Howard Davies: Do universities need overseas campuses?

My walk to work in London each day starts well - I congratulate myself on still not having seen Stomp at the Vaudeville Theatre - but ends badly, as Australia House reminds me of the Ashes revenge to come next winter. In between, I pass King's College, or Strand Polytechnic as my witty students call it, and then the proudly titled Monash Centre, a small shop-front.

Its presence always gives me pause for thought. The pedant in me is obscurely irritated by the use of the word "centre". Centre of what, I ask? Are there smaller offices of this Australian university dotted around London that owe allegiance to the one on the Aldwych? Surely their campus in Melbourne is the centre of the Monash world? Perhaps we should retaliate by establishing a London School of Economics (LSE) centre in Moonee Ponds.

But the Monash Centre does pose a serious question. Monash indeed does have campuses overseas. They can be found in parts of Asia and in South Africa. British universities, too, have set up satellite operations in China or elsewhere, though none so far on the Monash scale. American schools have established operations in Europe, or in the Gulf. Some are "semester abroad" facilities, which are not competing for local students. Others do, however, like Chicago Business School which has moved its European headquarters from Barcelona to London.

The LSE does not have a remote campus. Our "centre" is snugly housed in a warren of buildings just north of Aldwych. Are we missing a trick? I discussed this question the other day with the (soon-to-be-ex) Harvard president Larry Summers, over in Europe to look after his alumni. In suitably Socratic style he answered with another question. "Why is it that, in the US, health clubs are typically franchised operations, while country clubs are not?" Just like Socrates, Summers also supplied the answer. "Customers go to health clubs for the equipment but to country clubs for the people they hope to meet". Universities, he concluded, are country clubs, not health clubs. You can sell a Harvard T-shirt, or whoopee cushion, but you can't franchise its degrees.

How true is this? Certainly it would not be easy for the LSE to replicate its London "campus" (mind you, it is not clear why anyone would wish to try to do such a thing). To set up a remote campus that might plausibly claim to be an overseas version of the mother ship, one would need to dispatch faculty from London. Maybe that would be possible in Moonee Ponds, but a community of scholars cannot be uprooted and transplanted or replicated at will. Perhaps this consideration is more important for an integrated social-science school than it for a business school, for example, with one dominant product, which may be able to install another MBA product-line in an attractive part of the world, servicing those students in part through visiting staff. Perhaps science faculties find it financially attractive to establish remote operations in cheaper places. There are some striking examples, particularly in China, which seem to suggest that that this a realistic proposition.

Some argue that overseas engagements of this kind will be indispensable to the university of the future. Can we realistically expect countries like China and India to continue to send their best and brightest to Western universities which show no commitment to those countries, except an undertaking to cash their cheques promptly? Universities which wish to maintain a position in those markets will need, so the argument runs, to add more value locally - following the logic adopted in other industries.

This logic is seductive. But do developing countries themselves want overseas universities to skim off their best domestic students, as well as those with the means to study abroad? While the competition may be welcome for the stimulation it provides for their own universities, it seems unlikely that any country will wish to see a sizeable proportion of its student body educated in local subsidiaries of overseas universities.

Another option, therefore, is to set up partnerships with local universities - whether teaching courses on their campuses, or running joint degree-programmes in which students spend time in both countries. For now, that is the route the LSE is taking, with partner universities in the US, Europe, China and perhaps India.It seems to make sense for us.

But the global higher education marketplace is changing rapidly, so one needs to keep a weather eye open. If I spot a Harvard centre on the Aldwych, or a Harvard golf and country club in Royal Berkshire, then we may need to take another look.

The writer is the director of the LSE

education@independent.co.uk