East Asia’s low- and middle-income coun- tries are not delivering the skills and research outcomes they need. Many of the discon- nects are related to funding. The precise challenges and related priorities differ for individual countries, but all countries face some common imperatives.
First, they need to be selective in deciding their targets and priorities. In line with the
analysis of chapter 2, it is clear that enroll- ment increases are not urgent or even advis- able in all countries. Only a few universities will ever be able to develop credible research capacity (given the high requirements for faculty qualifications). By contrast, most research, STEM fi elds, and scholarships are underfunded, making them a priority area.
Second, countries need strategies to fund priority activities. There is a clear case for pub- lic fi nancing to fi nance research, STEM fi elds, and inclusiveness. (Private funding would complement public funding in fi nancing some activities and focus on increasing coverage and diversifi cation.) Countries could consider continuing to mobilize public resources, while prioritizing them better. And because public funds are scarce, countries should fi nd ways to allocate them more effi ciently, attract more private funds, and correct the source of mar- ket failures by offering student loans.
Mobilizing and prioritizing public funding.
Countries should assess the scope for increas- ing public spending. The ratios of tertiary spending to total education spending, of total education spending to GDP, and of taxes to GDP show the potential for increasing public spending. On the fi rst two indicators, Mon- golia and Thailand have more potential than the others. All countries should increase their shares of public spending for research, STEM fi elds, and scholarships.
Increasing the effi ciency of public fund- ing. Because few countries have much fl ex- ibility to ramp up their tertiary expenditures quickly, more efficient use and allocation of public funds applies particularly in the short and medium terms. Greater effi ciency requires being more selective and perfor- mance based in the way public funds for teaching and research are allocated across institutions and better targeting of equity- enhancing measures.
Leveraging private funds and correcting the source of market failures. One way to increase private funds is to design more effi - cient and equitable fee structures. Combined with loan schemes, these policies can increase access for the poor and disadvantaged while helping to recover costs.
Lower- and middle-income countries face the challenge of improving and prioritizing their fi nancing policy for their higher educa- tion systems. Meeting this critical challenge will bear fruit only within a more flexible and competitive higher education system—
the topic of the next two chapters.
Notes
1. OECD 2008b.
2. OECD 2008b.
3. As visible from the snapshot presented in table 4.5 and further evidence from Salmi (2009).
4. Linh, Thuy, and Long 2010.
5. Linh, Thuy, and Long 2010.
6. For instance, fee exemptions introduced at secondary education have been shown to have increased enrollment and completion of secondary school in Vietnam according to rigorous econometric analysis (World Bank 2010g).
7. Sakellariou 2010b.
8. World Bank 2008.
9. World Bank 2010d.
10. World Bank 2010d.
11. Ma 2010. The fi gures have been converted from renminbi (RMB) to U.S. dollars at a rate of US$1 = 6.83 RMB as of May 2010.
12. Loyalka 2009 as cited in Ma 2010; Ziderman 2004.
13. The Philippines has done very little overall in terms of equity (Orbeta 2008).
14. World Bank 2010c.
15. Directorate General for Higher Education, Ministry of National Education [Indonesia]
2009.
16. Moeliodihardjo 2010.
17. World Bank 2010e.
18. These fi gures are not directly comparable with the amounts in fi gure 4.5, which are cal- culated in Thai baht.
19. World Bank 2009a.
20. Ziderman 2004.
21. Singh 1973 cited in Mukherjee 2010.
22. World Bank 2007a.
23. Mukherjee 2010.
24. For a richer discussion of the trade-offs involved in funding various levels of educa- tion, see Mingat, Ledoux, and Rakotomalala (2010). The authors provide fi nancing simu- lations for Sub-Saharan Africa under fi ve
varying scenarios for progress toward univer- sal primary education under the Education for All Fast-Track Initiative Framework, as well as tertiary education expansion. The authors draw attention to the implications of such scenarios, such as raising the share of education in the national budget, reforming the service delivery arrangements to manage costs, diversifying the fl ow of students beyond lower-secondary education, and enlarging the role of private fi nance in postsecondary education.
25. Tertiary spending per student as a share of GDP per capita is used for the STEM share, given that the cost of providing these courses is likely to be quite dependent on local condi- tions; simple tertiary spending per student is used for the journal indicator, given the closer correlation with international salary costs.
26. Mok 2010.
27. Mok 2010.
28. Mok 2010.
29. Tan 2010.
30. These indicators include faculty strengths in course offerings, academic qualifi cation, research and publications, student graduation rates, employment rates, and student evalua- tion results.
31. World Bank 2007.
32. Raza 2010.
33. Ministry of Education, Singapore 2005.
34. Byun 2008.
35. Salmi and Hauptman 2006.
36. Salmi 2006.
37. Barr 2008.
38. Barr 2008.
39. This is true at least for public institutions.
Private institutions are generally—and should be—exempt from fee caps.
40. The use of fees can be maximized by charg- ing variable fees at the institutional and course level; higher-quality institutions and in-de- mand or higher-paying disciplines can charge greater fees.
41. This section draws heavily on a review on student loan design by Johnstone (2004).
42. Johnstone 2004.
43. Ziderman 2006.
44. Ziderman 2003.
45. Ping Chung 2007.
46. Programs to increase access to high-quality secondary schools and courses, particularly targeted at vulnerable groups, could have a par- ticularly high payoff, as shown by the example of the Urban Systemic Initiative in the United States. This initiative, which was designed to provide opportunities for disadvantaged youth to participate in high-level math and science courses, showed positive effects on access to advanced math and science courses, as well as reductions in disparities between (a) African Americans and whites and (b) Latinos and whites in science and mathematics course enrollment (Martinez and Klopott 2005).