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Hungarian Higher Education: the transition towards creating prosperity

Hungarian Higher Education: the transition towards creating prosperity

Abstract

The central issue of this article is that of the impediments to creating prosperity within the context of Higher Education during the transition period in Hungary from a budget-commanded regime to market-oriented operations. Fairbanks (2000: 290) refers to prosperity not only as the means through which people can live a good life but also as ‘the enabling environment that improves productivity’ and considers the purchasing power of a country per person’. It is seen as important as it affects living standards (e.g. malnutrition and poverty) and productivity levels. Thus dealing with the issue of prosperity also means dealing with poverty.

Fairbanks (2000) declared that each nation has a set of beliefs or mental model for creating prosperity which can change and suggests a 10 stage process, which is as follows: Decode the current strategy for Prosperity; Create a sense of urgency; Understand the range of strategic choices and inform them with analyses; Create a compelling vision; Create new networks of relationships; Communicate the vision; Build productive coalitions; Develop and Communicate short-term wins; Institutionalize the changes; and Evaluate and affirm the changes.

It is concluded that prosperity, despite being acknowledged as a good thing, is hard to achieve and a choice that leaders have to make when bearing in mind what exactly the consequences would be of such a choice. The article ends with a message to the Western world that it has a responsibility to consider and develop a change process relevant to local beliefs in developing nations with a constructive approach as a means to creating prosperity foremost in countries experiencing poverty, which Fairbanks mentions is a serious and all-too-common issue.

Introduction

Taking a macroeconomic perspective, this paper examines the process towards prosperity by applying the model developed by Fairbanks (2000) in the context of the change experienced by the education sector during the transition two decades ago of Hungary from a budget-commanded socialist regime to a market-oriented free market operation. Another issue to be considered is whether aspects of this change process could also be used on the micro level for the changes occurring in the merger of a higher education system.

The macro-perspective

When considering the macro perspective of the education sector during transition, Radó (2001: 11) declares, ‘The systematic vision of the transition in education … can be characterized as a move from a “command-driven” system to a “demand-driven” system’.

Change for prosperity is a global issue and in terms of the education sector, levels of prosperity during the transition are hard to gauge, however certain points are worth considering. The old fashioned education system had its weaknesses, but it also had its strengths such as high enrolment rates, universal and free enrolment, a generous supply of teachers and buildings and high levels of achievement of pupils in mathematics and science. In fact, this would be seen by many educators as a prosperous education system.

Fairbanks lists the steps as part of a process for change and each of these can be considered from the point of view of the educational sector in Hungary during the transition period towards a market oriented operation.

Step one: Decode the current strategy for Prosperity

When considering the strategy, a retrospective approach is required to find the strategy used in the period of transition in Hungary. According to Kornai (2000: 10), during the transition the strategy could be described as an organic one – a strategy of organic development. This strategy is characterized by creating favourable conditions for growth in the private sector (mass ‘de novo’ entry), privatization of most previously state-owned companies, companies having a ‘core’ owner and hard budget restraints on companies. Through this, the private sector’s proportion of gross production grew thanks to new private businesses and the shrinking of the state sector. This also meant an initial heavy reliance on Foreign Direct Investment and privatised industries.

            This adopted strategy also has a sociological aspect according to Kornai (2000). It incurs a process of ‘embourgeoisement’ with the development of a property-owning class.

            Lipton and Sachs (1990) refer to a strategy of transition which involves the likes of ending excess demand, budget restraints, creating market competition and privatization, many of the steps in this strategy could also be applied to Hungary and can be seen in the organic strategy suggested by Kornai.

Step two: Create a sense of urgency

When considering Hungarian teachers and perhaps many citizens in Hungary during the time of transition, there were great expectations that change was on its way and Hungary was about to join with Western countries, which in turn gave expectations about achieving the same standard of living and freedoms that weren’t available before. In this way, it could be said that there was a sense of urgency to become more market-focussed and ‘Westernized’ rather than risk the potential danger of reverting bank. In reality this would be a long process, but the expectations served as a means of creating this sense of urgency referred to by Sachs. The main impetus for this sense of urgency could be attributed to the people themselves rather than the government or the private sector although each had a role to play to some extent.

There are two other factors mentioned by Radó (2001) which could be seen as promoting a sense of urgency for change in the educational institutions in Hungary. The first is that of the reform of the governance system, including the rapidly emerging NGO sector and the appearance of private education. The second factor being a key impetus for public educational institutions is to consider becoming more competitive and, in order to achieve this, more market-oriented (Rado, 2001: 21).

Step three: Understand the range of strategic choices and inform them with analyses

When faced with the transition, a number of approaches from the West for education were considered in Hungary. The main four put forward by Radó (2001: 21) were as follows:

The same for all. This approach is based on social equality with a focus on systematic outcomes like graduation rates. The reform strategy is to maintain centralization and privatization is opposed.
Quality for those who deserve it. This is an elitist approach and the strategy promotes centralization and liberalization at the same time.
Quality for those who can afford it. This free market approach presents a view of a decentralized and liberalized education system, with full support for privatisation.
Quality for all. This approach supports decentralization and liberalization, but with only some support for privatization.

However, when considering the strategic choices available, there are a number of other factors that need to be considered. First of all, the educational sector in Hungary during the transition is making a change from a “command-driven” system to a “demand-driven” system. This factor is key when considering strategy and policy in Hungary. Appendix 1 shows the differences between the two systems according to Radó (2001: 24). The other factor is that of Hungary’s culture and attitudes to reform. Any strategy on a macro-level should consider Hungary’s specific situation not only economically and politically, but also culturally – adoption of a strategy based on Western approaches without such consideration would have a much smaller chance of success. In fact, educational reform in transition countries was carried out in a very different way to that of Western-European countries (see Appendix 2).

Step four: Create a compelling vision

When considering a compelling vision to promote change, it is worth noting that during the transition period there was a significant momentum for change in Hungary (Rado, 2001: 22). Such a momentum for change is rare and an important foundation upon which a compelling vision was built. From a macro point of view, the increased freedom experienced at the time of transition lead to a vision that was more aware of the surrounding environment as people experienced freedom to travel, labour mobility and freedom to trade with any markets abroad, just to name a few examples.

In the case of transition of the education sector, the vision was the demand-driven system retained many of the characteristics existing in education in developed countries in the West and for many, the compelling vision was the countries in the West with higher standards of living, high productivity and free markets. 

Evidence of a compelling vision was referred to by Kaufman and Paulston (1991: 11), Hungarians saw their nation as a leader in change and this pride in change not reinforces the fact that Hungarians had a compelling vision for change but also that the task of communicating the change was much each (see step seven).

Step five: Create new networks of relationships

It has been argued before that productive coalitions between management of educational institutions and companies would result in greater relevance of courses to company and students needs, both of which can be considered as forms of customer in terms of receiving the skills or skilled labour or knowledge supplied by educational institutions, however this such coalitions have yet to be implemented to a level comparable with that of many market-oriented Western countries (Chandler, 2008). 

New networks and were made and existing ones strengthened between Hungarian HEIs and educational institutions in the West and as Western HEIs such as those in the UK were becoming increasingly market-oriented in the early nineties this also created a further impetus for Hungarian HEIs to do likewise.

Step six: Communicate the vision

When considering reform in education, there are a number of key stakeholders that need to be considered as requiring communication of the vision: Teachers, Management, students (and students’ parents), the Government and to some extent, the public at large.

Whilst it could be argued that various types of media could be used to achieve this, it seems that in education, change is brought about in a different way. According to Radó (2001) reform in transition countries often takes place as either a “top-down” or “bottom-up” process. From the point of view of the thesis, this would mean that in the educational institution, change can be achieved through the medium of the teachers as they are right in the middle of the process, whether it is “top-down” or “bottom-up”. Thus teachers appear to feature as the main stakeholder to whom the vision should be communicated and, as reforms are generally initiated by the government and then communicated to educational management, the top-down process seems to be the most likely way to achieve this.

As teachers are central to communicating the vision and the vision during the transition (as mentioned in step four) is a Western system, the views of teachers towards the Western system during the time of transition need consideration.  According to the research of Kaufman and Paulston (1991: 9), out of eighteen teachers interviewed in their research, the majority favoured a Western focus with only one indicating a need to concentrate on national uniqueness and national pride. Another finding of this research was that in Hungary the rural population tended to favour nationalism and the urban population had a more European focus (Kaufman and Paulston, 1991: 10). When communicating the vision it would seem that for teachers, the vision was already on board to some extent, however for educational institutions in rural areas there would have been opposition from local residents (including students and parents). From Fairbanks’ process for change, this would imply a greater need to communicate effectively the vision in rural areas with potential opposition to change in Hungary.

In the case of Hungary the vision of a ‘Western lifestyle’ began even prior to the transition itself and not through the media listed by Fairbanks as such would not have been allowed or available at the time. Rather, it was through such events as vacationing at Lake Balaton where Hungarians met with family members from the West and so they were exposed to Western values and consumer goods, all of which served to ‘whet the appetites’ of Hungarians (Kaufman and Paulston, 1991: 17), and thus, serve as a means by which a compelling vision (of the West) was initially put forward to Hungarians.

            A number of other tools were used to internalize new ways of thinking in the education sector in Hungary. For example, a national supply of curricular programs with a national standard format, an electronic communication network to transfer information to schools and a new in-service training system (Halász, 2002: 8).

Step seven: Build productive coalitions

            One of the strengths during the transition of the education sector in Hungary was that of certain coalitions. Extensive participation by teachers in conferences, input from the professional public with surveys and strong professional groups (e.g. curriculum development advisers and innovative teachers), all served as effective coalitions with educational institutions in the push for reform (Halász, 2002: 10).

Step eight: Develop and Communicate short-term wins (demonstrations of success to coerce change)

One key short-term win (with long term benefits) for the education sector in Hungary was that of “comparative advantage” for newcomers (Rado, 2001: 22), which is well-known in the history of various economies and these previous cases, such as Germany building modern railways in the middle of the 19th century, were used to demonstrate the potential success for Hungary and through this, promote change.

Communicating these short-term wins seems especially important in the case of Hungary as at the time of transition there was a mood of uncertainty and hesitancy due to the fact that Hungarians have often seen themselves as victims (Kaufman and Paulston, 1991: 13) due to a rather tough history of treatment and subjugation[1]. This mood could easily mean that any suffering caused during the transition would lead to a revert back to the old ways, however these short-term wins would reinforce the fact that in this case Hungarian are winners rather than victims and promote some level of assurance.

The need for short-term wins is further reinforced by the appearance of short term losses. According to Halász (2002: 5), the economic change also brought with it an economic crisis meaning a scarcity of resources in educational institutions, which in turn could be seen as creating nostalgia towards the former centralised model where resources were more freely available. This would be further accentuated by the budget costs forcing down teachers salaries between 1994 and 1996. Although not mentioned by Fairbanks, it could be said that for every short term loss that were to appear, there would be a greater need to communicate short-term wins so as to reinforce the change and prevent reverting to the previous condition Lewin (1951).

Step nine: Institutionalize the changes (Institutions provide new norms of behaviour)

The idea by Fairbanks here is further reinforced by Kornai (2000: 23) when referring to change in the education sector in Hungary as he mentions that ‘for growth to be sustainable there has to be … a deep comprehensive program of institutional reforms’.

When considering Hungary’s turn towards a market orientation during the time of transition, it should be mentioned that many of the institutions conducive to a market economy such as company law and a market friendly tax system were created before the fall of communism and were stable enough to survive the democratic elections of the early nineties. The work of Halász (2002) refers to a number of key steps of institutionalization in Hungary:  

1) The basic institutions conducive to this transition were in place, such as the parliamentary framework and laws on associations.

2) Through the 1993 Education Act in Hungary, introduced a new model of curriculum regulation and in doing so changed the way educational institutions operated. As such this Act can be seen as providing new norms of behaviour for educational institutions, which in turn would pass these norms on to stakeholders such as students, teachers and parents. A further Amendment to the Act in 1996 served as further development of these new norms.

            3) A step towards becoming less centralized and more market-focussed was achieved through the 1990 Law on Self governments when ownership of state schools was handed over to local communities. (Although in some cases this step served to heighten the differences between the new decentralised system of public education and certain unchanged mechanisms such as curriculum regulation).

             Furthermore, various institutions were set up such as the National Institute for Public Education (set up in 1990) and as a result of the Education Act, the institution of the school board, on which the parents, the school and the maintaining authority were represented, was introduced in order to guarantee social control over schools (NIPE, 1996).

            Although not specified by Sachs it would seem that the institutionalizing of the changes also serves as a means of sustainability of change for the long term.

Step ten: Evaluate and affirm the changes (Summits, venues for discussion of results, measurements of results and room for improvement)

Following the reforms due to the Education Act in 1993 and the Amendment in 1996, by 1998 debates were being held in connection with this, involving politicians, researchers and pressure groups (Halász, 2002: 3), which can be seen as a form of evaluation of the results of these changes. The new curriculum was also evaluated by nationally accredited experts according to Halász (2002) and subject to the approval of the local municipality running the school. Not only this, but a national survey was conducted in 1998 to monitor the impact of these reforms and according to the results, modifications to the legislation was considered. Through this the Modification of the Education Act in 1999 came about.

Conclusions

In view of the current situation as stipulated in the thesis, there is a lot of scope for considering the period of change and acculturation through mergers and becoming market-driven through the eyes of Fairbanks. The current reforms are indeed reforms with a view to prosperity and as such, it will be interesting to see if the institution adopts a similar process to that put forward by Fairbanks, or not.

            Through this study of the transition period in Hungary in the education sector, there are clearly many issues listed here that could also be considered for an individual institution undergoing a similar change from budget-centred to market-focussed. Without risking the danger of a fallacy of composition by applying a macroeconomic process model to the microeconomic context of the thesis, it could still be said that certain aspects of the process put forward by Fairbanks could be adapted for usage on a smaller scale such as for an educational institution. Although clearly some steps in the change process put forward by Fairbanks would need modifying or in steps such as ‘institutionalizing reforms’ outright deletion. 

In terms if the thesis, if the Sachs approach is considered on a micro scale in terms of the thesis there are a number of factors that can be considered. Firstly, the current strategy for prosperity is basically to become market-oriented (step one). This is a very general strategy but in an HEI this covers a huge number of areas from course planning, to bureaucracy and treatment of students and in turn will mean vast changes in mental models for teachers, management and students alike. In terms of the HEI in the thesis, creating a sense of urgency (step two), the expectations would be rather limited – many institutions such as the one on the thesis are slow to change and it is often resisted – as the Hungarian expression goes: “the wheels of power turn slowly”. The status quo is comfortable and the need to become market oriented would certainly increase workload and require effort and time. Such expectations might well limit the urgency and constitute a major hurdle to overcome. The key to this might be in the steps of Sachs of creating a compelling vision, communicating the vision and communicating short-term wins and in this way, resistance to change can be minimised. It is worth considering that Hungarians can often be rather short-term in their thinking and as such the last step mentioned might be the most effective. Communicating a vision to teachers to instigate change will certainly require more than an occasional meeting. It will be interesting to see how the change is handled in reality.

            Other steps of relevance might include creating new networks of relationships. In order to become more market focussed (and more cost efficient) the three colleges (faculties) are to merge. As new subcultures are formed and new norms and values and introduced, this is no bad thing as it means that the former values and norms are being replaced. This might also be a good time to create and communicate the vision – before the new set of values becomes entrenched. Another important step would be to create coalitions. In fact, in my view, this is more important than the vision in terms of the HEI becoming more market oriented. Through stronger and closer relationships with employers and institutions abroad, teachers and management are much more likely to see the opportunities and the threats existing in the education market and, as the budget is reduced and there is a greater dependence on income from other sources such as EU tenders and foreign students, and in themselves create a vision and strategy based on the knowledge gained from such coalitions.   

Evaluation of the change is the last step referred to by Sachs and in the case of Hungary, such evaluations and feedback are relatively new – it is only in recent years that teachers themselves at the HEI in the thesis have started to receive feedback from students by means of end-of-term questionnaires, prior to this it was unheard-of. This might be a tough step for management and other stakeholders to take and criticism of any change will need to be handled carefully and constructively.

Considering the issue of whether or not Hungarians HEI are still undergoing transition, as mentioned by Radó (2001:25) ‘reform in education is not a linear and continuous process’ and it really does seems to be a case of ‘one step forward and two steps back’. The institution in the thesis has changed little over the past few decades. In fact the changes that occurred during the transition were not so much about being demand-driven (which is happening currently) but about changing the regime. The main changes are as follows: -

 1)      The curriculum change of dropping mandated Russian language instruction;

2)      Redefining school to include private and church affiliated schools;

3)      The impacts of an economic and political restructuring on the existing system.

 Furthermore, the impact of the changes during the transition in Hungary towards a market oriented  system could be considered as possible expected changes of an educational institution (such as more open community involvement, cross disciplinary approaches, an increase in in-service training and a greater sense of professionalism).

            When considering Fairbanks’ model of the process of change towards prosperity, it is worth considering in this case the work of Fullan (1991). Fullan (1991) focussed on change and the process of change but with a specialization in educational change. Fullan (1991) identified four steps in the change process: Initiation, Implementation, Continuation and Outcome. The key one for this assignment is Implementation and is according to Fuller (1991) covers four main factors: 1) the need, 2) clarity of goals and needs, 3) complexity: the extent of change required to those responsible for implementation and 4) quality / practicality of the change.  Fullan’s research could in fact be seen as dealing with the strategy for change (step three), whereas Fairbanks goes beyond this. Halász (2002) refers to certain specific features for consideration and in turn, these need to be considered when writing the thesis. The relating of the work of Halász to that of Fairbanks can be found in Appendix 3. Thus overall, Fairbanks (2000) agrees with a lot of the features put forward by Halász (2002) even though Fairbanks deals with a generalist model not specifically concerned with the education sector.

            In summary, Fairbanks process for change to prosperity can be considered on many levels as relevant to the thesis. By looking at Hungary’s education sector during transition toward a market-orientation, it is easy to see areas that could be considered in the management of a change of a higher education institution. That is not to say that the macro can be applied on a microeconomic level or that the issues involved in changing an organisational culture, strategy and structure are the same as the complexities of similar changes on a national scale. They clearly are not, but issues raised on a national level, such as obstacles to change and the importance of communicating short-term wins could be considered as possible issues on a microeconomic level as well.

[1] Such as the slaughter of protesters in 1919, the loss of 75% of Hungarian land after World War I and the 1956 revolution in which thousands lost their lives.

References

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Fairbanks, M., (2000). Changing the Mind of a Nation: Elements in a Process for Creating Prosperity, in Culture Matters, Lawrence E. Harrison and Samuel P. Huntington, editors, (New York: Basic Books), 2000, pp.270-281

Freeman, K., (2003). Higher education and multinational corporations: establishing a mutual bond, Policy Futures in Education, Volume 1, No. 2

Fullan, M., Stiegelbauer, S., (1991). The new meaning of educational change. 2nd ed. New York: Teachers College Press

Griffin, A., (1994). Transferring learning in higher education: problems and possibilities, in R. Barnett (ed.) , Academic community: discourse of disorder?, London: Jessica Kingsley

Halász, G., (2002). Educational change and social transition in Hungary. National Institute of Public Education, Budapest. Available at: http://www.see-educoop.net/education_in/pdf/halasz_edu_change_in_hungary1-oth-enl-t00.pdf

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Appendices

Appendix 1: The typical characteristics of “command driven” and “demand driven” systems in the education sector

The “command driven” system

The “demand driven” system

Teaching is in the center of pedagogy, teachers are in the center of policies.

Learning is in the center of pedagogy, students are in the center of policies.

Focuses on resources, controls processes and does not really care about outcomes.

Focuses on learning outcomes, improves the quality of processes, adjusts resources.

Gives preference to institutional and structural policies.

Gives preference to functional policies (improvement and development).

Focuses on the amount of financial resources that is deployed for educational provisions.

Focuses on the cost effectiveness of educational provisions.

Policy is driven by political and/or ideological agendas.

Policy is driven by analysis and bargaining 

The system is centralized and controlled.

The system is decentralized and liberalized 

The flow of information is blocked and reduced, the absorptive capacity of “educationalists” is low at both middle and grassroot levels (obedient system)

The flow of information is free and fostered, the absorptive capacity of “educationalists” is high at all levels (learning systems).

The number of circles that are involved in policy development, is small, stakeholders are not organized.

The number of circles that are involved in policy development is big, stakeholders are organized, and bargaining is institutionalized

Source: Radó P., 2001. Transition in education. Institute for Education Policy, Budapest, p.24. Available at: http://www.soros.org/initiatives/esp/articles_publications/publications/transition_20010401/rado.pdf

Appendix 2: Educational reform – Western European and Central Eastern European Countries

In Western-European countries

In Central-Eastern European countries

Reform is considered to be a new wave of a basically organic process of change (i.e. reconstruction).

Reform is considered to be an almost complete systemic and structural change (i.e. rebuilding).

Mainly genuine educational considerations and those of the “final users” mainly drive reform.

Reform is – to a huge extent – driven by ideological and political considerations.

The external challenges to education are partly predictable.

The speed of the transformation of the economic and social environment is very high.

Reform is initiated because of concerns about the achievement of students and the quality of education.

Educational reform is an inherent component of the overall transition agenda.

Avoidance of major structural changes.

Strong focus on structural issues.

Reform is about the support of grass-root change.

Reform is about the top-down implementation of systemic changes

Reform is supported by an existing and extensive system of information (evaluation, assessment, research) and by formal channels of bargaining and public discourse.

Reform is partly about the creation of the basic conditions of informed and open policy making.

Source: Radó P., 2001. Transition in education. Institute for Education Policy, Budapest, p.30.  

Appendix 3: Relating the reform processes of Fairbanks to the specific work of Halász

Halász

Fairbanks

Educational changes are strongly related to processes outside the education sector.

Changes for prosperity on a macro level involving the private sector, governments, natural resources and so on

The change process is not a linear one

A sense of urgency required in terms of creating a need for change but the rate of change is not referred to.

The capacity to manage uncertainty is a critical factor.

Doesn’t refer to uncertainty per se, he does list factors which will reduce risk and uncertainty about the change such as creating a compelling vision and institutionalizing changes.

Higher level willingness to take risk is endemic to societies in transition.

Doesn’t refer to risk but refers to minimising risk at higher levels by understanding the range of strategic choices and analysing them. This is common sense although it can be conceded that there is always some risk involved in any change about to take place.

Communication and ongoing learning becomes particularly important.

Communication is important on a number of levels such as creating a compelling vision and new networks of relationships and communicating the vision.

Increasing efficiency in the use of resources occurs with the accumulation of experience.

Resources are a part of overall strategy such as the dangers of an over reliance on resources, but the issue of whether efficiency increases with experience is not touched upon.

A pragmatic approach focusing on the instruments of implementation predominates over abstract, theoretical conceptions of change.

Approach is very much pragmatic with detailed approaches and case studies to reinforce the point. The instruments such as those for communication are considered.

Source: Adapted from the works of Halász and Fairbanks (see Bibliography)

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