In April 2004, the OECD Education Committee embarked on a comprehensive international review of tertiary education policy, the OECD Thematic Review of Tertiary Education. Its goal was to help countries share innovative and successful initiatives and to identify policy options to maximise the contribution of tertiary education to national economic and social objectives. In addition to this publication, the Review generated 24 reports by participating countries, 14 reports by external review teams (released as a publication series, OECD Reviews of Tertiary Education) and several research papers. This OECD project provides probably the most comprehensive analysis ever undertaken of tertiary education policy issues at international level.

Valuable comments on draft chapters were provided by members of the OECD Secretariat, members of the OECD Education Policy Committee, national co-ordinators of participating countries, and researchers and international agencies associated with the work.

Tertiary education policy is increasingly important on national agendas. The widespread recognition that tertiary education is a major driver of economic competitiveness in an increasingly knowledge-driven global economy has made highquality tertiary education more important than ever before. The imperative for countries is to raise higher-level employment skills, to sustain a globally competitive research base and to improve knowledge dissemination to the benefit of society.

Tertiary education policy is increasingly important on national agendas. The widespread recognition that tertiary education is a major driver of economic competitiveness in an increasingly knowledge-driven global economy has made highquality tertiary education more important than ever before. The imperative for countries is to raise higher-level employment skills, to sustain a globally competitive research base and to improve knowledge dissemination to the benefit of society.

This Chapter provides the context for analysing tertiary education policy. First, it summarises evidence on the impact and relevance of tertiary education, in particular its effect on economic growth and the benefits it brings to both individuals and societies. Second, it describes the main trends within tertiary education, with particular emphasis on growth and diversification, and reviews the contextual factors affecting the development of tertiary systems. Finally, it identifies the challenges currently facing tertiary education systems and which are addressed in subsequent Chapters. Countries are in the process of making a transition from a focus on quantity to a greater emphasis on the quality, coherence, and equity of tertiary education giving considerable room for tertiary education policy to play a role.

When the OECD was formed in 1961, tertiary education was not a leading concern of most member governments. Tertiary education, which was typically synonymous with university education, was not seen to be central to the well-being of most citizens or to the fortunes of national economies. Rather, it was a means of training members of learned professions, scholars, and civil servants.

Funding mechanisms are especially important in shaping tertiary education outcomes in areas such quality, efficiency, equity and system responsiveness. This Chapter analyses approaches to funding tertiary education which assist tertiary education systems achieve their goals.51 It reviews a number of principles for funding tertiary education, provides an overview of approaches to funding tertiary education in participating countries, and summarises the empirical evidence on the impact of specific approaches to funding tertiary education. It includes overall funding strategies, mechanisms to allocate funds to individual tertiary education institutions (TEIs), and strategies to assist students cover the costs of their participation. Particular attention is given to policy initiatives in participating countries. The Chapter concludes with a set of policy options for countries to consider.

With the move towards knowledge-driven economies and societies, education has never been more important for the future economic performance and relative economic standing of countries, but also to allow individuals to perform and fully participate in the economy and society (OECD, 2007a). In this context, broad participation in tertiary education is only one side of the coin. The quality of education delivered is equally important to ensure that tertiary graduates are effectively equipped to participate in the new economy and society at large, and that they are prepared to subsequently engage in lifelong learning activities to update their knowledge and skills as the knowledge frontier moves further. As a result, the issue of quality provision has received growing interest from the various stakeholders over the past two decades.

Equity is increasingly prominent in countries’ tertiary education policies. More attention is being focused on learners with more limited opportunities to access and succeed in tertiary education due to circumstances unrelated to their ability to benefit from tertiary education. This Chapter analyses equity in tertiary education. It defines what equity at tertiary education level entails, recognising that it is affected by inequities in previous levels of education. It provides an overview of contextual developments affecting equity in tertiary education and reviews current equity trends. It also offers an overview of the range of factors which affect equity in tertiary education, reviews available empirical evidence, and illustrates policy initiatives in participating countries. The Chapter concludes with a set of policy options for countries to consider. Equity issues related to approaches to funding tertiary education are discussed in Chapter 4 and are only briefly mentioned in this Chapter. In addition, the Chapter focuses on equity in tertiary education and only briefly addresses equity through tertiary education (or the social mobility effects of tertiary education).

This Chapter focuses on the role of tertiary education institutions (TEIs) in research and innovation. A central reason for looking at the tertiary education system in an innovation context is that in all OECD countries governments finance not only education infrastructure costs, but also a large proportion of gross expenditure on research and development (R&D), which flows to universities and other TEIs. One rationale for this sizable funding is the direct and indirect support given by the tertiary education sector to the overall innovation effort. This Chapter will therefore analyse the role(s) of tertiary education from a research and innovation perspective. It reviews the empirical evidence and analyses the governance of tertiary education research. Finally, it concludes by outlining policy options for enhancing research and innovation for countries to consider.

Fundamental requirements for institutions of tertiary education to achieve their missions are that motivated people with high-level knowledge and skills choose to become academics, strategies to facilitate their work are in place, and that effective academics wish to remain in academia. The academic profession needs to be competitive with other occupations in attracting talented people and the management of academic resources needs to ensure high levels of motivation within the profession. This Chapter reviews the trends and developments in the work of academics and analyses the main features of the academic profession in the countries reviewed. Whilst the tertiary education sector and the academic working environment are becoming increasingly diversified and complex, a number of broad trends affecting academic work and changes in staffing policies seem to be common to many countries. The Chapter further reviews factors which affect the attractiveness of the academic profession and those which influence the effectiveness of academics. It includes descriptions of policy initiatives in participating countries, and develops policy options for countries to consider.

Tertiary education has become a central means by which young adults equip themselves for working life – or working adults refresh their skills. In some countries it is now the leading means by which they do so, accounting for a larger share of new entrants to the labour market than any other education or training pathway. In OECD countries, nearly one third of adults between the ages of 25 and 34 hold a tertiary qualification. In the Republic of Korea, about one-half do (OECD, 2007a).

Internationalisation features among the key transformations of tertiary education provision in developed industrial countries since the late 1980s – alongside the massification of participation. Despite signs of international student and academic mobility in medieval European universities, which was facilitated by the common use of Latin (Scott, 2000), international activities have in more recent times long been bound to research. Teaching and learning remained essentially national, both in terms of student populations as well as in terms of provision. The national oversight of tertiary education found its expression in a long tradition of State-funded tertiary education institutions (TEIs) in many OECD countries.

Education constitutes one area of public intervention in which reform is a recurrent theme. This is all the more true of tertiary education where in the past decades, structural changes in the external environment, participation patterns and growing demands from the sector have called for its modernisation and new models of governance, funding, quality assurance, relations with stakeholders etc.

Over the past few decades tertiary education systems have experienced significant transformations. Globalisation and the development of knowledge-based economies have put new demands and pressures upon tertiary education institutions (TEIs). Tertiary education is increasingly expected to satisfy the needs of the economy and society, meet requirements for accountability and build closer links with a variety of stakeholders. During the past 20-30 years, the tertiary education landscape has changed a great deal, with increasingly diverse student populations and the emergence of new types of institutions and modes of study. Growing constraints on public funding, together with the expansion of tertiary education and the emergence of new demands, have encouraged the development of new patterns of financing and management.

In the country-specific background reports and detailed analyses of external teams, the Review has identified several areas where data or research gaps impair policy diagnosis and informed policy making. These information gaps can be grouped along the broad areas of tertiary education supply and demand, access and participation, human and financial resources, and completion and outcomes. In some cases, it would be sufficient to address these gaps at the system level while information at institutional level would be desirable in other instances.