Applicability of Performance-Based Funding Models for Tertiary Education in Small Island Developing States: The Case of Mauritius

Performance-based funding of publicly-provided goods and services is an output-oriented system which is seen by many experts as a better way of improving efficiency and enhancing public accountability than reliance upon an input-based system. From the early 1980s, the goal has shifted in many OECD countries from accounting for expenditures to accounting for results. The shift gained momentum from movements to re-engineer business and reinvent government. Empirical studies of performance-based funding (PBF) systems to date have been largely confined to OECD countries and there is a lack of literature on PBF models with regard to developing countries, including Small Island Developing States (SIDS). This research explores the desirability and applicability of a PBF model for tertiary education in SIDS, with particular reference to Mauritius. This research adopts a pluralist methodology which is based on a literature review, a substantive assessment of the five OECD countries (Australia, Denmark, Sweden, New Zealand and United Kingdom) where PBF models are currently in use in the tertiary education sector, and qualitative interviewing. Thirty-eight respondents were interviewed involving members of the political elites and representatives of the tertiary education sector in Mauritius. Primary empirical materials were triangulated and cross-validated with secondary data gathered from official documents. The results indicated some measure of support for performance-based systems among the respondents in order to promote the quality of tertiary education, enhance research capability and increase accountability for the use of public funds. However, SIDS would face difficulties in developing and implementing PBF systems for tertiary education in the short-term because of a lack of human resource capability, the limited capacity of governments to reward performance due to budgetary constraints, the distinctive characteristics of SIDS (e.g. smallness, a limited number of tertiary education institutions, and vulnerability to natural calamities), and high administrative and compliance costs. An important conclusion from this investigation is that there is no 'perfect' PBF model and unintended consequences are likely from any model adopted. A PBF model for either teaching or research (whether based on peer review, performance indicators or a mix of the two) would not be desirable, feasible or applicable in Mauritius or any other SIDS in the short-term. Three other policy options are considered for enhancing research and teaching performance in the tertiary education sector in the short-term, namely better monitoring and reviewing research performance, an improved quality assurance system, a review of outcomes, or some combination of the three options. In the longer-term, there is the possibility of developing a PBF research indicator model, provided some key preconditions are met, such as stable policy settings and political commitment, adequate human resource capacity and capability, and the separation of budgets for research and teaching