Why Europe's universities should be reformed 

The recent Shanghai ranking of the top fifty universities in the world – a well-respected index for monitoring the research performance of universities around the world and which Bruegel used as a basis for their cross-country comparison - listed only nine European ones (mostly from the UK) compared with 37 from the US. Among the top ten, only Oxford and Cambridge managed to break into the American-dominated list. 

According to Bruegel, this fact is largely due to a large discrepancy in public and private spending for the universities in Europe and America. Whereas European countries on average spend only 1.3 percent of their GDP on higher education, the US invests 3.3 percent of its GDP in this area. 

In terms of expenditure per student, the contrast is even starker, with average annual expenditure of €8,700 in the EU versus €36,500 in the US. This lack of funding coincides with the much lower degree of autonomy for European universities compared with their American counterparts. 

Such lack of autonomy directly affects the patenting impact of research funding, the Bruegel policy paper states. Since the authors regard autonomy and funding as complementary, more autonomy in reverse would increase the extent to which additional research funding improves performance. 

The picture brightens a little bit for Europe when one enlarges the numbers of universities considered. Whereas American universities dominate in the top tier (Top 100), Europe has many good universities in the lower tiers (Top 100-500). Switzerland, the UK and Sweden do particularly well in the second tier (100-200), which the authors attribute mainly to better funding and a smaller-sized universities (up to 25,000 students) than the European average. 

The authors conclude by making the following two recommendations for European policymakers:

• European countries should increase funding for universities at least by one percent over the next ten years. 
• They should grant their universities more autonomy, in particular with regard to the budget.