While California and other states cut higher education budgets, many countries are spending to boost the number and quality of their graduates, setting the stage for brain drains and brain gains as the global economy emerges from the Great Recession, according to a UC Berkeley research paper.

China, Taiwan, South Korea, Germany, France and Brazil are among the major industrial nations that have continued to boost education spending despite the recession, while the United Kingdom and Ireland have joined the United States in making cuts, said John Aubrey Douglass, who wrote the paper for Berkeley's Center for Studies in Higher Education.

"Over the last decade we have seen higher education elevated to a top policy concern in many nations, where it is seen as vital for economic development and competitiveness," Douglass said.

But the United States has lagged in this regard, partly because its higher education system is decentralized and controlled by state governments, whereas in many other nations the central government coordinates spending, Douglass said.

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In economic downturns, some of these international competitors have chosen to borrow to fund education, whereas U.S. states generally can't engage in deficit spending.

In the current recession, this has led to steep higher education budget cuts in 34 states, including California, he said.

For years U.S. industrial and academic leaders have warned that the nation is losing its educational edge even as the world shifts to a knowledge-driven economy.

Members of the National Academies, the top U.S. scientific and engineering body, argued that point in a 2005 report, "Rising Above the Gathering Storm." This month, Joint Venture Silicon Valley Network, a public policy group, raised similar concerns with regard to the region's high-tech economy.

Douglass said that two decades ago the United States had the highest college graduation rate of any country in the Organization for Economic Cooperation and Development, a group of 30 top industrialized nations. Today it ranks 19th.

Recent cuts in higher education by cash-strapped states such as California won't help.

"One might postulate that the decisions made today and in reaction to the Great Recession ... will likely accelerate global shifts in the race to develop human capital, with the U.S. losing ground," he wrote in a paper titled "Higher Education Budgets and the Global Recession," available at bit.ly/bnY4xp.