Structural Analysis of the Competitive Environment for Education and Research Provided by Universities in Japan

Author Name DOI Ryoji  (Consulting Fellow, RIETI)
Creation Date/NO. August 2007 07-P-003
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Reform of universities is now one of high on the Japanese Cabinet agenda, intensely debated by the newly established Education Rebuilding Council chaired by the prime minister. Issues to be discussed in this area are multidimensional and complex in character; ranging from how to fund and manage innovative research in globally cutting-edge fields, to how to remedy financial problems of private universities that persistently operate under a deficit as a result of population aging-related shortages of students. In this paper I take a bird's-eye view of the entire market structure of the education and research provided by national, public, and private universities, and, by using effective competition review methods I analyze the competitive environments of the vertically divided markets of education and research provided by universities, and provide a simplified picture of structural problems existing in the hierarchy of Japanese universities.

In the first section of the paper I set out the abovementioned objectives, and in the second section I define the disparities in the competitive environment that have mainly arisen from the gap between demand (students) and supply (university organizations and faculty), and then analyze the characteristics of the national and regional supply structure of national, public, and private universities. In the third section I first identify the shift of financial policy from institutional subsidies to competitive funds, analyze the characteristics of subsidies and funds by type of university, and then set out factors for consideration with regard to competitive research funds and their incentive mechanism. Finally, in the fourth section, I describe the three-tiered structure of competition between universities, reflecting on the differences between domestic and international competitive environments and set out the points at issue, including such matters as incentive mechanisms, appropriate to each tier.