The collapse of eastern Europe has shown state-run industry to be a failure, is it the same for state-run universities? É«ºÐÖ±²¥S looks at the competition With more than 200,000 students in fee-paying institutions, most of them in private "grandes ecoles", offering business courses and preparatory classes leading to these ecoles, France's private sector is generally believed to have reached its full potential.

In the late 1980s, business schools and to a lesser extent technical and engineering schools underwent rapid expansion then three years ago hit hard times as the recession began to bite.

Private universities have fared better, with increased public funding since the rightwing government came to power in 1993.

The private university sector, made up mostly of five Catholic institutes, saw its state funding rise from Fr140 million to Fr180 million (Pounds 17 million to Pounds 22 million) last academic year and increase by a further Fr24 million this year.

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"Those budget increases go far above inflation, but are basically making up for the lack of any rise between 1988 and 1993," noted Claude Le Brun, head of private sector affairs at the ministry for higher education and research.

Along with extra cash, private institutions are getting more attention from the ministry. An advisory body, the national private higher education council, has been set up.

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"The minister, Francois Fillon, wants to follow this sector closely and set up the council to debate policy and exchange ideas," Mr Le Brun explained.

Institutions which give no nationally recognised diplomas and receive no state money escape ministerial supervision entirely.

One such is the Leonard de Vinci University, a fee-paying institution funded entirely by the greater Paris "Ile-de-France" regional council, due to open its doors, one year late, next October. It is billed by its supporters as an exciting innovation, combining original course content, teaching and links with business.

Its detractors say the high fees - Fr30,000 a year - do not even lead to officially recognised diplomas, while the project absorbs funds the public sector desperately needs.

The future university has had trouble finding partners in the public sector, after Paris-VI University backed out of a partnership which has given the private body's students access to recognised qualifications.

One partnership has been struck with the Paris chamber of commerce and industry, which will set up an institute of technology and management on the Leonard de Vinci site.

"It is an original university and the partnership is a way of being close to it, of saying 'this is good, we need innovation, new models'," commented Hubert Bonal, director of education at the chamber of commerce.

Whether or not Leonard de Vinci manages to get off the ground, many observers see very limited potential for such a model.

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"This type of university cannot spread for a very simple reason - cost. The Ile-de-France council is extremely wealthy, but other regional councils could not afford to fund more than, possibly, a private ecole," noted Mr Le Brun.

Outside the public sector, some ecoles are entirely private, others are run by chambers of commerce; all charge fees.

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While France's 60 private engineering schools have weathered the recession fairly well, the business schools have had a far harder time. "We're bailing water out as fast as it comes in," commented a manager of one of the private management schools.

With fewer career openings and starting salaries that have dropped from Fr180,000 a year to around Fr150,000, students and their families have become wary of investing in a school where fees easily top Fr30,000 a year.

Most schools have frozen or even cut their fees for three consecutive years, all make a far greater effort to help their students find a job after graduating and many now have far fewer students in spite of such efforts.

"Our numbers peaked at around 90 a year in the late 1980s and are now down to about 60 a year," said Simon Taylor director of public relations for the new MBA Institute, designed as a fast track on to American postgraduate MBA courses, so it selects only those candidates who can make the grade.

The school has frozen its Fr37,000-a-year fees and works hard at placing students with companies. Even the most prestigious business schools are feeling the pinch. "We try to organise our schools better and reduce administration," said Mr Bonal.

The schools also face the problem of modernising their structure and courses. One of the chamber's schools, l'Ecole Superieure de Commerce de Paris, ESCP, recently commissioned an opinion poll on management courses across Europe and found that business and financial executives thought Britain beat France.

"The London School of Economics produces graduates with far more brilliant personalities and character," said Hugues du Rouert, vice president of Shell France, at a conference at ESCP where the survey's findings were presented. He concluded that the French ecole system was perhaps ill-adapted to the globalisation of the economy. Meanwhile, a teacher at ESCP, Jean-Gustave Padioleau, has been given notice after criticising the ecole system.

A row has broken out over the sacking of Padioleau, a sociologist who teaches public policy. He and Jean-Claude Thoenig, a re-searcher at the Centre National de la Recherche Scientifique wrote an article outlining the shortcomings of French business schools and proposing reforms.

They accused the ecole system of a conspiracy of silence, covering up its weaknesses and preventing open competition for posts to ensure academic excellence.

"We proposed reforms to make the system really independent and outstanding. When you keep to facts and recommendations, that is seen as blowing the whistle," said Mr Padioleau, who is fighting his dismissal.

Mr Bonal does not agree that it is an issue of academic freedom. "You would not expect an executive to criticise Oreal and keep his job there," he said.

Some 25,000 students are on degree courses in Catholic institutes, under arrangements with neighbouring state universities, which alone can award national degrees.

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