Higher Education: Economics Behind Global Rankings

This article critically examines the global university ranking system as a market-driven framework that promotes the Global North or developed world’s notion of quality in higher education by pushing the Global South or developing nations to follow the same path. It argues that ranking metrics, rooted in utilitarian economics and biased toward developed-country contexts, create a principal-agent problem that forces institutions to prioritise measurable outputs over equity, access, and social justice, which calls for a new evaluative framework grounded in inclusion, community impact, and democratisation of knowledge.

This raises quality concerns in Indian higher education with regard to the university ranking systems across the world. The Press Bureau of India reported in January 2026 that the number of high ranked Indian universities in the QS World University Rankings 2026, increased substantially, i.e., five-fold, from 11 to 54 over the period 2015-2026.

India, driven by this number game, has the second most representation in the Times Higher Education (THE) ranking with 128 institutions but could not find a place even in the global top 200. Further, in the recent India AI Impact Summit 2026, the Chinese robodog fiasco over Galgotias University’s false claim on an international platform has not only questioned the university’s goodwill but also questioned the desired ranking quality parameters of QS World Ranking of universities that ranked this university as among the finest ones. The Galgotias episode has come out as a follow up of the university’s entry into THE and QS World Ranking Universities.

In this light, these two episodes can’t be viewed in isolation from each other and invite quality concerns for aspiring universities. The discourse, however, is also witnessing a paradigm shift via redefining quality parameters in higher educational institutions or universities in recent times. The news headlines of January 2026, referring to Zhejiang University, a Chinese university, as on top position in the CWTS Leiden Ranking, pushing Harvard University from first to third position, disrupts the existing global academic dominance. This “new academic world order,” is the result of China’s “whole-of-nation” scientific investment.

The above statements highlight and conform with the dominating discourse on the importance of accrediting universities on certain parameters of -- teaching, research, knowledge transfer followed by institutional income and internationalisation components of education. The emerging ecosystem of knowledge translates the complex human- centric mission of universities into a standardised set of quantifiable, weighted metrics.

The world ranking systems are based on standards based on developed nations’ parameters in terms of creating a research environment with higher funding and contributing to higher research quality. The global parameters are a huge challenge for developing nations, such as India, where low public funding results in poor research environment and research quality. Thus, investment in education and research is solely driven by the market logic for human capital formation to meet the demand and supply.  Here, it would be pertinent to examine how the ranking phenomenon has emerged as a multi-billion-dollar global industry with the advent of various indicators of quality, such as the  patent system, indexing of academic journals, monetising articles/journals etc.

Ranking: A Business of Prestige and Pressure

Global university rankings—QS, Times Higher Education, and ARWU—shape prestige worldwide, dominated by institutions in the US and the UK. Despite excellence in diverse fields, many countries struggle to enter the top 200, as rankings privilege STEM, patents, and research income. Universities like Oxford and Cambridge set the standards, influencing policy and attracting global talent, while others face the pressure to conform. A drop in rank can reduce applications, faculty, partnerships, and funding, creating a cycle of anxiety and commerce. This system sidelines arts, humanities, and social sciences, widening inequality, especially for developing nations, like India, where rankings reinforce stratification and global imbalance.

Quantifying Human Endeavour

Ranking methodologies are often backed by utilitarian economics that can contribute to innovation and human capital formation. The economics of university ranking system guides educational institutions to follow a market-friendly vision of excellence that lays greater weightage to high-impact publication in nature and science than the groundbreaking legal-aid clinic serving the poor that can’t be measured in absolute numbers. An educational institution is marked with a composite index, a single number that represents the status of the university in terms of ranking, unfortunately reflecting the gap between the top-ranked universities, such as Harvard or Oxford, and aspiring Indian universities.

Two Opposing Frameworks: The Welfare State vs. Market

Global university rankings distort higher education's core mission by treating institutions as competitive firms, ignoring their role in advancing equity and social mobility. Vital democratic functions—preserving culture, promoting public health, and shaping socially engaged citizens—are undervalued by metrics like "industry income" that prioritise commercial gain over social utility.

India currently is in ideological crossroads involving opposing frameworks: it simultaneously promotes privatisation and financial autonomy. Rankings incentivise universities to divert resources from essential teaching mandates—educating the human infrastructure of nurses and teachers—toward high-output research labs to secure citations and industry partnerships.

While China treats universities as strategic State assets and the West accelerates privatisation, India must craft a unique path. This requires reinforcing education as a fundamental right through expanded funding and regulation, ensuring institutions collectively serve the whole of society rather than mere market-driven metrics.

Thus, India’s challenge as a Global South economy, lies in devising a new model by not abandoning the welfare-State ideal of higher education as a right, rather reinforcing it. For reinventing public universities’ potential, there is an urgent need to increase public funding in Indian higher education system and ensure scientific knowledge production for the society as a whole.

Narender Thakur is Professor in Department of Economics Dr. Bhim Rao Ambedkar College, University of Delhi (narender224jnu@gmail.com.) Vaishali is an independent researcher based in Delhi (pihunavya@gmail.com.) The views are personal.