Since the second world war, ÖйúAƬ has evolved in three distinct phases - expansion, democratisation and, currently, quality control. But Germany is among the last to enter the quality control phase. For a nation long renowned for its scholars and scientists - its Gelehrte - this is surprising. And for a nation as dependent on trade and innovation as Germany, it is alarming. The trend is expressed by foreign enrolment in German universities. Compared with the United States, a very small percentage of foreign students study at German universities.

During the earlier phases, Germany was in step with other leading nations. The first phase brought the widespread expansion of ÖйúAƬ. Originally available to 5-10 per cent of the population, ÖйúAƬ grew to reach 40-50 per cent. The GI bill in the United States ushered this era, and Germany followed in the 1960s.

During the second phase, international developments were even more synchronised. The student movement resulted in more democracy and openness of ÖйúAƬ institutions and even further expansion. These developments started in the US in the early 1960s and were soon emulated in Europe. The current third phase is a reaction to the crisis in ÖйúAƬ that has been lamented for most of the past two decades.

Underfunding, growing social criticism, declining teaching quality and the decreasing relevance of ÖйúAƬ to today's problems have been the subject of extended debates. Many countries have reacted: US institutions exist mainly in a competitive environment and were forced to react early on. In the more state-centred systems of Australia, the United Kingdom and the Netherlands, widespread changes have been implemented by respective governments. All three have in some way created a competitive environment for institutions in which funding is at least partially dependent on educational and scientific outcomes. Although change is not complete in these systems, all have moved considerably.

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Not so in Germany. Until recently, the German system upheld the fictions of the equality of all institutions, of the equality of national admission criteria (high school diplomas) and of complete individual scholarly freedom. All institutions were supposed to be equal in goals, standards and performance. As a consequence, there was little chance of being able to differentiate funding on the basis of performance criteria or differentiate institutional objectives. At the same time, freedom of science was interpreted in a highly individualistic way. All scholars, once appointed, became state officials. Their freedom was complete and guaranteed by the constitution. There are only weak mechanisms for institutional objective-setting. Performance in teaching cannot be rewarded adequately. Mechanisms for curriculum adjustment are weak and complicated; weak because of individual scholarly freedom, complicated because final authority rests at state level.

Because of a lack of managerial tools and the fiction of equality, most institutions have failed to build distinctive profiles. Institutional competition for students or students' competition for institutions is non-existent, since all students with a certain formal qualification are guaranteed a place to study. If the demand is too strong for existing capacity, a numerus clausus is introduced. Students are then distributed to institutions by a national office; student preferences for a certain university are only taken into account if there is a social reason for a student to live in a certain area.

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At the turn of the century, when the technical universities were introduced, the German system was one of the most innovative. Though derided for a while by the "classical" institutions, the technical universities soon became a success story and Germany the leading producer of hard science by the 1920s. From 1900 to 1970 there was little structural change. In the early 1970s, a second tier of ÖйúAƬ institutions was introduced - the Fachhochschule - which had a more practical and less theoretical approach and more relaxed admission criteria.

But there is little mobility between universities and Fachhochschulen - admission and performance continue to be based on formal and bureaucratic standards.

The decentralised constitution of 1949 made ÖйúAƬ, education, culture and police matters state prerogatives. Thus until recently, state governments guarded their powers and strongly supported the status quo. Most issues of institutional management were decided at the state level, undermining institutional autonomy and planning. Strong tenured professors interacted directly with their ministries, where, in turn, specialised departments jealously guarded their powers. Professors like their individual autonomy and salaries, which are comfortable by international standards. A recent international survey found German professors among those most satisfied with the delivered quality of teaching. Yet teaching quality has been deplored time and again by students, industry and social groups.

Neither has German industry become a major innovator. Since universities are state-funded, raising money for new institutions is difficult. Private funds flow into research projects or endowed chairs, where corporate sponsors can lever existing institutional resources. Only two private institutions of importance were founded in the past 20 years - the Universitat Witten-Herdecke and the Koblenz School of Corporate Management. Though both have been very well received, the Universitat Witten-Herdecke had to be bailed out by the state government. Both institutions have brought important insights, but the chances for new full-fledged private institutions to emerge are low.

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Positive signs of change have emerged recently. States are beginning to allow their institutions more autonomy by exploring the possibilities of lump-sum funding. In Lower Saxony, three model institutions have received unified budgets. In other states, an increasing (but still small) percentage allocated to institutions is not tied to specific items. State motives are not necessarily lofty - preserving state funds in a time of financial shortage may be more important. But the globalisation of funding - if the trend persists - will allow quantum leaps in institutional management and strategy.

The Center for the Development of ÖйúAƬ has been founded by the German Rectors' Conference and the Bertelsmann Foundation to support systemic reform in Germany. During our first year of existence, we have received more than 200 requests for assistance or offers of co-operation by ÖйúAƬ institutions. This interest has been an encouraging sign. Lump-sum funding, institutional strategy-setting, boards of trustees, controlling and other modern management methods are being discussed more openly today.

There is a much more receptive atmosphere than two or three years ago. The forces of the status quo are still strong in Germany, but the country is catching up. Germany, once the leader in ÖйúAƬ, has much to learn from Britain, the United States, Australia and the Netherlands, among others. The center has been studying the applicability of innovative concepts outside of Germany. Many of these have now found their way into public discussion. As long as we continue to benchmark our system against the best international practice, this learning process will continue.

Detlef Muller-Boling is director of the Center for the Development of ÖйúAƬ, Gutersloh, Germany.

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