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Financing Higher Education and Economic Development in East Asia

Financing Higher Education and Economic Development in East Asia

Shiro Armstrong
Bruce Chapman
Copyright Date: 2011
Published by: ANU Press
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  • Book Info
    Financing Higher Education and Economic Development in East Asia
    Book Description:

    This volume addresses important issues to do with access to higher education and different models of its financing in the East Asia region. It is enriched by diverse perspectives from vastly different starting points and by the historical and institutional settings in the region. The issues are set out in the context of the value of higher education in economic development and how it contributes to the capacities to adopt and adapt to new technologies and undertake institutional innovation. The established and well-functioning higher education loan and financing systems, such as those in Australia, and the experience of different systems tried—both in East Asia and in the United States—are brought to bear in this volume.

    eISBN: 978-1-921666-63-6
    Subjects: Education

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface
    (pp. vii-viii)
    Shiro Armstrong and Bruce Chapman
  4. 1. Issues and Overview
    (pp. 1-16)
    Shiro Armstrong and Aaron Batten

    Human capital plays a key role in the development of all economies. A decade ago, discussions of education and development tended to be categorised by focusing on the importance of primary and secondary services. For example, it was thought more important to teach large amounts of people to read than to teach a small cadre liberal arts and high-level sciences. In an egalitarian sense, support for universities was seen as biased against poorer elements of society. These arguments have a degree of merit and, certainly, primary and secondary education are both important elements of the sector—not least because they...

  5. Part 1. Education and Development:: The role of higher education

    • 2. Education and Development: The role of higher education
      (pp. 19-24)
      Lawrence Summers

      This chapter provides an American perspective on issues affecting higher education in China. It discusses how the work of universities is so important to the development of nations, and reflects on the success of the US system and what lessons can be taken from this system for higher education in other parts of the world.

      Discussions of higher education and development took an odd turn about a generation ago from which we are only now recovering. It came to be a fashionable idea that emphasis should be placed on primary and secondary services, rather than on tertiary services. The argument...

    • 3. Financing Higher Education: Lessons from economic theory and operational experience
      (pp. 25-48)
      Nicholas Barr

      This chapter talks about how to pay for teaching at universities. It does not talk about financing research or about any particular country. Instead, its purpose is to offer a tool kit for policy makers thinking about reform.

      The chapter sets out lessons for policy design from economic theory and the experience of developed countries. Economic theory, however, is not enough. Policy design that outstrips a country’s capacity to implement it effectively is bad policy design. This chapter therefore deliberately goes beyond theory to include lessons about implementation. The chapter concludes with discussion of the resulting system.

      Higher education matters...

    • 4. Finance, State Capacity, Privatisation and Transparency in South-East Asian Higher Education
      (pp. 49-80)
      Anthony R. Welch

      Key dilemmas underpin the development and expansion of higher education in South-East Asia. On the one hand are the tensions between the desire to expand the quantity of higher education while at the same time improving quality. On the other is the issue of enhancing access while improving equity. While all of the five states treated in this chapter (Indonesia, Malaysia, the Philippines, Thailand and Vietnam) share the goal of extending access to higher education as part of their wider social and economic development goals, none is in a position to provide public higher education to all who aspire to...

  6. Part 2. Experience in Developed Economies

    • 5. The Australian University Student Financing System: The rationale for, and experience with, income-contingent loans
      (pp. 83-106)
      Bruce Chapman

      In 1989 the Australian government introduced an income-contingent loan for the payment of public-sector higher education¹ tuition charges, known as the Higher Education Contribution Scheme (HECS). The debt is repaid through the income tax system and, at the time, it was the first scheme of its kind. Since then similar arrangements have been adopted in, among other countries, New Zealand (1991), South Africa (1991), the United Kingdom (2006), Thailand (2006) and Israel (planned for 2008). As well, there is currently active consideration of potential higher education financing reforms towards income-contingent loans in Germany, Canada and a host of other countries....

    • 6. Higher Education Policies and Development: Approaches to funding higher education in Japan
      (pp. 107-142)
      Motohisa Kaneko

      Japan’s higher education system is similar to those in many East Asian counties in the sense that it comprises both public and private sectors. The public sector consists of the national universities, which are established by the national government, and local public universities, which are established by prefectures and other local governments. While the private institutions enrol three-quarters of undergraduates, the national institutions play significant roles in research and graduate education.

      With the advent of globalisation and ‘the knowledge society’ on the one hand and the increasing pressure of financial stringency on the other, both national and private institutions are...

  7. Part 3. Experience in East Asia

    • 7. Student Loan Reform in China: Problems and challenges
      (pp. 145-158)
      Wei Jianguo and Wang Rong

      The development of student loans in China accompanies China’s higher education ‘massification’. In 1999, the Chinese government launched a policy onhigher education expansion. Since then, Chinese higher education has shifted rapidly from elite education to mass education. In 2002, China’s gross enrolment rate in higher education increased to 15 per cent from 9.8 per cent in 1998—meeting the minimum standards of mass higher education defined by Professor Martin Trow. The rate increased to 23 per cent in 2007. In the process of promoting mass higher education, the Chinese government has also reformed the previous free tuition policies. Starting in...

    • 8. Recent Developments in Higher Education in Indonesia: Issues and challenges
      (pp. 159-188)
      Teguh Yudo Wicaksono and Deni Friawan

      Secular higher education in Indonesia has a relatively short history. It began with the establishment by the Dutch colonialists of tertiary schools training indigenous people in medicine and engineering. Before the colonial education system, higher education was considered an Islamic institution. The growth in higher education post independence has, however, been very swift. Since the endorsement of the very first Education Act in 1961, Indonesian higher education has continuously experienced rapid expansion. The development of higher education grew during the period from the 1970s to the 1990s, when Indonesia was experiencing strong economic growth, fuelled by an oil-price boom and...

    • 9. Strategies for Financing Higher Education: The case of Thailand
      (pp. 189-220)
      Somkiat Tangkitvanich and Areeya Manasboonphempool

      Ninety years ago, the first university was established in Thailand. It was an elite approach to higher education with the main purpose being to train government officials to run the country (Krongkaew 2004). Since then, the Thai higher education sector has experienced remarkable development. Most notably, the number of higher educational institutions (HEIs) has increased to nearly 800, with the total number of students enrolled reaching 2.5 million. Thus, the Thai higher education sector has changed from elitist to a mass economic and social institution.

      The purpose of this chapter is to discuss the main characteristics of the higher education...

    • 10. Thailand’s Student Loans Fund: An analysis of interest rate subsidies and repayment hardships
      (pp. 221-244)
      Piruna Polsiri, Rangsit Sarachitti and Thitima Sitthipongpanich

      Human capital is important for social and economic development. The most sensible way to enhance the quality of a country’s human capital is to promote education. In developing countries, however, access to education, especially at high educational levels, is limited because large numbers of the population are poor. Therefore, the government has to play an important role in establishing a student loans scheme to reduce inequality in education, which will eventually increase the country’s economic growth.

      From the point of view of the government, as a loan provider, some key issues regarding a student loans scheme are: allocation and distribution,...

    • 11. Income-Contingent Student Loans for Thailand: Alternatives compared
      (pp. 245-282)
      Bruce Chapman and Kiatanantha Lounkaew

      In Thailand there is an ongoing debate concerning the most desirable form of higher education financing, with the critical concern being the form such a loan scheme should take. Conceptually, there are two generic possibilities: a mortgage-type loan, in which repayments are made on a consistent basis over a set period; and an income-contingent loan, in which the level and timing of repayments depend on a borrower’s future income stream.

      From 1996 to 2006, Thailand’s preferred approach to higher education financing took the form of a mortgage-type loan known as the Student Loans Fund (SLF). The SLF involved targeted funds...