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In order for universities and other institutions of higher education to make the most of their distinctive qualities and promote reform, and sufficiently realize the functions expected of them, a very important issue is to improve the financial base as a basic condition of these improvements. When the benefits that higher education bring to society are considered, such as the role higher education plays in the development of society and the improvement of the lives of the people, it is necessary to take into account a further expansion of fiscal expenditures with a view to sharing widely the burden for expenses necessary for higher education over society as a whole.

Furthermore, an important issue is to promote further the introduction of private-sector funds. The promotion of the introduction of private-sector funds into universities and other institutions of higher education will encourage the self-efforts of universities and other institutions of higher education with respect to education and research activities as well as management, and is useful for strengthening and improving the independent financial base of universities and other institutions of higher education. To this end, it is necessary to continue to proceed with the expansion of mechanisms to introduce private-sector funds.

Along with the securing of financial resources, the other important issue is the effective utilization of limited financial resources. The problem of how to combine so-called institutional subsidies, such as subsidies for private institutions of higher education and administrative expense subsidies for post-incorporation national universities and others, and so-called individual subsidies, such as scholarships and grants-in-aid for research, is a problem shared by all countries. In addition, when implementing institutional subsidies, it is necessary to take steps to ensure the development of a competitive environment. The important issues are to increase incentives to improve education and research performance through resource distribution based on evaluation and other methods, and, based on the different establishment aims of national, public and private higher education institutions, to develop competitive conditions among them through an expansion of competitive subsidies and tax measures.

MEXT is going to study the best future approach to these issues as part of its consideration of the future concept of higher education.