Since the transition from a plannedeconomy to a market-based democracy in the early 1990s,Mongolian higher education has experienced a markedexpansion. Between 1992 and 2007, the number of tertiaryeducation institution (TEIs) has increased more thanfour-fold and enrollment more than six-fold, with the grossenrollment ratio growing from 14 to 47 percent. This rapidgrowth has been fueled by the increased demand for higherskills in the labor market and has led to rising educationpremia. These trends, in turn, have stimulated increasedhousehold demand for tertiary education. In the early 1990s,the liberalization of the economy and the legalization ofprivate higher education made it possible to increase thesupply of tertiary education. However, this expansion insupply has been met with the charging of tuition fees inpublic universities and the growth of private institutions.As a result, public expenditure on higher education has beencontained to about 14 percent of total expenditure, comparedwith over 20 percent in China. Although this policy has metthe need for an increased supply of tertiary education, ithas failed to produce graduates who can improveMongolia's international competitiveness. The emergingproblems are low-cost and low-quality education, a mismatchbetween the demand for and supply of skills, and inequitableopportunities of access between the urban and rural areasand between the rich and the poor.
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