Estimating unit cost of public university education in Vietnam

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Estimating unit cost of public university education in Vietnam Vu Thang Pham1

· Binh Tran-Nam2,3

Received: 12 February 2019 / Accepted: 3 September 2020 © Springer Nature Singapore Pte Ltd. 2020

Abstract This paper is motivated by the ongoing debate on university reform in Vietnam. In particular, there is a need to quantify the level of governmental support for public universities and examine whether or not such a support is adequate. To this end, the present paper estimates training costs per student in different disciplines within the Vietnamese public university education system in 2010. The various estimates of unit costs are based on the definitional approach which defines unit cost as the ratio of total costs over output. In measuring total costs, private costs incurred by university students (apart from formal tuition fees) are excluded. Further, the opportunity cost method employed emphasizes implicit costs such as imputed land rent. The total output is based on weighted student numbers. Unit costs are then estimated using a variety of primary (from survey) and secondary data sources. The results obtained suggest that the unit costs of public university education in Vietnam vary considerably between disciplines. The results also support the presence of economies of scale and scope in higher education and a negative relationship between unit costs and teaching quality proxies. The overall unit cost of public universities in Vietnam is very low in absolute terms when comparing with other countries. However, unit cost relative to GDP per capita in Vietnam is more comparable with those of neighboring countries. Nevertheless, the findings of the paper imply that more resources need to be allocated to the public university sector as part of an urgently needed university reform in Vietnam.

This paper is derived from a capacity building project commissioned by the Higher Education Project 2 (HEP2) of Vietnam’s Ministry of Education and Training (MOET). The authors are grateful to many individuals and organizations for their valuable assistance in making this project possible. The authors would also like to thank two anonymous reviewers whose valuable comments result in vast improvement of the paper. The views expressed in this article are those of the authors and do not necessarily reflect the views of any institutions with which they are affiliated.

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Vu Thang Pham [email protected] Binh Tran-Nam [email protected]

1

Center for Economic Development Studies, VNU University of Economics and Business, Vietnam National University, Hanoi, 144 Xuan Thuy Road, Cau Giay District, Hanoi, Vietnam

2

School of Taxation and Business Law, UNSW Sydney, Kensington, NSW 2052, Australia

3

School of Business and Management, RMIT University Vietnam, Ho Chi Minh City, Vietnam

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V. T. Pham, B. Tran-Nam

Keywords Training cost · Unit cost · Economies of scale · Economies of scope · University reform · Vietnam

1 Introduction and policy context As a transition economy, Vietnam has achieved reasonable successes in ec