Linkages between Investment Potential and Quality of Educational Institutions: Evidence from India

Abstract

Using disparate datasets, one on the quality of higher education institutions (HEIs) in India comprising 348 HEIs that were accredited over the years 2004-2008, and another on the investment potential of states based on four indicators, we fail to find a correlation between the investment potential of a state and the mean efficiency of its HEIs computed using nonparametric data envelopment analysis (DEA). However, interactions of investment potential indicators with HEI scores on seven quality assessment criteria exhibit a significant impact on efficiency scores thereby suggesting a latent moderating effect. We conclude that the investment potential moderates the quality assessment of HEIs, but these indicators do not affect the efficiency of HEIs. A direct policy implication of the study is a latent link between HEI quality and investment potential of a state but not an overt one. Moreover, a state's infrastructure interacts with teaching and learning to affect HEI efficiency positively, whereas research output and good political governance interact to affect efficiency positively and significantly.