IF YOU LEARNED that the top dogs in a particular market were the same as 100 years ago, you would probably surmise that the business concerned had suffered a century of stagnation. In the case of higher education, which has been dominated by American universities since the early 20th century, you would be quite wrong. It grew slowly for the first quarter-century, gathered pace in the middle half and took off in the fourth quarter. You might then conclude that the top dogs were truly outstanding, or that there was something very odd about the market. In the case of higher education, you would be right on both counts.

America gave the world the modern research university. The American elite imported the model of the Oxbridge college in the 17th century to give its rough sons a polish. In 1876 the trustees of the estate of Johns Hopkins, a banker and railroad magnate, decided to use what was then the largest bequest in history to marry up the Oxbridge college with the research university, an institution the Germans had developed at the beginning of the 19th century. Both private and public universities adopted the model, and Harvard, Yale, Princeton, Caltech and the rest of America’s top rank emerged as the prime movers of the world’s intellectual and scientific life shortly afterwards.

These institutions have produced a startling number of the inventions that have made the world safer, more comfortable and more interesting. “Imagine life without polio vaccines and heart pacemakers…or municipal water-purification systems. Or space-based weather forecasting. Or advanced cancer therapies. Or jet airliners,” wrote a bunch of America’s business leaders to Congress in 1995, pleading with the government not to cut research funding to universities. Since then, those institutions have also powered the digital revolution that has improved life in every corner of the planet.

America led the world, too, in creating mass higher education. That transformation was driven in part by the economy’s need for higher skills and in part by society’s desire to give the men who fought in the second world war a chance to better themselves. America thus became the first country in the world in which the children of the middle classes went to college, and college became a passport to prosperity.

Given its success, it is hardly surprising that the American approach to higher education is spreading. Mass education has taken off all over the world. The American-style research university is the gold standard, and competition among nations to create world-class research universities as good as America’s is intensifying. Spending on higher education is rising: across the OECD, from 1.3% of GDP in 2000 to 1.6% in 2011. Provision, financing and control everywhere is moving away from the European model, where everything is done by the state, towards the American one, in which the private sector provides a large part of the education and individuals pay for most of their tuition.

But just as the American model is spreading around the world, it is struggling at home. America’s best universities still do more top-class research than any other country’s; the problem lies in getting value for money on the teaching side. Tests suggest that many students do not learn enough these days. They work less than they used to. The average performance of America’s graduates, compared with those of other countries, is low and slipping. Higher education does not increase social mobility but reinforces existing barriers. At the same time costs have nearly doubled in real terms in the past 20 years. The enrolment rate is falling. Technology offers the promise of making education both cheaper and more effective, but universities resist adopting it.

This special report will argue that the problems spring in part from the tensions at the heart of higher education between research and teaching, and between excellence and equity; but that technology and better information can help make the teaching side of the business more effective. America, having exported its model to the world, could learn some lessons from other countries about how to improve its own system.

How much is too much?

“Everybody’s gettin’ so goddam educated in this country there’ll be nobody to take away the garbage…You stand on the street today and spit, you’re gonna hit a college man,” says Keller in Arthur Miller’s play, “All My Sons”, written in 1946. Higher education in America started to spread from the elite to the masses as early as the 19th century, with the establishment of the land-grant universities, but got its biggest boost with the 1944 GI bill that paid servicemen to go to college.

What happened in America then happened in Europe and Japan in the 1960s and 1970s, in South Korea in the 1980s, and is now happening the world over. Student numbers are growing faster than global GDP. So hungry is the world for higher education that enrolment is growing faster than purchases of that ultimate consumer good, the car (see chart 1). The global tertiary enrolment ratio—the proportion of the respective age cohort enrolled in university—increased from 14% to 32% in the two decades to 2012; the number of countries with an enrolment ratio of more than half went up from five to 54 over the period. Sub-Saharan Africa is the only part of the world where “massification” is not much in evidence yet.

 CONTINUACIÓN:  Universities: Excellence v equity