8/2/2019 3447124

1/8

Higher Education in Developing Countries: The Scenario of the FutureAuthor(s): George PsacharopoulosReviewed work(s):Source: Higher Education, Vol. 21, No. 1, Higher Education in Developing Countries (Jan.,1991), pp. 3-9Published by: SpringerStable URL: http://www.jstor.org/stable/3447124 .

Accessed: 29/02/2012 08:56

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of

content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms

of scholarship. For more information about JSTOR, please contact support@jstor.org.

Springeris collaborating with JSTOR to digitize, preserve and extend access toHigher Education.

http://www.jstor.org

http://www.jstor.org/action/showPublisher?publisherCode=springerhttp://www.jstor.org/stable/3447124?origin=JSTOR-pdfhttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/stable/3447124?origin=JSTOR-pdfhttp://www.jstor.org/action/showPublisher?publisherCode=springer

8/2/2019 3447124

2/8

HigherEducation21: 3-9, 1991.? 1991 KluwerAcademicPublishers.Printed n the Netherlands.

Highereducationndeveloping ountries:hescenarioof thefuture*GEORGE PSACHAROPOULOSThe WorldBank, Washington,DC 20433, U.S.A.

IntroductionThe papersin this issue are representativeof the challenge facing most universitysystemsin today's developingworld. Highereducationsystemshave multipleandvarioustasks,includingnationbuilding,trainingof highlevelmanpower,satisfyingthe social demand for education, conducting research and being centers ofexcellence. As shown by experience,the above batch of laudable objectives isseldom, if ever,achieved.Why?In this introductionI attemptto explainbrieflywhythe dynamics underpinningthedevelopmentof university ystemsin low incomecountriesmighthavechangeddrasticallyrelative o, say,30yearsago, andoffer a vision of the inevitabledirectionshighereducationmightbe heading.

ThechangedscenarioUntil the middle of this century, only a small fraction of the eligible populationattended universities.Higher education systems were able to accommodate thedemand for education at the tertiary level based mainly on public funding. As

Table 1. Higher education enrollmentratio (percentof age group)

Region 1950 1960 1970 1980 Latest 1987Africa 0.8 0.7 1.5 3.5 4.3Asia 1.5 2.6 3.5 5.6 7.3Latin America 1.6 3.0 6.3 13.5 16.9Europe 2.2 10.3 17.3 22.1 25.2Northern America 7.2 28.9 45.4 54.3 63.8Developing Countries ... 2.1 3.0 5.7 7.4Developed Countries ... 13.5 23.4 30.3 34.1World 2.8 5.3 8.5 11.5 12.6Source:UNESCO, StatisticalYearbook, 1980, 1989.... Data not available.

8/2/2019 3447124

3/8

430

2520

15

10'

5'

Percent

Europe

1950

Asia

1987960 1970 1980Fig. 1. Highereducationenrollmentratio by region.Source:From Table 1.shown inTable 1andFigure1,highereducationenrollments ncreaseddramaticallyduringthesecondhalf of thiscenturyto a multipleof whattheywere nthe 1950s.InLatin America, for example, the higher educationenrollmentratio increased 10times between 1950 and 1987.But as shown in Tables2, 3 and 4 the public resourcesfor education in general,and highereducation inparticular,have not increasedparipassuwith enrollments.For example, the share of the public budget devoted to education has remainedconstant,if not declined,throughoutthe periodunderconsideration n allpartsofthe world.

There areexplanationsfor both trends describedabove.Table2 Publicexpenditureon education as percentageof the GNPRegion 1975 1980 Latest 1987Africa 4.5 5.0 6.6Asia 4.3 4.5 4.5LatinAmerica 3.4 3.8 4.1Europe 5.7 5.5 5.5Northern America 6.4 6.7 6.9

Developing Countries 3.5 3.8 4.1Developed Countries 6.0 6.0 5.9World 5.5 5.5 5.6Source:UNESCO, StatisticalYearbook, 1989.

8/2/2019 3447124

4/8

5Enrollment growth. Industrializedcountries first took the lead in increasingenrollments n the earlysixties. The mainreasonfor the sharprisein enrollment nthe developed world, I believe, was the Sputnik effect. The United States first,followed by Europeancountries,felt that they were lagging behind in technologyrelative o the SovietUnion. Henceuniversitiesalongwith theaccompaniedR&D)weregivena greatboost. Developingcountriesfollowed as a demonstrationeffect(or to catch up with the metropolis)and also becauseof the rise of the indigenouscivil service in these countries. As the expatriateswent home, the countryhad toproduceits own high-levelmanpower.The thinkingwas that civil servantsshouldpreferablybe educatedlocally, ratherthan be exposed to a 'foreignmodel'.A secondaryeffectboostinghighereducation enrollments nboth developedanddevelopingcountrieswastherise n real ncomes.As percapitaincomeincreased, odid the demand for luxurygoods that could not be afforded before. Universityattendance, regardlessof career plans after graduation, increased, along withdemandforcarsandrefrigerators.Also, the rise nthepublicsector ingeneral ueledthe demand for higher education - a university degree became the sine quanonqualificationfor enteringthe public sector.A thirdreasonforuniversityexpansion,especially ndevelopingcountries, iesinthe developmentmodel used in the post World-WarII period,which is known asmanpowerforecasting.For a countryto groweconomicallyit shouldhave a givennumber of engineers, architects and other high level manpower that only auniversitycould produce.(For a review of this model and the reasonsit has been

Table3. Public spending on education as a share of public budget, major world regions, 1965-80(percent)Region 1965 1970 1975 1980Africa 16.0 16.4 15.7 16.4Asia 14.2 13.1 12.2 12.7Latin America and Caribbean 18.7 18.9 16.5 15.3Europe, Middle East, and North Africa 12.4 12.5 11.5 12.2Developing Countries 16.1 15.8 14.5 14.7Developed Countries 16.0 15.5 14.1 13.7Source:Based on World Bank(1986), p. 7.Table 4. The shareof highereducation in public recurrentexpenditure,1965-80 (percent)Region 1965 1970 1975 1980Africa 10.8 11.7 21.2 22.1Asia 16.0 17.0 17.8 20.2Latin America and Caribbean 14.3 15.9 23.4 23.5Europe, Middle East, and North Africa 10.4 18.3 21.8 21.7Developed Countries 13.9 18.6 19.4 19.1Source:Based on World Bank(1986), p. 54.

8/2/2019 3447124

5/8

6discredited, eePsacharopoulos 1984).)Muchof universityexpansion nAfrica,forexample,was basedon this rationale.It should be noted at the outset that the numbersin Figure 1 referto actualenrollmentsand not to the demand for highereducation. Demand for universitystudies vastly exceeds enrollment because many systems cannot offer as manyuniversityplacesas demandedby studentsand theirfamilies.Finance trends. The main reason why public funds for higher education, andeducationingeneral,havenot increasedparipassuwithenrollments s that therearemanyothersectorscompetingfor scarceresources.Food andsheltermightbe moreimportant haneducation. Ofteneducation ministriesarein a weakpositionrelativeto other ministries n persuading he ministryof finance to allocatemore resourcesto education in general.Another reasonis that there arelimitsto thegenerationofpublicfundsthroughtaxation.Infact,regarding hesplitof publicfundsallocatedto education,therehasbeen ashift towards highereducation(see Table 4). The reason is that the incidenceofuniversityattendance s higheramong the wealthierpartsof the population whosefamilies are more articulate than those of the farmer. Hence richer groupsappropriatemore publicfunds for the educationof theiroffspring.

ThepresentresponseDifferenthighereducationsystemshave respondedin differentways to increaseddemand for universityentry in the presenceof financingconstraints.Some haveaccommodatedmorestudentsata reducedunitcost, flagging'masseducation',buttacitly sacrificing quality. Others have reducedthe numberof years requiredforgraduation or changed the mix of subjects offered towards the cheaper socialsciences. Of course other systems have shifted towards more reliance on private,rather than public, funds for university inancing.Amongthevariousresponses,perhaps he onethat relieson greaterprivatesectorparticipation s the mostsustainableone, leadingto higherefficiencyandequityin agiven society. In order to understandwhythisis so, let us brieflyanalyzethecurrentstate of affairs in a typical developing country universitysystem.Fact. No. 1:Thereis moredemand to enterpublicuniversities hanthe statebudgetcan respondto - what economists call 'excessdemand'.Fact No. 2:The demand for universityentryis fuelledby the followingfactors:

- the low cost of entry(no fees, or token fees being charged);- the high benefit of beinga universitygraduate(higherlifetimeearnings,betterworking conditions);

8/2/2019 3447124

6/8

7- therequirementf a universityegreeorenteringhe civilservice.Fact.No.3:The ncidencefuniversityttendanceshigher mongwealthierroupsin thepopulation.Thereare notas manystudents er100,000 opulationwhosefather s a farmer elative o thosewhose athers a whitecollaremployee.Thecombination f theabove acts eads o a seriesofeconomic nefficienciesndsocial nequities.Inefficiencies.nthe firstplace,anythinghat s freeof charge an be abused. f Ihave opay ortheelectricityamusing, ammore ikelyo turnoffthe ightsbeforeIleavehome.If Idonothave opay, he ightsmaystayon. Theuniversitynalogsthatmanymaywish oenrollas'students' ndstay n theuniversity earlyor everin order o appropriateecondary enefitsassociatedwithuniversityttendance(e.g.,reduced us ares, ubsidizedunches).fsomeonehas o somehow ontributeto thecost of his/herstudy, t is more ikely hatthispersonwillthink wicebeforeenrolling.And it is less ikely hathe/she willbecomean eternal tudent.Thepressureoruniversityntrybythemostarticulate,ftenwealthiest,roupsin the populationmayresult n the countrymisallocatingesources evoted oeducation. f (a)the education udget s moreor lessfixed,as is the case n mostcountries, b) the countryhas a high incidenceof illiteracy, nd (c) the mostarticulate lassesdivertresourceso higherrather hanprimary ducation, hecountrymightbeunderinvestingnwhat t needsmost:primaryducationocreatea literate opulation nd abor orce.Inequities.Who are those most likelyto be excluded rom the presenthighereducation inancing ystem?Certainly,t is not the offspringof high incomefamilies.Thesewill eitherenrollfree of chargeat thepublicuniversityperhapsbecause etter oaching rattendancet aprivateecondarychoolgave hemmorechances o compete uccessfullyt thenationaluniversityntrancexaminations).Or, fthey ailtoenter hedomestic ublichigher ducationystem, heywillenrollin a privateuniversityrgo abroad ortheir tudies.Of course t isthosewhocome rom he ower ncome lasses hataremost ikelyto beexcludedrom freehigher ducation' ecause, lthoughheywillalsopaynoenrollmentees, heforegonencomewhile tudying eters hem rom venapplyingforentrance.Or, ftheycompete t thenationaluniversityntrancexaminations,they mightbe at a disadvantageelativeo thosefromwealthieramiliesbecausetheydidnot receive quivalentoaching.Also,if (a)universities resupposedo select he mostableamong hepoolofcandidates,b)thedistributionf abilitiessthesameamong hetwosocioeconomicgroupsdescribedbove,and(c)selection s madeprincipallyysocialclassratherthanability, hisaddsafurthernefficiencynthesystem.SeePinera ndSelowsky1981.)

8/2/2019 3447124

7/8

8ThealternativesNow comparethe abovesituationto one in which thefinancingof highereducationreliesto a greaterextent on privateresourcesand contributionsfrom users. Whatwould be the efficiencyand equity implicationsof this change?First, excess demand for universityeducation would be reduced.This reducedpressure oruniversityentrymaytranslate nto morepublicresourcesbeingusedforprimaryeducation, which is still investmentprioritynumber one in developingcountries.

Second,tapping private inancesources meansmoreresources oruniversitiesasa whole. Whether it is by means of the establishmentof privateuniversities,or thepaying of fees at public universities,the great unsatisfied demand for universityplaceswill translate nto more money coming to the sector. Of coursemoremoneywould translate,although not automatically,to betterqualityeducation.But I thinkthe ultimateefficiencyeffect of the introduction of a systemof evenpartialcost-recovery nhighereducation ies in theaccountability tbringswithit. Ifuniversitieschargefees,the consumers must see a value to what theyaregettinginreturn.If not, such universitieswill not surviveand give way to betterones. At theindividual student level, the charging of fees means greater accountabilitytothemselves,in the sense of beingmotivated to studyhard and completecourses ontime.

Chargingof fees alsoprovidesa more efficientstudent selectionmechanism,as itwill beonlythose who arelikelyto succeedwho wouldbewillingtopaythefees.Oneshould note that cost-recoverydoes not automaticallymean privatization.Feescould be chargedat publicuniversitiesso thataccountability s introducedat boththe universityand student level.Itmaysoundparadoxical hat the introductionof student fees is equitable.Yet ifonecomparesa cost-recovery cenarioto thepresentone, (wherebothrich andpoordo not pay any fees at all, and where the poor might be deterredfrom enteringuniversity because of the foregone earnings involved), things become clearer.Selectivecost-recovery(directlyrelated to some measure of parentalwealth),canredress nequitiesin the financingof highereducation.In addition,studentsfromlow incomefamiliescannotonly continue to studyfree of charge,butalso receiveascholarship n order to compensatefor theirforegone earnings.When combined with the availabilityof studentloans, cost-recovery n highereducationis associated with furtherequitygains. Anybody, whetherpoor or rich,could then borrow to finance his or heruniversitystudies. The equityeffect comesfrom the fact that those who later in life will have higher earnings(due to theiruniversityeducation) relativeto the rest of the population (who arenot universitygraduates),will financetheirstudies themselves not the generaltaxpayer. For anelaborationand empiricalevidenceon this theme,see World Bank (1986).)

8/2/2019 3447124

8/8

9PoliticalfeasibilityThe above propositions might be consideredtheoretical, given the tremendouspoliticalcost in introducingcost-recovery n education.Yet severalcountries havedone it. It is my predictionthatselectivecost-recoverycumstudentloanswill be thehighereducationfinancingscenario of the future.This will not happenovernightgiventhe politicalcosts. However,highereducationsystemsaroundthe Worldareinevitablyheadingin thatdirection.The simplecontrastof the privatedemandforhigher education and the available public resourcesdoes not permit any othersustainablefinancing systemin the long run.

Note*The views expressedhere are those of the author and should not be attributedto the World Bank.

ReferencesPinera, S. and Selowsky, M. (1981). 'The optimal ability-education mix and the misallocation ofresourceswithineducationmagnitudefor developing countries',Journalof DevelopmentEconomics8, 111-131.Psacharopoulos, G. (1984). 'Assessingtraining priorities n developing countries:currentpracticeandpossible alternatives',InternationalLaborReview 123(5), 569-583.FinancingEducation nDevelopingCountries:AnExploration fPolicy Options(1986).TheWorld Bank.