Costs and Finance of Higher Education in Pakistan

Public Disclosure Authorized

Public Disclosure Authorized

Public Disclosure Authorized

|Pollcy, Researcha,ndExternaAl ffairs

- WORKING PAPERS

EducationandEmploymeitt PopulationandHumanResources

Department The WorldBank

June 1991 WPS 704

Costs and Finance of Higher Education

in Pakistan

RosemaryBellew and

Joseph DeStefano

Available educational resources could be used more effectively by reducing theproportion ofnonteaching employees - most of them servants - and by reallocating those resources to faculty and instructional materials. Pakistan's government should not allocate more resources to the sector until .t has established better mechanisms for allocating resources and has established incentives and sanctions to improve institutional performance.

The Policy. Research, and ExtemnalAffairs Complex distributes PREWorking Papers todisseminate the findings of workin progress and to enoourage the exchangc of ideas among Bank staff and all others interested in development issues. These papers canrythe narnes of the authors, reflect only their views, and should be used and cited accordingly. The findings, interpretations,and conelusions are the authors' own. They should not be attributed to the World Bank, its Board of Directors,its management, or any of its member countries.

Public Disclosure Authorized

Policy,Researcha, nd ExternaAl ffairs

Edctionand Employment WPS 704

This paper - a product of the Education and Employment Division, Population and Human Resources Department -is part of a larger World Bank sector study on higher education in Pakistan. C.opiesare

available free from the World Bank, 1818 H Street NW, Washington DC 20433. Please contact Cynthia Cristobal, room S6-214, extension 33640 (57 pages, with figures and tables).

Using data from colleges and universities, Bellew and DeStefano investigate the costs and effectiveness of higher education in Pakistan, identify factors that influence those costs and effectiveness, and estimate levels of study subsidies.

Not surprisingly, they find that most colleges and universities are underfunded. They operate with minimal faculty, spend little on learning materials, and cannot cut costs by enrolling more students (with current faculty levels) without jeopardizing the quality of education.

Available resources could be used more effectively by reducing the proportion of nonteaching employees - most of them servants - and by reallocating those resources to faculty and instructional materials.

Student performance in examinations is consistent with the lcvel and use of resources. Most students fail examinations, particularly in crowded institutions that offer few courses. And those who pass do so largely through their owII efforts, not because of the quality of teaching.

There are no institutional incentives for achievement or penalties for failure. Colleges and universities are not held accountable for the quality of instruction, cost recovery is low, and the government demands no standards. It would be imprudent for the Pakistani government to allocate more resources to the education sector until mechanisms have been established for more effectively allocating resources within and among institutions and for establishing incentives and sanctions that create pressure to improve institutional performance.

Thc PREWorkingPaperSeriesdisseminatesthefindingsof workunderwayin theBank'sPolicy,Research.and Extemal AffairsComplexA. nobjectiveoftheseriesistogetthesefindingsoutquickly,evenifpresentationsarclessthanfullypolished. The findings, interpretations, and conclusions in these papers do not necessarily represent official Bank policy.

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TABLE OF CONTENTS

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1. The Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2. Unit Costs of Higher Education ... . . . . . . . . . . . . . . . 4 Personnel Expenditures ... . . . . . . . . . . . . . . . . 6 NonpersonnelExpenditurss... . . . . . . . . . . . . . . . 8

3. InstitutionalCharacteristicsand Unit Costs . . . . . . . . . . . 10 Framework . . . . . . . . . . . . . . . . . . . . . . . . . . 10 College Characteristics.10

University Characteristics.12 Model .15 College Cost Functions.16 Conclusion .20 UniversityCost Functions.21 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . 25

4. Effectiveness .... . . . . . . . . . . . . . . . . . . . . . . . 25 Pass Rates .... . . . . . . . . . . . . . . . . . . . . . 25 Variable Measures .... . . . . . . . . . . . . . . . . . . 27 Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 IntermediateResults . . . . . . . . . . . . . . . . . . . . 28 BachelorsResults .... . . . . . . . . . . . . . . . . . . 31

5. Revenues and Cost Recovery .... . . . . . . . . . . . . . . . . 32 UniversityRevenue .... . . . . . . . . . . . . . . . . . 33 UniversityGrant Process . . . . . . . . . . . . . . . . . . 34 Cost Recovery in Universities. . . . . . . . . . . . . . . . 35 College Revenues and Cost Recovery ... . . . . . . . . . . 36 Summary and ConcludingRemarks ... . . . . . . . . . . . . 37

References ............................... Annexes. . . .

. 38 40

'Thisanalysis was a part of a larger World Bank sector study on Higher Education in Pakistan. Ralph Harbison supei ised the study and many PakistaniHigher Educationauthoritiesprovided data, as well as their time and insights. The paper also benefited from the

comments and support of Charles Benson, John Middleton, Bashir Parvez, and Adriaan Verspoor. Nasir JalAl contributedto organizing

the informationin the early stages of the study.

ZC' ,Akbles 1. Distributionof the College Populationand Analysis Sample by Type of

college and Province 2. Average Per Student Costs in Degree Colleges 3. Average Per Student Costs in Universities 4. PercentageDistributionof College and UniversityBudgets 5. NonteachingStaff in Colleges and lJniversitTyeaching Departmentsby

Civil Service Grade 6. Average Unit Costs and Other Indicatorsby College Size 7. Average Unit Costs and Other Indicatorsby Size, Universities1985/86-

1986/87 8. RegressionResults for the College Sample 9. RegressionResults for Universities 10. Percent Passing the F.A., F.S., B.A. and B.S. Exams, 1988 11. IntermediateExam Results 12. Regression Results for Bachelor Exams

Text Figures 1. Decline in Per Student College Costs When Current EnrollmentIncreases

by 100 2. Decline in Per Student University Costs When Current Enrollment

Increasesby 100 3. Central GovernmentGrants to Universities

Annexes 1. The Context of Higher Educationin Pakistan 2. Data Compilation,Limitations,and Manipulations 3. Annex Tables

A.1. Per Student Expendituresand Other Indicatorsby College A.2. Distributionnf UniversityPersonnel Expenditures,1985-86 and 1986-87 A.3. Distributionof UniversityNon-TeachingPersonnelby Civil Service

Grade, 1185-86 and 1986-87 A.4. University Enrollment,Unit Costs and Other Indicators,1985-86 and

1986-87 A.5. Means and Standard Deviationsof Variables in College Regressions A.6. CorrelationMatrix for Colleges A.7. Means and Standard Deviationsof Variablesin UniversityRegressions A.8. CorrelationMatrix for Universities A.9. Area of Universities (in ft2) Relative to Enrollment,1985/86 and

1986/87 A.10. Means and Standard Deviationsof Variables in Exam Regressions A.ll. CorrelationMatrix for VariablesUsed in Arts Exam Regressioils A.12. CorrelationMatrix for VariablesUsed in ScienceExam Regressions

A.13. Sources of University Income (in percent) A.14. Average Fees and Fee Income of Universities,1985/86 and 1986/87 A.15. Total Grants Requestedby Universities(millions1987 constant Rs),

1979-89 A.16. Grants Disbursed, 1979-89 (in millions 1987 constant Rs)

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