Mixed data analysis from 14 national research universities in Ukraine provides insights into the challenges faced by higher education reformers, as they push academic science to a higher position in the emerging knowledge economy, but are halted by deeply entrenched economic and political legacies. This paper examines competing forces that entangle the university idea in hierarchizing, rather than synergizing notions of nation-building, economic modernization and quality education access. Local reform efforts are viewed as being anchored in the outdated "factory-model" of higher education and generate more losses than gains in regional and global competitions. The discussion focuses on the argument that failing higher education is most likely to lead to a failed state. One of the contributors to the failure is the lack of a globally conditioned set of indicators, independent of local politics. The world-class university model can become a major reform driver, but it can also be thwarted by the legacy of entitlements, corruption and poor performance.