Funding Argentine universities

After a period of high growth between the 1993 and 1998, the Argentine economy underwent a significant slowdown that ultimately resulted in economic depression and crisis. In 2001 and 2002 the financial sector and the exchange rate system (the so-called Convertibility Regime) collapsed and Argentina’s global socio-economic situation deteriorated. In 2003 the economic activity began to recover thanks to favorable international commodity prices. Since then, growth has been strong, averaging seven percent per year and a consequent substantial public revenue increase. This new growth scenario has created a unique opportunity for Argentina to invest in human capital –particularly in secondary and higher education – and technology.

The current economic situation has, indeed, resulted in an increasing allocation of fiscal resources to higher education. From 2004 to 2009, public university education expenditures climbed from 0.48 percent to 0.87 percent of GDP. In absolute terms, this increase is remarkable because the cake (GDP) is now far bigger. Additionally, this is taking place within the context of a deceleration in the public university enrollment rate. As a consequence, the public university expenditure per student has increased from US$ 1,382 to 3,254 in PPP from 2004 to 2009. Indeed, the increment in the funds allocated to universities took place as part of a more general policy aimed at increasing the percentage of GDP devoted to education. The goal was to reach six percent of GDP in 2010 and this goal has largely been met.

The bulk of the incremental budgetary funds has been allocated to raise faculty wages in real terms. This policy was in line with the overall evolution of the real wages corresponding to unionized workers in other sectors of the economy. As to incentives, this was good news since competitive wages are key to retaining and attracting the best professors at national universities. However, we should not overlook the fact that the lack of financial problems is just one dimension of the problem. The weaknesses of the Argentine public university sector are also rooted in organizational disarrays and political issues. This means that the expansion in the amount of funds is a necessary condition for improvement and innovation, but it is not sufficient.

From the organizational point of view, there are three issues that appear to be most pressing in the current situation in order to take advantage of the favorable budgetary situation. First, although wages have increased, the majority of the public universities have not developed institutional policies to ensure faculty commitment to good teaching performance. In particular, executive and collegial authorities have not implemented effective mechanisms to ensure that the faculty will follow cooperative strategies to orient improved teaching and research quality. Second, the bloated budget has not been used to increase the participation of full-time professors. Despite the increase in full-time faculty in absolute terms between 2003 and 2008, their participation out of the total remains more or less the same: 13 percent. Third, working conditions in terms of infrastructure and new facilities have not improved at many universities. Finally, the graduate level, a nascent and underdeveloped tier in the Argentine higher education sector and crucial to R&D, has received little attention. At this level, the public funds have mostly been concentrated in PhD scholarships without a corresponding strengthening of institutional programs and physical infrastructure. In sum, the present situation of high speed growth opens a window of opportunity to improve the quality of the Argentine higher education sector. We hope that future policy and funding allocation decisions will address the flows at the institutional and organizational level.