Japan’s University Fund is ill-equipped to stem decline in research performance

Author: Hideaki Tanaka, Meiji University

In September 2023, Japan’s Ministry of Education, Culture, Sports, Science and Technology nominated Tohoku University as a candidate to be a ‘University for International Research Excellence’ (UIRE). This program is supported by Japan’s 10 trillion yen (US$68.7 billion) University Fund (UF).

The UF is an excellence initiative managed by the Japan Science and Technology Agency (JST). The agency established the UF as an investment fund mainly by borrowing from the Fiscal Investment and Loan Program. Ten trillion yen in stocks and bonds are invested in the UF, and its annual return is expected to be 300 billion yen. The UF’s return will be provided to the UIRE program.

According to a government paper, world-class universities such as Harvard and Oxford develop their own visions, autonomously expand their budgets and conduct innovative research. On the other hand, Japanese universities seemingly cannot change their traditional ideas and management styles.

The government is demanding that Japanese universities manage themselves like world-class universities. National universities in Japan were corporatised in 2004. This idea comes from ‘New Public Management’ theory, which posits that governments should encourage better performance by empowering agencies’ management.

But the 2004 corporatisation differed substantially from management theory in practice. The ministry instead strengthened its control and regulation of universities. For instance, universities are not allowed to change the number of students they enrol or the structure of their faculties and subjects without bureaucratic approval.

Large national universities are now required to establish a managing board as a decision-making body and to oversee their executive. But with a new management board added to existing organisations, the governance structure of universities has become even more complicated and fragmented.

The government has also been strengthening the power of university presidents since the corporatisation reforms. But the new management boards reduce university presidents’ power. This apparent contradiction in policy direction has not yet been adequately explained by the government.

A major problem in the UIRE program is the lack of any assessment of previous similar programs. The government has implemented various programs over the last two decades, but the research performance of Japanese universities has continued to fall. The same failures risk being repeated.

Another area of concern is the source of the UF. JST borrowed money to fund the UF and must repay its debt with interest. The government assumes an annual rate of return of 4.38 per cent, while the UIRE program needs to make a 3 per cent annual return. But the annual return of the UF for the 2022 financial year was negative 2.2 per cent. The Japanese government also has a public pension fund, the Government Pension Investment Fund. Its average annual return for the last 22 years is 3.59 per cent, less than the UF’s expected return.

The final issue is whether the UF will actually support universities. Japan was ranked 12th in the world in terms of the number of adjusted top 10 per cent papers by citation count between 2019–2021. Japan was ranked 4th between 1999–2001.

Why is Japan’s research performance deteriorating? Block grants to national universities have been cut over the last two decades, reducing actual research spending. The number of full-time researchers has also been decreasing. The number of PhD candidates has decreased and Japan’s PhD per population figure is now about one third that of the United Kingdom and Germany. The time available for research has also been decreasing, while the time allocated for teaching and administrative procedures has been increasing.

Many believe that competition improves research performance, but excessive competition could bring about negative consequences. It could undermine motivation by categorising the time and resources devoted to failed projects as ‘wasteful’. Academics don’t undertake challenging and innovative research when they are overly concerned about avoiding risk and beating the competition for funding.

There is some evidence supporting these observations about excessive competition. Sweden increased competitive research funds but saw research productivity decline since 2000. The biggest reason was that excessive reliance on competitive funds made young researchers’ employment unstable. Several statistical analyses also suggest the productivity of publication depends on a high level of basic grants and comprehensive post-publication evaluation. Stronger executive control over academics and higher levels of competitive funds could reduce overall research performance.

The UF supports only a few universities. Even if such universities increase their publication output, Japan’s overall research performance won’t necessarily improve. According to analysis by the National Institute of Science and Technology Policy, Japan’s top universities perform better than German ones in terms of publication output. But Germany performs better than Japan in producing highly-cited publications. That is why German universities develop their own specific strengths in different academic fields.

The UF scheme is inconsistent. The UF is also likely to lose money, meaning that taxpayers will have to take responsibility for funding the UIRE program. This program could be justified if Japan invested in developing human resources across Japan, rather than at just a few universities. That is something the UF is not doing in its current form.

Hideaki Tanaka is Professor at the Graduate School of Governance Studies, Meiji University.

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