Efficiency and Productivity in Education Systems

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Abstract
This paper approaches the issue of resource allocation within education systems from the perspective of economic theory. Education is considered as a production process which involves the transformation of inputs (for example, staff and student time, physical capital and environmental factors) into outputs (for example, teaching outputs, research outputs and social services). The economic concepts of “efficiency” and “productivity” are reviewed, and it is suggested that while these concepts do not have direct application in the context of education systems they do serve to focus attention on factors which are influential in determining the extent to which resources that are available are used effectively. Accordingly, it is argued that account should be taken of the underlying economic concepts in establishing or reviewing arrangements for funding both institutions and departments or faculties within institutions, and that incentives that will encourage the pursuit of efficiency and productivity should be built into education systems at all levels.

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