is relatively
specialized

Reference

Africa

South Africa

Information Technology, Business and Commerce

Asmal (2003)

Business, Commerce and Management Studies

Kraak (2003)

Subotzky (2003)

Ethiopia

Business Administration, Computer Studies and Information
Technology

Teferra (2005)

America

Brazil

Administration, Law, Accounting, and Economics

Schwartzman (1997)

Mexico

Finance, Business, Accounting, Computing and Humanities

Kent and Ramírez (1999)

Accounting, Marketing and Business

Silas (2005)

Argentina

Social Sciences and Humanities

De Cohen (2003)

Uruguay

Business Administration, Computer Science, Education and
Psychology

Couture (2005)

Asia

Philippines

Business and Engineering

James
(1991)

Israel

Economics, Law and Management

Guri
-
Rozenblit (1993)

Vietnam

Business Administration, Foreign Languages, Accounting and
Information Technology

Huong and Fry (2002)

Indonesia

Education and Social Sciences

Welch (2007)

Europe

Russia

Management, Business and Market Economy subjects

Kodin (1996)

Law, Economics and Social Sciences

Fried et al.
(2007)

Ukraine

Business, Law, Education and Medicine

Stetar and Stocker (1997)

Law, Economics and Management

Stetar and Berezkina (2002)

Law, Economics, Social Sciences and Humanities

Fried et al.
(2007)

Hungary

Computer Sciences, Management, Business and Teaching of Foreign
Languages

Nagy
-
Darvas (1997)

Czech Republic,
Hungary, Poland
and Romania

Business and Management, Computer
Science and Pedagogy
(Teaching of foreign languages)

Giesecke (1999)

Portugal

Law, Economics, Business and Health

Amaral and Teixeira (2000)

Teixeira and Amaral (2001)

Social Sciences, Commerce and Law

Correia et al.
(2002)

Law, Economics and
Social Sciences

Fried et al.
(2007)

Poland

Business, Management, Education, Political Sciences and Computer
Sciences

Duczmal (2005)

Economics and Social Sciences

Fried et al.
(2007)

Romania

Law, Economics and Humanities

Nicolescu (2005)

Fried

et al.

(2007)

Albania, Germany

Law, Economics and Social Sciences

Fried et al.
(2007)

Austria

Economics and Social Sciences

Fried et al.
(2007)

Bulgaria

Economics, Social Sciences, Technical Sciences and Humanities

Fried et al.

(2007)

Estonia and
Spain

Law, Economics, Social Sciences and Technical Sciences

Fried et al.
(2007)

Turkey

Law, Economics, Social Sciences and Humanities

Fried et al.
(2007)

Italy

Law, Economics, Social Sciences and Arts

Fried et al.
(2007)

Social Sciences, Arts and
Humanities

Rossi (2009)


27


Table 2
.

Basic data on the
p
rivate sector for the
c
ountries analyzed


Establishm
ent of first
private HEI

Period of
expansion of
the private
sector

Number
of private
HEIs
a)

Number of
students
enrolled in
private
sector
b)

Share of
private sector
in enrolments
b)

Average
number of
students
enrolled

by
private
HEI

b)

Growth rate
of
enrolments

Annual
average
growth rate
of enrolments

Albania

2000

2000s

15

5
,
761

6
.
6%

384

486
.
1%
c)

142
.
1%

Argentina

1959

early 1990s

57

317
,
040

19
.
9%

5
,
562

40.
0
%
d)

8
.
8%

Brazil

1940

late 60s

2,016

3,806,091

75.0%

1,888

16
.
7%
e)

5
.
3%

Chile

1888

late 70s?

44

273,357

47.5%

6,213

54
.
2%
f)

9
.
0%

Mexico

1935

late 80s and
early 90s

1
,
786

874
,
314

33
.
3%

490

23
.
4%
g)

5
.
4%

Poland

1989

early 1990s

278

659
,
396

34
.
2%

2
,
372

13
.
6%
d)

3
.
2%

Portugal

1964

late 70s

98

90
,
564

24
.
3%

924

-
8
.
2%
f)

-
1
.
7%

a)

Data for 2010 except for Albania (2006);
b)

All data refer to 2008/2009 except for Albania (06/07), Mexico (07/08) and Chile
(09/10);
c)

Between 2004/05
-

2006/07;
d)

Between 2004/05
-
2008/09;
e)

Between 2005/06
-
2008/09;
f)

Between 2004/05
-

2009/10;
g)

Between 2003/04
-
2007/08
.




Table
3
.

Specialization of public and private sectors (
NS
ji
)
a



Portugal

Brazil

Chile

Poland

Albania



Public

Private

Public

Private

Public

Private

Public

Private

Public

Private

Education

-
0,01060

0,03203

0,26112

-
0,13384

-
0,03549

0,03651

-
0,08751

0,13403

0,05451

-
0,76732

Humanities and Arts

0,03161

-
0,09554

0,23580

-
0,11491

-
0,01769

0,01886

0,07836

-
0,19553

0,03390

-
0,47729

Social Sciences, Business
and Law

-
0,03886

0,11746

-
0,30257

0,07200

-
0,10335

0,09384

-
0,10078

0,14974

-
0,02469

0,34756

Science

0,11229

-
0,33939

0,13749

-
0,05624

0,12238

-
0,18227

0,06867

-
0,16527

0,04268

-
0,60085

Engineering, Manuf. and
Construct

0,10881

-
0,32888

0,19426

-
0,08758

0,18649

-
0,33949

0,17582

-
0,69589

0,03167

-
0,44590

Agriculture

0,18215

-
0,55057

0,40156

-
0,28888

0,09726

-
0,13523

0,17363

-
0,67830

0,07103

-
1,00000

Health and Welfare

-
0,06103

0,18448

-
0,13152

0,03737

-
0,13172

0,11401

0,06780

-
0,16266

-
0,02276

0,32038

Services

-
0,03554

0,10741

-
0,16757

0,04574

0,05709

-
0,07174

-
0,08999

0,13704

-
0,00662

0,09314


a

Shaded areas indicate the cases of relative over
-
specialization, with positive values for
NS
ji






28





1

By economies of scope we try to assess to what extent production complementarities exist among the
outputs, i.e., if it is cheaper to produce all the outputs in conjunction rather than separately.

2

Balassa’s
index
of relative export performance by country and industry, defined as a country's share of
world exports of a good divided by its share of total world exports. The index for
country

i

good

j

is

RCA
ij

=

100(
X
ij

/
X
wj
)/(
X
it

/
X
wt
) where

X
ab

is exports by country

a

(
w
=world) of
good

b

(
t
=total for all goods).

3

The UOE manual considers eight educational fields:
Education

(Teacher training and education
science),
Humanities and Arts
(Arts; Humanities),
Social sciences, business and law
(Social and
behavioral science; Journalism and information; Business and administration; Law),
Science

(Life
sciences; Physical sciences; Mathematics and statistics; Computing),
Engineering, manufacturing and
construction

(Engineering and engineering trade
s; Manufacturing and processing; Architecture and
building),
Agriculture

(Agriculture, forestry and fishery; Veterinary),
Health and welfare

(Health; Social
services) and
Services

(Personal services; Transport services; Environmental protection; Security
s
ervices).

4

For Portugal, data was collected from Ministry of Science, Technology and Higher Education (MCTES


GPEARI). For Brazil, we have accessed to data through the Ministry of Education and INEP. For Chile,
data was made available by the Chilean Mini
stry of Education (DIVESUP). Similarly, for Argentina, data
was collected through the website of Ministry of Education (SPU). For Mexico, data comes from the
official offices, namely INEGI, ANUIES and SEP. For Poland, data was obtained from the Ministry of

Science and Higher Education and finally, for Albania, we have used data from the official statistics of
INSTAT and MASH.

5

Detailed information about
t

and
t
-
s

for each country is presented in the Table 2.

6

The results for Argentina and Mexico are exclu
ded from the table, since different classifications of
educational fields are used by the official statistical offices from which the data was collected. However,
the results are available upon request to the authors.