A cash flow management system is important for Russian education

23 june 2015

Experts of the Analytical Center have reviewed the systems used for financing education in various countries and concluded that the most important issue in Russian education today is how effectively new financial resources are found and used rather than how much money it gets.

Education is an important mechanism for developing the human potential of any country: education is the foundation for research and development, increasing labor productivity, improving a country’s image in the international arena. The prevailing wisdom is that the more money is spent on education, the better educated the average person will be and the better the quality of education that the population of the country will be able to get. The experts decided to figure out whether money is the most important factor that makes or breaks a country’s education system.

The amount of money the state spends on education in Russia has increased by a factor of 3.7 in the past decade. Every year the Government spends an average of 200 billion rubles more on education than the year before. In 2014 education spending made up 4.28% of the country’s GDP. However, in terms of education spending per student Russia lags behind the global leaders in education. Nevertheless, despite spending comparatively modest amounts on education Russia still manages to offer education to the largest percentage of its population, up to 54% (in Canada it is 51%, in the US – 42%, in the UK – 41% and in China – only 4%). And to this day education in Russia is free and accessible.

The mechanism used in Russia to finance the education system presents a number of opportunities, which experts believe can be used to solve the problems the country is bound to face after going through a socio-economic crisis. One such opportunity is attracting private sources of finance. If we look at countries like Canada, the US, Chili and Japan, we can see that private investments in education have great potential. Experts also see opportunities for Russia to attract foreign students to Russian universities, primarily from East and South East Asia where the number of students getting an education abroad is on the rise.

However, experts say that the most important issue is the efficiency of budget spending. Special attention needs to be paid not so much to financing per se but rather to how efficiently the financial resources that are available are used, how well funds are allocated, in other words, improvements are needed in cash flow management.

Article by experts of the Analytical Center Tatyana Yuzhakova and Irina Karakchieva on this issue was published in the International Journal of Applied and Fundamental Research, No 7 for 2015.