Private Higher Education and Economic Development

Overview & Synopsis

In Western Europe, especially in Germany, private higher education is generally perceived as an alternative to public higher education for students from relatively affluent families; more broadly, there is a general perception that attending a private higher education institution is correlated to wealth. This perception is influenced by private higher education in the US, which is the world's most visible private system, but also probably the most atypical. In this article, we will analyse the relationship between private higher education attainment and the wealth of nations as reflected by their per capita GDP. We will try to relate the indicators in models that use cross-sectional transnational data as well as time series analysis for four contrasting countries (Chile, Germany, Romania, and the US). We will address two questions: (1) do wealthier nations have a higher percentage of enrolment in private higher education? and (2) does enrolment in private higher education grow with economic growth? Our analysis shows that a simple general relationship between enrolment in private higher education and the wealth of nations does not exist.