Higher education between government policy and free market forces: The case of Israel

Abstract

Abstract. In recent years Israel's system of higher education has undergone a revolutionary transformation, leading to a sharp rise in the number of students, establishment of new degree-granting institutions, and shifts in legislation and policy. All these have changed dramatically, arousing profound public debates centering on one major issue: how to reconcile academic freedom, as manifested in a free academic market, with the regulation of higher education. This study explores three main processes that occurred within Israel's higher education system since the reform in the early 1990s and attempts to identify their causes. The research findings show that it was the government's decision to carry out a reform, rather than free market forces that led to the considerable rise in the number of applicants for academic studies. However, free market sources were found to affect admission terms to the various departments, guided by trends of demand and supply.Key words: Public Policy, Higher Education, Israel, free market forces, regulationJEL classification: A2, I2IntroductionIsrael's system of higher education has undergone an extensive process of development since the state was established. During this time, the number of degree-granting institutions has risen, with a concurrent rise in the number of undergraduate and graduate students1 (Davidovitch & Iram, 2014).The agency responsible for promoting this system is the Council for Higher Education (CHE), headed by the Minister of Education, and most of its members are high-ranking higher education professionals. In addition, the CHE operates the Planning and Budgeting Committee (PBC).In 1993 these agencies, in charge of formulating higher education policy, initiated a reform2 that for about a decade led to an extensive transformation of structured opportunities for acquiring an academic education in Israel. As a result of this reform, Israel's system of higher education changed dramatically, and since the early 1990s the universities were joined by many colleges, creating a more extensive and open framework of higher education encompassing a wide range of fields.The meteoric growth in Israel's higher education had negative impacts on the system as well, with a decrease in the quality of academic instruction and learning, cutbacks in government funding of schools and universities, and a drop in the ratio of students to senior faculty, which had been about 16 students to each senior faculty member in the mid-1990s and dropped to 25 students per senior faculty member in the first decade of the 2000s.Moreover, the entrance of foreign extensions, the establishment of nine new privately-owned institutions, and the expansion of the number of public colleges led to fierce competition, with a detrimental effect on the quality of both students and faculty. All these had a negative impact on Israel's system of higher education and aroused criticism.This criticism of the quality of higher education and of the constant budgetary crises (voiced predominantly by the universities) led the government to establish a committee that in 2007 presented its recommendations on improving higher education (Volansky, 2007).In light of these trends and effects, the current study shall attempt to analyze the justifications underlying regulation processes undertaken within Israeli higher education and to determine whether these intervention processes stemmed from a preplanned and defined government policy or whether they were simply responses to actions and failures of the free market. First, however, we shall present the basic justifications for the regulation processes undertaken towards the activities of the free market.Fundamental justifications for regulationThe fundamental justifications for regulation processes derive from the nature of the government's activities vis-a-vis the free market. Advocates of government intervention in activities of the free market offer several justifications for regulatory actions:1. …