The role of universities in nation building

There is a general view that great nations have great universities. This motivates significant public and private investment [both financial and political] in universities.
Unfortunately, these days much of the focus is on universities promoting economic growth.
However, I think equally important are the contributions that universities can make to culture, political stability, and positive social change.

Aside: Much of this discussion assumes a causality: strong universities produce strong nations. However, I think caution is in order here. Sometimes it may be correlation not causality. For example, wealthy nations use their wealth to build excellent universities.

The main purpose of this post is to make two bold claims. For neither claim do I have empirical evidence. But, I think they are worth discussing.

First some nomenclature. In every country the quality of institutions decays with ranking. In different countries that decay rate is different. Roughly the rate decreases from India to Australia to the USA. Below I will distinguish between tier 1 and tier 2 institutions. It is not clear how to define the exact boundary. But, roughly the number of tier 1 would be no more than 50, 10, and 10 for  the USA, India, and Australia respectively. Let's not get in a big debate about how big this number is.

So here are the claims.

1. The key institutions for nation building are not the best institutions but the second tier ones.

2. Making second tier institutions effective is much more challenging than first tier institutions.

Let me try and justify each claim.

1. Great nations are not just build by brilliant scientists, writers and entrepreneurs.
Rather they also require effective school teachers, engineers, small business owners,...
Furthermore, you need citizens who are well informed, critical thinkers and engaged in politics and communities. The best universities are populated with highly gifted and motivated faculty and students. Most would be productive and successful, regardless of fancy buildings or high salaries. The best students will learn a lot regardless of the quality of the teaching. You don't need to teach them how to write an essay or to think critically. In contrast, faculty and students at second tier institutions require significantly more nurturing and development.

2.  At tier one institutions governments [or private trustees] just need to provide a certain minimal amount of resources and get out of the way. However, tier two institutions are a completely different ball game. Many are characterised by form without substance.
To be concrete, you can write impressive course profiles, assign leading texts, give lectures, and have fancy graduation ceremonies, but at the end students actually learn little. This painful reality is covered up by soft exams and grading. The focus in on rote learning rather than critical thinking.
Faculty may do research in the sense that they get grants, graduate Ph.D students, and publish papers.
However, the "research" and the Ph.D graduates are of such low quality they make little contribution to the nation.
The problem is accentuated by the fact they many of these institutions don't want to face the painful reality of the low quality of their incoming students and so they don't adjust their mission and programs accordingly. They just try to mimic tier one institutions.
Reforming these institutions is particularly difficult because they are largely controlled by career administrators who have no real experience or interest in real scholarship or teaching. Instead, they are obsessed with rankings, metrics, reorganisations, buildings, money, and particularly their own careers.

I think these concerns are just as applicable to countries as diverse as the USA, Australia, and India.
For a perspective on the latter, there is an interesting paper by Sabyasachi Bhattacharya
Indian Science Today: An Indigenously Crafted Crisis He was  a recent director of the Tata Institute for Fundamental Research.
I also found helpful a Physics World essay by  Shiraz Minwalla.

I welcome comments.