Working paper 41

The changing finances of world-class universities

Published August 2018

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Alex Usher and Marcos Ramos suggest that increased funding does not enhance the performance of top universities.

The paper investigates whether changes in funding over the past decade (measured by total expenditure per student) have had an impact on the research output, impact or ranking position of world-class universities.

The authors use a variety of national and institutional data sources to look at 166 universities in the top 200 of the Academic Ranking of World Universities (ARWU) 2017 (Shanghai) ranking across 10 countries: the United States, the UK, Germany, Australia, Switzerland, Canada, the Netherlands, Japan, Sweden and Israel.

They find that between 2006-16 there was no observable relationship between changes in spending per student and relative publication output, publication impact or ranking position. At least in the medium term, there appears to be little or no correlation between increased funding and increased research output.

The findings show that most world-class universities have improved their financial position over the last decade, but not all. Overall funding among the universities varied, with those in the 51-200 range having much lower funding levels than those in the top 50.

In half the cases studied, the ARWU-ranked universities fared better financially than other universities, and in most cases fared no worse. However, in general, the ARWU-ranked universities fared less well between 2011-16 than they did in the five years prior to this period.

World-class universities are increasing their spending per student at a faster rate than less prestigious universities (spending increased by 15.7 per cent on average during the period studied), although the gap is not particularly large, except in Germany and Switzerland.

The authors argue that two generalisations about world-class universities need to be re-thought. First, the overall findings do not show that the focus on world-class universities is creating a two-tiered system (except in Germany and Switzerland). Second, the findings do not support the idea that universities can get ahead by spending more.

The authors conclude that far more attention should be paid to exactly how money is spent and how institutions are managed – as more money does not guarantee better results.

  • TitleThe changing finances of world-class universities
  • DateAugust 2018
  • Authors
    • Alex Usher
    • Marcos Ramos
  • DownloadView PDF

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