Since the 1990s higher education has been positioned as one of the most important powerhouses for development in low-income countries. This signals a policy reversal on the part of powerful international organizations such as the World Bank, which for decades declared that there should be little investment in higher education because of low rates of social and economic return. In the context of the knowledge economy, the widely held view is that the ability to access, generate and transmit information rapidly across the globe has the potential to transform countries that are materially poor into countries that are ‘information-rich’with the ability to utilize knowledge for economic development and leapfrog traditional developmental stages. This chapter assesses the potential for building higher education systems that can contribute to development in low-income countries. Given the rapid development of a global higher education arena and the intensification of higher education relationships across borders, low-income countries cannot be researched in isolation but must be analyzed in the context of changing relations between capitalism and contemporary globalization, and the transformation of higher education systems worldwide. Drawing on scholarship related to the new imperialism, this chapter argues that rivalry between the most powerful nation-states is a key feature of contemporary globalization with considerable impact on higher education systems. Restructuring and cross-border interactions in higher education are increasingly characterized by governance mechanisms and rationales that aim to deploy higher education as a lever to enhance the competitive edge of the nation-state in the global economy and to assert political influence in the regional and global context.

The chapter begins by analyzing the global sociopolitical and economic contexts underlying the policy shift that has harnessed higher education so closely to the knowledge economy meta-narrative. It then presents an analysis of the new imperialism in the twenty-first century and explores how emerging powers such as China have the potential to impact on older hegemonic relations. Rather than conceptualizing low-income countries as passive subjects of inter-hegemonic rivalry, as much of the literature tends to do, the chapter explores the strategic interventions and actions taken by low-income countries themselves. The opportunities and the pitfalls for low-income countries under current global conditions are assessed before the chapter concludes with seminal issues for research and policy to enable genuine capacity-building in higher education systems with the potential to contribute to development.