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Reforming Universities For the 21 st Century

By Phillip Lebel Ph. D


Economic growth depends as much on factor productivity as it does on increases in the stock of resources. Investment in education is one key to improvement in total factor productivity. The choice of an optimal level of investment in higher education, and how such investment is to be financed, is thus a critical issue in achieving sustainable economic growth. Selection of an optimal level of investment depends on the presence of efficient markets. In education, markets are incomplete not just in terms of the degree of competition, but also in terms of the level and distribution of information, and in terms of the presence of external benefits. While the presence of external benefits traditionally has been used to justify public sector support for education, subsidies by themselves produce varying effects on the underlying technical efficiency of institutions, depending on the specific mode of finance. Although proposals for the reform of university finance may begin in the first instance as a response to political pressure, it is important to examine the economic impact o

Year: 1999
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