Abstract
For a very long time the Japanese government concentrated its higher education investment on a handful of national institutions, until the policy came to be called into question in the late 1980s in the face of globalisation and other factors. Higher education reform was significantly accelerated in the 1990s: the government has continuously deregulated the higher education system including the incorporation of national universities, and has brought more and more competition through diverse competitive funding schemes. Some policies – not only higher education policies but also science and technology ones – were explicitly designed to develop ‘world-class’ education and research centres, such as the 21st COE programme. This article suggests that although a funding policy based on competition, with a strict evaluation, seems to be a move in the right direction, a right balance of budget allocation between competitive funds and basic education-research funds should be sought. Furthermore, the programmes of the government have to be offered in a more consistent manner, and more concerted and integrated efforts will be required, to address the critical problem of building world-class universities.