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FUNDING HIGHER EDUCATION: ANALYSIS FROM THE CONTEXT OF DEVELOPING COUNTRY

Higher education in most of the country contributes to the human development to promote highly educated society in order to keep stability in economy, social, and political. In order to promote sustainable development, the role of higher education is very important because the governments in most developing countries provide strong funding capacities to their higher education institutions. Therefore, the strategic funding approach that based on the performance based become very popular to be implemented to increase the accountability and transparency.

FUNDING HIGHER EDUCATION: ANALYSIS FROM THE CONTEXT OF DEVELOPING COUNTRY Abd Rahman Ahmad (Corresponding author) Faculty of Technology Management and Business, Universiti Tun Hussein Onn Malaysia, 86400 Batu Pahat, Johor, Malaysia Tel: +607 4533953 E-mail: arahman@uthm.edu.my Ng Kim Soon Faculty of Technology Management and Business, Universiti Tun Hussein Onn Malaysia, 86400 Batu Pahat, Johor, Malaysia ABSTRACT Higher education in most of the country contributes to the human development to promote highly educated society in order to keep stability in economy, social, and political. In order to promote sustainable development, the role of higher education is very important because the governments in most developing countries provide strong funding capacities to their higher education institutions. Therefore, the strategic funding approach that based on the performance based become very popular to be implemented to increase the accountability and transparency. Field of Research: Funding, higher education, developing country ---------------------------------------------------------------------------------------------------------------- Introduction Higher education around the world has shown dramatically decreased on the state funding. These challenges require reform for HEIs in order to survive with the increase on costs, complex set of problem, expend roles of higher education, and demand for more accountability in higher education (Altbach, Reisberg, & Rumbley, 2009). Funding reform according to Schiller & Liefner (2006) comprise of government budget cuts, performance-based funding, and diversification of the funding base. In the context of developing countries the major funding sources of funding for higher education come from government. However, in some developing countries, Varghese (2004a) points out that there is strategy to be more independent from the public resources to finance the HEIs activities that includes privatisation of public universities and the promotion of private HEIs. Literature Review Albrecht and Ziderman (1992) pointed out the need for developing countries to provide effective policies for funding mechanisms in order to stabilise the supply of resources and created links between subsidies and higher education admissions. They stated that funding access could be achieved by establishing funding formulas and linking them to access to the labour market. These policies need to generate a diversification of funding resources, not only engaging in one. Therefore, they need to diversify activities of research and development, consultancy, entrepreneurship, patenting, and commercialisation to generate returns for resource funding. In order to implement this policy, HEIs need to be given academic autonomy and control of their own resources. Governments in most developing countries provide strong funding capacities to their HEIs. However, Schiller and Liefner (2006) have argued that although similarities exist in the HEI funding of developed countries, universities in developing countries still experience extreme politicisation of their environments (Jongbloed, 2000). For this reason, there are different approaches to allocations of funding in developing countries. For example, some governments in developing countries use negotiation-based approaches, while others use performance-based approaches or formula-based allocations to determine funding allocations. The higher education system in developing countries experience deficiencies in some area that restrict for the future development. This includes the quality of the faculty, students, and insufficient of resources and autonomy (Mundial-Unesco, 2000; Salmi, 1992). Meanwhile, Tilak (2000) argued that higher education in developing countries went into some policy issues where in developing countries: (1) higher education has over-expended, (2) higher education heavily subsidised by the government, and (3) higher education is not heavily important. It shore up with the finding from the Global University Network for Innovation (2009) in the sub-Saharan Africa, Asia-Pacific, and Arab States where this region is considered as developing countries. According to the finding, sub-Saharan Africa went into crisis in the late 1980 and 1990s, where at that time the problem accord is high student enrolment, shortage of funds, and poor of quality. As in Arab States, higher education’s almost having the same problem with the sub-Saharan Africa except that they were facing problems in research and gender inequity in teaching post. Finally in Asia-Pacific have little autonomy compared to others countries. Even though, the developing countries faced the challenge on the issues state, the contribution of higher education to some extent for to the social development is mostly important. As a result in sub-s higher education is very important to facing globalisation, gender issues, and equity in the education (Global University Network for Innovation., 2009). In the future scenario, the university is expected to be more complex, competitive, and will face challenges from various parties in educational and industries sector in local and at international level. The new realities is that, higher education in developing countries is under reform and there is rapid development of higher education (Huang, 2006; Lee & Healy, 2006). Meanwhile, a recent study from Asian Development Region (ADB) shows that the demand for higher education is expected to double in five years and triple in ten years in many of developing countries in the region (Sarvi, 2008). Funding Higher Education in Asia Trends in several Asia countries demonstrate dramatic increased on the number of students and HEIs. In fact, in Asia itself there are about 45 million students which it covers nearly 45 per cent of total number of students in the world (Global University Network for Innovation, 2009). The most important challenges faced by government in Asia is the rapid growth and increase in public demand impacted higher education change and reform especially in East Asia (Hong Kong, Singapore, Taiwan, South Korea, China and Japan) (Hawkins, 2008; JBG Tilak, 2003; Welch, 2007b). In other cases, the total funding pattern shows a steady decline from the state government which has affected the development of institutions. In this regard, HEIs need structural adjustment to generate resources on their own. Since that, institutions have started to exercise activities focusing of strategies to attract more funding from private sectors (Varghese, 2004a; Welch, 2007b). The cost of sharing between government and private approach is increasingly adopted in Asia and the trends can be summarised as follows (Global University Network for Innovation, 2009): The introduction of cost sharing in higher education; The introduction of tuition charges; Increase completion between higher education for finance; Diversification sources of funding; The introduction of income-generating activities; International cooperation contribute to additional funds to higher education; and Increase on expenditure from private on higher education. Funding higher education in the context of policy reform in this section covered from selected Asia countries namely from China, India, and Indonesia. Funding Higher Education in China Over the last 30 years, the Chinese economy has moved from a centrally planned economy to a market economy and this remarkable growth has highlighted the importance of investment in human capital development (NG, 2009). In accordance to that, this transformation has affected the level of expenditure and government spending on education services. According to Kang (2004) the rapid growth of expansion of higher education in China begun since the Third National Conference on Education in 1999, and the implementation of the Plan for Chinese Education Development in 21 century. As a consequence, a rapidly growing cause four major challenges: (1) development of science and technology; (2) social reform and innovation; (3) economic reform; and (4) culture conflict with western (Brandenburg & Zhu, 2007). Moreover, these challenges can be resolved with implementing higher education reform in China. The Chinese government has shifting planning and regulation of higher education system towards the market oriented approach. Furthermore, Lianqing (1996) suggested ten characteristics of higher education reform where one of them included change on the pattern of financing higher education from the government. Moreover, the transition to a market oriented system included a number of programs with special funding in order to help universities become world class (Li, 2010). To achieve this, the government have identified nine universities that should strive to achieve world class status (Vidovich, Yang, & Currie, 2007). Therefore the China government through the Ministry of Education has come out with the agenda to reform the higher education including the introduction of new financing system (Brandenburg & Zhu, 2007). With the reform HEIs in China have more autonomy to generate their own revenues without too much depend on the government (Vidovich, et al., 2007). In respond to increasing demand for greater quality, efficiency and to readjust the strategic structure (Mok, 2005a), university merging have changed the landscape of higher education in China (Wan & Peterson, 2007). In the merging initiatives, the policy contexts of governance, autonomy and decentralisation implementation program have changed the structural in the financing of higher education in China. As a consequent, the impact of merges adopted reduced the government financial subsidies (Wang, 2001) and the overall resources allocated to the institutions suffered from serious decline (Mok, 2005a). A study from Mao, Du and Liu (2009) on the effects of university mergers in China since 1990s from the perspective of knowledge production indicated that, prior to the mergers, the reform has a positive impact on research funding efficiency, but there was a “short-term prosperity”. With the booming of higher education in China, the structural changed in financing is more obvious. In fact, the financial support to higher education in China had actually declined from 93.5% to 50% in 1990 to 2002. In other words, the real value of government allocations for higher education has declined and institutions have to heavily relied upon the financial abilities of local governments and individual contributions (Mok & Lo, 2007). In order to overcome the problem, Tilak (2003) stated that a number of institutions in China started to generate innovative forms of methods to generate their own resources by running a business, commercialisation of research to the industry, contract for training and development, consultancy, and provided IT services to the public. Due to the pressure of funding, the China government shift the pattern of governance and funding to: (1) a state supervising model; (2) a diversified funding base; and (3) fee charges (Chow & Shen, 2006; JBG Tilak, 2003). Distribution of teaching and research funding to higher education has become a central element of the university’s mission. With the introduction of student tuition fees and the commercialisation have turned into a way of strategies to increasing funding for higher education (Vidovich, et al., 2007). In fact, China government has provided most of the research funding to the research universities partly through the 985 and 211 central-government-funded support programmes - approximately 150 universities have participated in these key projects (Altbach, 2009). Funding Higher Education in India India’s higher education system is the third largest in the world (Singh & Papa, 2010), which found itself facing pressure from the globalisation and challenging environment (Swar & Pandey, 2008). Today, there are about 490 universities (Central Universities = 20, State Universities 216, Institution Deemed to be University = 101, Institutions of National Importance = 13 and Research Institutes = 140) and 20,769 colleges (General Education = 11,698, Engineering, Technology & Arch = 1,562, Medical = 2,053, Teachers Training = 1,669, Polytechnics = 1,274, and Others = 2,513) of HEIs in India (Government of India, 2008a). The basic principles of funding higher education in India are centred by the India Federal Government or state and the households. Three main sources of funding come from the government as major contributors, student fees, and private sectors. According to Tilak (2004) the average sources of financing of universities in India relatively come from different sources in which several universities got 80 per cent funding from government and others universities only received about less than 70 per cent and the rest even much lower than that. After independence, the higher education grow rapidly and until year 2005/2006 there are about 18,123 public and private HEIs with the total number of 10,468,000 students (Agarwal, 2006). Therefore, sources of funds from the public is not sufficient to support the dramatic growth of demand and expansion of HEIs in India (Rani, 2004; Varghese, 2000). Swar and Pandey (2008) indicated that higher education system in India suffers from acute paucity of funds, lack of autonomy, burden of affiliation and etc. It is characterised by extreme rigidity and lack of flexibility. In addition, the educational system is predominantly a state funding (J Tilak, 2004; Varghese, 2000) and the adverse impact on financial constraints has contributed to financial reform. In accordance to that, Tilak (2004) stated that the government expenditure on higher education has been accompanied by a decline in public spending after the economic policies were introduced in India. In fact, the public expenditure expenses on higher education has increased from Rs 23,120 million in 1990-1991 to 95,620 million in 2004-2005, however by contrast due to increase on the inflation the total allocation is just an illusion (Prakash, 2007). As a result, most of the HEIs have increased the tuition fees not only to cover the operating costs, but also to generate surplus for other operations of the institution as part of the strategies to cope with increased demand and cost (Agarwal, 2007). In addition to that, the political interference on academic appointments, campus activities, and decision has also contributed to the problem (Agarwal, 2006; Singh & Papa, 2010). In these challenging circumstances the India government needs to improve the overall education system. With that the government has set various committees to explore the possibilities of resource mobilisation in order to reduce the pressure from public funds. In addressing these issues, Agarwal (2007) suggested strategic change agenda to foster the development of higher education in India. Here he suggested the India government to have pragmatic and innovative public policies to ensure the accountability in funding mechanisms that can be established for both of public and private HEIs in order to encourage quality, equity, and efficiency. Furthermore, the government should increase the public funding for higher education in order to face the challenges. In fact, India has a competitive advantages since it has the largest higher education institutions in the World after China and the United States (Altbach, 2005). Funding Higher Education in Indonesia Higher education in Indonesia is dominated by the private sectors where by almost 95 per cent of the institutions and 62 per cent of its enrolment hold by that sectors (Varghese, 2004a). In 2004, there are about 2,235 private HEIs compared to only 81 HEIs owned by public sectors. Indonesian Government provided almost 80 to 90 percent of funding for public universities; meanwhile private universities are operated by budgets that are almost entirely tuition driven. However, a reduction in total funding from government have changed the focus of public institutions to becoming increasingly reliant upon tuition fees (Welch, 2007a). The recent concern on globalisation and economic crisis in 1997 followed by the political instability has become the factors that contributed to the strategy and implementation to reform the higher education in Indonesia in order to improve the higher education system (Fadlil Munawwar Manshur, 2009; Welch, 2007a). According to Brodjonegoro (2002), a landmark to the reform agenda for higher education in Indonesia is due to the following factors: (1) the cost of higher education has grown rapidly shaped by increasingly shared with students and families through tuitions fees; (2) legal mechanism needed to control the growth of private sectors institutions; and (3) the setting of financing should enhance measureable indicators of outcome as well as devolving some functions to the expenditure of the authority to the universities. According to Varghese (2004) two main foundation of the reform is new bodies and structures, and new funding schemes for higher education in Indonesia. With the new bodies and structure, the Indonesian government has introduced a new paradigm in order to improve the quality, autonomy, accountability, accreditation, and evaluation for higher education system. With that, Directorate General of Higher Education (DGHE) has established the Board of Higher Education (DPT) and the Ministry of Education and Culture, through the DGHE have the authority over both state and private HEIs. The recent reforms have promoted the new cooperation between private and public HEIs to the extant where both of the sectors in the same band are encouraged to compete with government funding (Welch, 2007a). For the new funding schemes, the Indonesian government has introduced the competitive funding by year 1990s in effort to implement its new Higher Education Long Term Strategy (HELTS) (Tadjudin, 2007; Varghese, 2004a). Tadjudin (2007) pointed out that the study on competitive funding from DGHE in 2007 shows that the method has changed the Indonesia public universities to be more competitive, proactive, and creative. Furthermore, the purposes of competitive funding mechanism implemented is to improve the Indonesia government investment and at the same time improve to planning, cost efficiency, and ownership amongst institutions (Varghese, 2004a). Funding Higher Education in Sub-Saharan Africa The Sub-Saharan Africa includes 54 countries with the rapid increase on the total numbers of population (Boserup, 1985). With the population of more than 657 million, the role of education is very important to fight poverty and promoting economic growth in this region. Eventually, the emphasis to higher education in this countries would contributed to the increase in revenue, saving and investment, entrepreneurial and civic society (Bloom, Canning, & Chan, 2006; Teferra, 2006). However, the higher education in Sub-Saharan Africa in other hands faces a considerable challenge in the development. While, this region facing dilemma on the development and financing higher education due to largely dependent on government funding (Global University Network for Innovation., 2009; Johnstone, 2004). The cause of the challenges includes: The pressure to expend the higher education system; Challenge with the economic growth and political instability that one of the sources of financing the higher education; The changes on policy and fiscal climate from the lending agencies such as International Monetary Fund (IMF) and the World Bank; Social concern and health issues such as HIV/AIDS infection; Declining expenditure of the ability from students to pay higher education fees; and The misallocation of financial resources. HEIs in Sub-Saharan Africa enjoy relatively higher financing allocation compared to others educational sectors such as primary and secondary. However, the past decade of the efficient use of government monies in this field has increasingly been questioned (Banya & Elu, 2001). Moreover, in fact the apparent inability of the government to subsidise the increase number of enrolments due to the need to prioritise investment to basic education, health care, and poverty programs (Oketch, 2003a). Furthermore, Johnstone (2004) added the pressure of financial support to the higher education of sub-Saharan Africa contributed to the low productivity and efficiency. This includes declining in staff qualification, funds for educational inputs, research, and quality assurance. According to Pillay (2008) the factors of lack of funding is for the reason that of low expenditure from government, political pressure in ensuring that the primary and secondary schooling are more important in getting the overwhelming share and resource constraints. Furthermore, de Villiers & Steyn (2009) stated that, public expenditure on higher education in South Africa shows drastic decrease from 0.86 per cent of GDP to 0.66 per cent in 2006. The same conditions also affected Nigeria and Uganda higher education where there is a fluctuation and resource constraints from the government (Akinsolu, 2008; Ssempebwa, 2007). In South Africa, HEIs need to generate funds from others sources since state funding shows decline in order to generate funds from other sources such as higher education fees. South Africa has come out with four funding model of higher education. The latest funding model called New Funding Framework has been implemented in year 2004. In Jamaica, both of public and private HEIs offered significant role in contributing to the economy growth. According to Evans and Burke (2006), institutions are publicly financed and in the meantime the levels of funding depending upon the type of institutions. On average funding for education in Jamaica has grown at a four per cent of GDP in 1990 to eight per cent in year 2000 (Ministry of Education, 2004). The current practice of funding higher education is based on the cost sharing between the state, corporate, students and institutions. With this model, Nkrumah-Young, Huisman, and Powell (2008) pointed out that the cost sharing model shows positive impact compared to the previous mechanisms. In the meantime, the Jamaican government would continue providing significant amount of funding of higher education, meanwhile the amount of total funding are shared responsibility among the state, corporate sectors, students and institutions. Funding Higher Education in Arab States The Arab countries include four sub-regions that can be categorised as follows: Sub-region I : Mauritania, Morocco, Algeria, Tunisia, Libyan Arab Jamahiriya; Sub-region II : Egypt, Sudan, Djibouti, Somalia; Sub-region III: Yemen, Saudi Arabia, The Sultanate of Oman, U.A.E., Qatar, Bahrain, Kuwait; and Sub-region IV: Iraq, Jordan, Syria, Lebanon, Palestine. Sanyal (1998) pointed out six factors that contributed to the financial problem of higher education system in Arab countries. This includes (1) the increasing of demand for higher education due to rapid growth of the population and students enrolments, (2) the priorities for secondary and primary education level in reducing the poverty, (3) customisation of courses in labour market, (4) the rapid growth of technology and knowledge, (5) the emphasis on research and development needs for additional funds from government, and (6) the important of quality in teaching and learning. Higher education in Arab countries share same common characteristics that contributed to the development and crisis. According to Rugh (2002a) in recent decades, HEIs have shown rapidly growth with government control on it and there is emergent trends towards privatisation reform. Schools and universities in the majority of the Arab countries is administered by the government where most of the academic staff are government employees and HEIs is funded mainly from the government budget (Rugh, 2002a). However, Sabry (2009) stated that the spreading out of higher education in Arab region is not balanced and most of the HEIs in the Arab countries faced a funding crisis where there are limited of government spending for higher education. Some of the universities in Arab countries already increased the tuition fees in effort to increase the sources of funds. Furthermore, HEIs in Arab countries have experienced dramatic increase in the new trend of privatisation with more private university establishes in cooperation with North American and European Universities (Herrera, 2007; Rugh, 2002a), The growth of private universities can be clearly seen in year 2000 where out of 175 universities about 47 of them are private universities in Arab region. According to Al-Suwaidi (1997) previously, higher education in The United Arab Emirates (UAE) faced many problems due to political, social and economical factors. However, after the expansion of higher education in the UAE, the government has embarked the program towards educational excellence in order to enhancing the future of economic growth (Gardner, 1995). Like many other countries, the government has started the educational reform with emphasis on quality and focus to the government needs. The effect of globalisation has influenced the government to provide effective policies for future development and growth (Al-Suwaidi, 1997; Godwin, 2006; Kirk & Napier, 2009). With that the government has set the formation of new Emirates Foundation as a body to provide funding to HEIs (Godwin, 2006). Furthermore, today there are more foreign universities operating to meet the increase demand from local and international students (Lefrere, 2007). Meanwhile, in Saudi Arabia the government has devoted the attention in fostering the development of higher education in the country (Rugh, 2002b; Saleh, 1986). Since that higher education in this country has undergone a tremendous growth and become highly priorities for future growth. In practice, higher education is highly subsidised by the government. According to Rugh (2002b) the government spends almost 23 per cent of its yearly budget and 7.5 per cent of GNP for the purpose of education in all levels. In fact, the Ministry of Higher Education of Saudi Arabia has spent about $15 billion for the educational in year 2007 as part of the program to enhance further development in these sectors (AME info, 2008). The government has dedicated the vision of higher education development into high level in order to improve the knowledge and skills of its citizens. This can be viewed from King Abdullah message as follows: It is my desire that this new university becomes one of the world's great institutions of research ... that it fosters, on the basis of merit and excellence, collaboration and cooperation with other great research universities and the private sector." Elhag (2009) stated that the future scenarios of higher education in Arab countries are based on the current situation that are challenging and need to be reformed. Here, in order to face the challenges, the Arab world must start to do the planning to bridge the gap. He suggested some of the strategies which include enhancing the obligation to improve the quality of higher education, providing adequate financial support for HEIs to growth and expand, Increase the numbers of HEIs and student enrolments, and finally perform scientific research to promote economic growth. Summary However, Litten and Terkla (2007) pointed out that the sustainable progress for HEIs is a critical mission in order to perform the traditional functions which includes teaching, research and services. Here, HEIs should find the best solution to face all challenges that they will embark upon in the future. The challenges to be met are as follows; globalisation process and the ICT development, liberalisation market of World Trade Organization (WTO) and the safety and the unexpected outcome of the world economy as well. It is recognised that the public funds have a monopoly on funding higher education despite its decline. 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