ABSTRACT
What is the financial context under which universities operate in the developing world today? This chapter takes as its starting point the basic financial problem confronting universities in most developing countries, namely that rapid expansion has not been accompanied by commensurate funding increases. Perhaps more significant than an erosion of real resources, however, have been government imposed restrictions on institutions that have limited their capacity to respond. A decline in resources might lead institutions to become more efficient, to seek alternative sources of income, or to cut back on their activities. Such responses, however, have been rare. Indeed, many institutions have actually increased the number of staff. We shall argue that this counter-intuitive reaction is actually a logical response given the restrictive environment within which institutions operate. The continuing decline in per student resources and the failure on the part of institutions to realign accordingly stems in a large part from the policy conditions under which higher education institutions operate.
