EXPLORING THE RELATIONSHIP BETWEEN HIGHER EDUCATION FINANCING MECHANISMS AND UNIVERSITY RANKING

Abstract

According to the World Bank, on average 13% of state budget worldwide goes to education, and a significant portion to higher education, and governments are interested in spending these funds productively. One of the generally accepted criteria for the efficiency of a university is its position in international academic rankings. We discuss the influence of the state financing mechanism of universities on their ranking. And what are the main mechanisms of state financing of universities in the world? We identified three main mechanisms: financing according to a formula (a-type), performance-based financing (b-type) and financing by negotiations (c-type). We have collected information about the financing mechanisms of universities in different European countries. Based on the results of the analysis, two main groups of universities were formed: those who do not succeed in ranking (with a- and b-type financing mechanisms), and those who lead in ranking (first hundred). Such universities use a c-type financing mechanism either alongside a- and b-types or as the main one. Based on the results, we propose an effective funding mechanism for the Armenian universities.