The World Bank

1. The World Bank Second ECA Education Conference, Dubrovnik, Croatia Creativity, innovation and role of higher education in economic development – Financing of tertiary education” October 2-4, 2005 Don Thornhill Chairman National Competitiveness Council Ireland

2. Innovation – the key to  Economic advantage  Greater prosperity  Increased living standards

3. Innovation  Creative process  Transforms  Knowledge  Ideas  Technology  Greater value  S&T, social and economic dimensions

4. Tertiary education system  Teaching and learning  Research  Knowledge (including technology diffusion) Key agent  Economic development  Enhancing comparative advantage

5. Tertiary education  Many interests, pressures and objectives  Government (multiple roles, policies and agencies  Society Confusion, messiness and controversy – unsurprising !

6. If State is a key funder of TE financing system is needed which  Addresses multiple objectives  Promotes creativity and innovation  Is responsive and flexible  Promotes excellent outcomes

7. Key drivers  Institutional autonomy  Accountability  Competition

8. WELL ‘ETHICAL’ UNDERSTOOD ARGUMENTS FOR INSTITUTIONAL AUTONOMY INVOKED LESS OFTEN ‘EFFICIENCY’ ESSENTIAL ACCOUNTABILITY

9. CENTRALISED CONTROL SYSTEMS TEND TO  Inhibit constructive application of energy and innovation  Confuse responsibility for outcomes  At worst incentivise irresponsible behaviour?

10. Direct State funding for HEIs Performance related “core” funding Competitive funding new initiatives Experimental funding Research funding Bedrockfunding

11. 1. Bedrock funding for undergraduate education and learning capitation based  rates and criteria, rational, transparent, straightforward  equitable as between institutions  reflect cost differences  subject disciplines  student categories 

12. Direct State funding for HEIs Performance related “core” funding Competitive funding new initiatives Experimental funding Research funding Bedrockfunding

13. 2. Performance related element in core funding focused on limited number of public policy objectives  ideally, benchmarked  not destabilising 

14. Direct State funding for HEIs Performance related “core” funding Competitive funding new initiatives Experimental funding Research funding Bedrockfunding

15. 3. Major new initiatives competitive funding  open and transparent process  expert assessment final  non-national membership 

16. Direct State funding for HEIs Performance related “core” funding Competitive funding new initiatives Experimental funding Research funding Bedrockfunding

17. 4. Experimental and innovative programmes discretionary funding  allow for experimentation  review  abandon or mainstream 

18. Direct State funding for HEIs Performance related “core” funding Competitive funding new initiatives Experimental funding Research funding Bedrockfunding

19. 5. Research funding non-competitive “foundation funding”  competitive performance-based institutional funding  competitive funding for research projects and grants (fellowships etc.) 

20. 6. Financial sanctions limited usefulness  risk of inappropriate and perverse effects  institutional responsibility 

21. 7. Vital importance of monitoring, review and performance appraisal but avoid intrusion and disproportionate compliance costs

22. 8. Funding mechanisms should support institutional autonomy diversity of funding sources – a potentially important guarantor of autonomy and the capacity for institutional development  mechanisms should encourage and incentivise private funding 

23. Model Transparent  Competitive  Non-discriminatory  Promotes re-structuring (internal and between institutions 

24. IMPORTANTCONDITIONS Transparency Culture of review and appraisal     self-evaluation  external appraisal  Distinction between governance and management Limited but clearly defined reserve powers for the state e.g. in respect of overall financial management and oversight

25. Undergraduate tuition fees? REGRESSIVE PUBLIC / PRIVATE GAIN ‘MARKET SIGNALS’ ENHANCE VFM FOR INSTITUTIONAL ENHANCE AUTONOMY FISCAL REDUCE ‘STRAIN’

26. Undergraduate tuition fees? PARTICIPATION POOR GRANTS TARGETING AGAINST EXTERNALITIES  HUMAN CAPITAL PUBLIC GAIN STUDENT DEBT GRADUATE

27. Gains are very considerable but need to address Social equity and risk aversion issues  Optimising social return  Effective means-testing systems 

28. Necessary requirements Leadership, skill and courage !