The history of transformations in Russia and, specifically, in Russian higher education provides us a good example of fluctuations between state control and market power. Russia entered the new transit era with inherited state controlled higher education system [Clark 1983]. Thus, we have seen extreme “zero market” by the end of Soviet-era and rapid marketization of higher education in the next few years [Klyachko et al. 2002]. In 1991 the new legislation of post-Soviet states provided new conditions for reaction of higher education system to labor market and economic conjuncture [Johnson 2008]. Although policy toward liberalization limited state regulation, we should not forget about the mission of government to balance between social and economic goals [Teixeira et al. 2013: 275]. Shifting labor market launched structural changes in the social expectations and economic demands for higher education. New economic conditions and political liberalization made households invest in higher education from the mid-90s till the mid-2000s in a tremendously rapid way. The growth of participation (similar with the general worldwide trends) determined one the greatest massification, both in Russian higher education history and globally [Smolentseva 2006]. Lots of new institutions have emerged every year. Existing institutions with a long history, primarily Soviet-born, opened a bunch of new programs on social sciences, management, and humanities [Froumin et al. 2014]. The privatization contained the emergence of private institutions sector and opening the option of private funding of places in state HEIs. Besides, although in the first part of transitional period the state had limited ability to regulate the higher education system, in 2000s it has returned its role of the main agent and provider of changes of higher education system design [Salmi and Froumin 2013]. Developing the analysis of the core transformations and their consequences, this paper provides observations of the state-market interactions critical to defining the design of a national higher education system.

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