ABSTRACT
In the previous three chapters we have examined mechanisms for diversifying and augmenting revenues for higher education, given the declining ability for governments to pay for higher education. However, in Chapter 2, we argued that the financial problems confronting institutions are not only a lack of resources, but also stem from underlying restrictions imposed by governments. Reform should begin by allowing institutions to reconcile enrollments with resources, as well as allowing them to deploy their resources in ways that correspond to the demands of society. This does not imply that the state will no longer play an important financial role in higher education. It will almost certainly remain the dominant source of funds in most countries. But reform will require that the state step back and grant institutions more financial autonomy, while at the same time ensuring that institutions are publicly accountable. This chapter examines the mechanisms through which governments allocate resources to higher education, particularly in developing countries, in order to establish effective means to transfer these subsidies to institutions.
