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U.S. Would Be Wise to Maintain Investment in Global Knowledge

June 18, 1995|JOSE DE LA TORRE | JOSE DE LA TORRE is a professor of international business strategy in UCLA's Anderson Graduate School of Management and director of the university's Center for International Business Education and Research

Ten days ago, President Clinton for the first time exercised his veto power, rejecting $16.4 billion in spending cuts for the current fiscal year. The largest cuts would have applied to housing ($6.2 billion), transportation ($2.4 billion) and environmental protection ($1.5 billion). But much of the disagreement between the President and the Republicans in Congress was over $650 million in education spending--money for programs pursuing educational reform, vocational training, drug-free schools, student aid and international programs for higher education.

Both parties seem now to be seriously committed to balancing the federal budget over the next decade. There seems to be little disagreement on the desirability of this goal. Reducing our budget deficit would aid the country's international competitiveness and reduce the need to borrow nearly 4% of gross domestic product to finance our excess consumption--obligations our grandchildren eventually will need to pay. Solving this problem is one key to more productive investment, the source of long-term growth and prosperity and the creation of stable, high-quality jobs at home.

Yet it is also generally acknowledged that we operate in a global economy in which ever-larger shares of our production are consumed in distant markets. The success of our industries and companies is increasingly measured in terms of their ability to serve customers not only in California or Ohio, but also in Thailand, France or Peru. Firsthand knowledge of these markets and their particular needs can only come through the deployment of people capable to operate effectively in each national culture and social system. The same requirementholds for maintaining our national security in an era of regional conflicts and ethnic strife. Our diplomatic and military leaders must have at their disposal these skills and specialized knowledge if they are to further our national interests.

Targeted for elimination in both the House and Senate budget resolutions is a set of relatively small programs that are vital to the continued development of such knowledge and skills in this country. The support for international education provided by Title VI of the Higher Education Act and the Fulbright-Hays programs constitute a fundamental investment in the future of this nation.

Annual spending for these programs amounts to a mere $59 million. But that sum supports more than 100 centers that conduct research and training in foreign languages and a range of disciplines focused on specific regions. That money also pays for another 25 centers that train students and executives in the intricacies of conducting business internationally. And the funds also help thousands of Americans--from undergraduates to doctoral candidates, elementary schoolteachers to professors--receive training or do research in foreign languages and area studies, both here and abroad.

Why should these programs be spared, given the urgency of the budget-paring exercise?

The international studies faculties and programs supported through these investments represent the font of our future expertise in many areas of the world--areas where we trade and invest and with which we conduct diplomacy on issues of national interest. They are often the only source of expertise and research on non-European countries and cultures. They help create jobs in America by enhancing the international competitiveness of U.S.-based businesses, provide training and export market information through myriad public assistance programs and train future managers to operate effectively in the global marketplace. They also serve to enhance the public's understanding of international events and issues that affect our national interest and illuminate our policy choices.

Will these programs disappear in the absence of federal support? Many undoubtedly will--especially those dealing with arcane languages and obscure geographic areas--and most will see a significant reduction in operating capacity.

The reason is the multiplier effect that federal grants have on university budgets.

At UCLA, for example, there are Title VI centers specializing in Africa, Eastern Europe and Central Asia, Latin America and the Middle East, as well as my own Center for International Business Education and Research. We also operate two joint centers with USC specializing in East Asia and international studies. The university received a total of $1.3 million from the federal government for these seven centers for 1994-95, out of a total budget of more than $6.8 million. This means that for every federal dollar spent, the university or the private sector contributes an additional four. In the absence of these taxpayer funds, it is doubtful that over-stretched university budgets would continue to support the centers, and many private donors would lose the confidence provided by the government's rigorous competitive review process.

Last year, America's higher education institutions generated a trade surplus of more than $6.8 billion--and an estimated 136,000 jobs--by attracting a large number of foreign students to our campuses. Our excellence depends in part on our ability to continue to generate the knowledge and training upon which U.S. industry and public agencies have come to rely.

Although the goal of deficit reduction is indeed worthy, let us not be indiscriminate in the use of the budget ax. The interdependent global economy of the 21st Century will require a well-trained and internationally sophisticated labor force. It would be foolish to reduce our investment in such international expertise at the time of our greatest need.

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