Published: Oct 12, 2018

  Kostiantyn Hromovenko

  Yana Tytska


The article analyses modern trends in supporting the development of financing of higher education in the European Union, namely: the evolution of financing strategies for higher education in 2010-2016, the change in the volume of financing of various systems for this period, and the criteria for the allocation of public funds in higher educational institutions. It is shown that countries, members of the EU, use different strategies for financing higher education but do not have a universal mechanism. Based on the analysis of European scholars’ research, various mechanisms for financing higher education are presented, their tendencies are determined. Models of adaptive transition of HEIs to modern conditions of functioning, using accessible tools and methods were considered. The proposed three scenarios for funding universities show that the strategy for financing HEIs in the current dynamic development conditions should shift from a traditional model of public financing (supply-side) through the transformation to financing on the basis of socio-economic mechanisms (demand-side) using different tools. The EU countries use different financing strategies for HEIs and do not have a universal mechanism. The amount of funding for higher education institutions depends both on quantitative (number of students) and qualitative (number of credits, diplomas) indicators. There is a tendency to allocate public funds to HEIs on the basis of learning outcomes, as well as the tendency of combining different financing instruments in the context of a particular country, including the emergence of demand-side socio-economic financing mechanisms. Socio-economic financing on the basis of demand has several potential advantages. Firstly, students and firms, “consumers” of educational services, are key figures. These mechanisms can stimulate universities to be more efficient economically, and students – to improve academic results and increase internal efficiency. Secondly, the demand scenario mechanisms can be used regardless of the source of financing. They can be applied equally for the allocation of public resources and private financing of employers or students and their families. The main disadvantage of the mechanisms for financing HEIs is that they are not interested in using funding for social and public programs and research with low economic efficiency. To apply one of the scenarios in a particular country, it is important to take into account not only national characteristics but also international trends. Competitiveness of international students, the emergence of the territory of a multinational educational platform and international ratings – all this play a significant role in the formation of strategic decisions for the HEIs’ development. An effective process of resource management of HEI should be based on strategic and financial benchmarks that provide for the development and implementation of a number of activities for the current activities of HEIs aimed at achieving the normal sustainability of the funding system and enhancing the university’s competitive advantages. For this purpose, a scheme for shaping the development strategy of the HEI was developed and a methodology was proposed for calculating the scientific and educational effectiveness of the university’s activity, which includes three fundamental categories: the quality of the university’s growth; the demand for scientific activity; scale, sustainability of scientific activity.

How to Cite

Hromovenko, K., & Tytska, Y. (2018). FORMING THE DEVELOPMENT STRATEGY OF MODERN HEI. Baltic Journal of Economic Studies, 4(3), 42-50.
Article views: 388 | PDF Downloads: 232



higher education, experience of EU countries, HEI financing strategies, financing conditions, financing mechanisms, HEI development scenarios, financing instruments, strategy scheme, HEI efficiency rating


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