Deal 'em in

Britain is well known for its invisible exports. Foreigners pay hard cash for high-quality services available in the UK. What is less well known is that one sector within higher education - business and management studies - is a very substantial "invisible". It earns more than pounds 400m a year, placing it within the UK's top 50 exporters.

The Dearing inquiry into higher education has largely removed discussion on the subject of business education, at least temporarily, from the increasing heat of party political debate. Those who work in the sector now have the opportunity to convert the sceptics who see HE as a set of costs, not profits.

By attracting 37,000 overseas students to universities in the UK, the business schools reckon that they generate more than pounds 400m when students' spending on campus and in the community is added to the tuition fees they pay. Business schools attract the largest number of overseas enrolments - 17 per cent of overseas undergraduates and 24 per cent of overseas postgraduates. They also provide qualification programmes to an estimated 10,000 students in their own countries. A major area of growth in recent years has been the Master of Business Administration (MBA) by distance learning. Much of the demand arises from the fast-growing economies of South-east Asia.

The most striking feature of the business schools is the comprehensive nature of their provision. Some specialise, for example, in post-experience work for managers; some address local and regional needs such as in small businesses; others project specialisations such as banking and finance or human resource management. The Association of Business Schools has 100 institutional members which teach more than 156,000 undergraduates and 59,000 postgraduates. These numbers place business and management ahead of any other discipline. With undergraduate applications running at two for every place, there is a clear opportunity for the Treasury and the funding councils to enable expansion in the field.

Are students right to vote for business and management? They find that the subject provides a good all-round education, in that it develops both quantitive and conceptual thinking. Recruiters of graduates have named their top three requirements as team-working, leadership and business awareness. A good education in any field helps students to develop the first two capabilities, but the programmes in business and management are best adapted to delivering the third.

Many students taking business-related degrees benefit from work placements which complement their studies. Undergraduates, MBA and specialist master's students often regard that experience as the pinnacle of their course. The placements provide companies with injections of energetic talent on flexible terms, give the students an excellent preparation for employment and maintain business schools' knowledge of business practice.

How good are the business schools? The ability to generate income and the ability to attract applications are not in themselves guarantees of quality. However, the evidence is encouraging. In England alone, the Funding Council identified "excellent" provision of teaching in 19 business schools.

The schools are moving towards a greater degree of self-assessment in the crowded MBA market which is something of a jungle for applicants. The Association of Business Schools and the Association of MBAs (AMBA) are planning a new system of accreditation for MBA programmes which could be a big step forward.

If everything is so positive, why change anything? Can't the cash-strapped universities be allowed to continue milking the business school cash-cow to nourish the less robust animals in the campus farmyard? The problem is that financial success in one sector enables the Government to pay out correspondingly less to higher education as a whole.

The schools warn their students of the dangers of short-termism in business, and now they are warning Dearing about short-termism in higher education. In order to keep their provision relevant to their students' careers, the business schools have to invest in information technology. A policy of providing resources at the level of "classroom" subjects and of permitting student/staff ratios to drift up to the highest levels in the university system is not sustainable.

Certainly the business schools can be expected to be entrepreneurial on their own behalf, but they need and deserve equitable treatment. Their customers encompass a range of students from undergraduates, through graduates pursuing advanced conversion courses, company personnel trained in science wishing to become professional managers, to executives at board level. They are challenging and critical audiences for whom increasingly sophisticated tailored teaching is needed. Business schools can meet these stretching targets only if they are allowed to re-invest funds in their future.

Professor Stephen Watson is a member of the Association of Business Schools' executive committee and Dean of Lancaster University Management Schools.

The achievements of British business schools are outlined in a new report, 'Pillars of the Economy: The Contribution of UK Business Schools to the Economy', available from the ABS, 344/354 Gray's Inn Road, London WC1X 8BP (0171 837 1899).