Abstract
M.Com. (Economic Development and Policy Issues)
This study aims to examine the relationship between public funding on tertiary education in
developing countries and the level of student enrolments. The intuitive economic expectation is that
an increase in public education funding should lead to an increase in student enrolments. This study
finds this general expectation to be true for only the primary and secondary education sectors, but
not for the tertiary education sector. By using a sample of 39 randomly selected developing
countries from different parts of the world, this empirical study finds that public expenditure on
tertiary education has an insignificant and in some cases a negative relationship with student
enrolments at the tertiary education level. The study interestingly finds public expenditure on
primary and secondary education sectors to have more significant and positive relationship with
tertiary student enrolments.
The study also confirms earlier research arguments that governments in developing countries spend
proportionately more on tertiary education than on primary or secondary education as compared to
developed nations. This study finds that public education expenditure is three times as much, or
more, on tertiary education than on primary or secondary education. However, despite this relative
public overspending on the tertiary education sector in comparison to primary and secondary
education sectors, tertiary student enrolment appears not to have a significant relationship with
public expenditure, whereas the relationship is significant and positive in the case of both secondary
and primary education sectors where public expenditure is ironically much less.
The study further finds that the negative relationship between public expenditure on tertiary
education and student enrolments is possibly caused by the rigorous global emphasis on
implementing austerity measures across economies. At the same time, developing countries are
experiencing a high demand for tertiary enrolment due to a rapid increase in population, improved
adult literacy, worsening unemployment and other factors.