Adopting the Hirschman-Herfindahl Index to estimate the financial sustainability of Vietnamese public universities

Global higher education finance has shifted from fully free models to cost-sharing systems, distributing costs among governments, students, families, industries, and donors. As higher education becomes a quasi-market, universities increasingly seek non-public revenues, making financial diversification a key marker of institutional sustainability. Vietnam has followed this trend since the late 1990s, introducing tuition fees, student loans, and policies to encourage donations and technology transfer. Amid concerns about over-dependence on tuition and state subsidies, there is limited empirical evidence on the financial sustainability of Vietnamese public universities. This study addresses that gap by applying the Hirschman-Herfindahl Index (HHI) to estimate the degree of financial diversity of 51 Vietnamese public universities during 2015–2017, providing an initial picture of their financial health and situating Vietnam in international comparisons.

The literature highlights sustained reductions in public funding for higher education globally, prompting adoption of cost-sharing models and revenue diversification through tuition, donations, and knowledge transfer. Cost-sharing features in reform agendas across developed and developing contexts and is particularly pressing in emerging economies facing tighter budgets. In Vietnam, higher education expanded rapidly since Doi Moi, transitioning from an elite to a mass system with significant growth in institutions and enrollments, though most universities remain teaching-oriented. Government education spending has increased in absolute terms but lags behind massification, with per-student public expenditure constrained. Since the 1990s, Vietnam’s cost-sharing policies—often framed as “socialization”—have included tuition fee schemes with rising caps, a national student loan program, legal frameworks for social/charity funds, incentives for technology transfer, and a second-track system allowing fully self-paying students and greater autonomy for selected institutions. Prior research has used HHI to assess revenue concentration and financial sustainability in universities internationally, motivating its application to Vietnam.

Design and measure: The study uses the Hirschman-Herfindahl Index (HHI) to assess financial diversity/sustainability, adapting the index from market concentration analysis to revenue concentration across income sources. The standardized HHI ranges from 0 (highly diversified) to 1 (highly concentrated), with thresholds: <0.15 strong diversity, 0.15–0.25 moderate, >0.25 weak financial diversity/sustainability. Computation: HHI = Σ_i (r_i/R)^2, where r_i is revenue from source i and R is total revenue. Two approaches were used: (1) aggregation across four main inflows and (2) disaggregation across 12 sub-inflows. Revenue classification: Four inflows were defined—(1) State allocation for instruction; (2) Tuition and fees; (3) Research and Development; (4) Borrowing and Donations. These were disaggregated into 12 sub-inflows: (1.1) State recurrent subsidies (instruction); (1.2) Earmarked non-recurrent allocation; (1.3) Capital investment; (2.1) Tuition (domestic); (2.2) Tuition (international); (3.1) State recurrent subsidies (R&D); (3.2) State projects; (3.3) Non-state projects; (3.4) Technology transfer and service; (4.1) State borrowing; (4.2) Non-state borrowing; (4.3) Donations. Data collection and sample: Due to lack of national aggregate datasets, primary data were collected directly from universities. Emails were sent to 100 public universities requesting revenue breakdowns for 2015–2017. Data collection ran April–September 2019; 51 universities responded (51% response rate) across all regions (53% North; 47% Central/South), with near-equal distribution of research- vs teaching-oriented institutions. Institutional characteristics (age, size, orientation, location) were recorded to compare HHI across groups. Analysis: For each university and year (2015–2017), HHIs were computed under both aggregation and disaggregation and then averaged across years. Group comparisons by age (≥50 vs <50 years), enrollment (≥10,000 vs <10,000 students), orientation (teaching vs research), and location (North vs Central/South) were conducted, with p-values reported for differences.

Revenue composition: Tuition fees, particularly from domestic students, constituted the majority of total income for surveyed universities and increased over 2015–2017. State allocations for instruction contributed a sizable but smaller share, ranging from 35.98% (2015) to 30.02% (2017). Within state allocations for instruction, state recurrent subsidies were the largest sub-inflow (22.30%–25.32%), followed by earmarked non-recurrent allocations (4.44%–5.60%) and capital investment (2.79%–5.06%). Research and Development contributed modestly at 7.09%–8.8% of total income. Borrowing and donations were minor contributors. HHI results: Across 51 universities (2015–2017 averages), mean standardized HHI was 0.559 (SD = 0.018) using the aggregation approach and 0.479 (SD = 0.022) using the disaggregation approach. No university had an HHI below 0.25; three universities exhibited extremely weak diversity with HHIs > 0.75 under both approaches. Group comparisons: Generally, there were no significant differences in HHI across age, size, orientation, or location (most p-values > 0.05), with the exception of a significant difference between teaching- and research-oriented universities under the aggregated HHI. International comparison: Vietnamese universities’ HHIs were higher (less diversified) than those reported for European research universities (mean HHI ≈ 0.30) and somewhat higher than for English public, non-specialist universities (mean HHI ≈ 0.42).

Findings indicate pervasive financial concentration among Vietnamese public universities, reflecting heavy reliance on tuition fees and comparatively modest contributions from governmental allocations and minimal revenues from R&D, technology transfer, borrowing, and donations. This pattern aligns with policy shifts since 2005 that decoupled subsidies from enrollment growth and with ongoing massification that expanded fee revenue faster than state funding shares. The marginal role of R&D income mirrors the historical legacy of a Soviet-style separation of teaching universities and research institutes and a predominance of teaching-oriented institutions, despite recent legal recognition of research and knowledge transfer missions. Limited borrowing is consistent with restricted institutional autonomy and lack of asset ownership for collateral. Low donation income is consistent with cultural giving preferences prioritizing non-education causes. Compared internationally, higher HHIs underscore Vietnam’s comparatively weak financial diversification, raising vulnerability to shocks affecting major revenue streams (e.g., tuition). The results suggest that policy and institutional changes are needed to broaden revenue bases and improve resilience.

This study applies the HHI to a novel national context to quantify financial diversity in Vietnamese public universities, showing widespread weak financial sustainability in 2015–2017. Contributions include demonstrating the utility of HHI as a proxy for financial sustainability in an emerging economy and providing baseline evidence for Vietnam relative to international benchmarks. Policy and practice recommendations include: (1) reforming funding allocation toward performance-based mechanisms, reducing historically based subsidies; (2) considering a targeted investment strategy focusing resources on a small number of high-potential universities while encouraging others to diversify through cost-sharing; (3) expanding international student recruitment as a potential growth revenue stream; and (4) building institutional capacities in fund-raising, entrepreneurship, and the “business of science” to enhance technology transfer and service revenues. Universities should prioritize a focused strategy, developing one or two additional revenue sources rather than attempting broad simultaneous diversification. Future research should expand samples, include private universities, and investigate determinants and outcomes of financial diversification using panel or Bayesian methods.

The study relies on primary data from a convenience sample of 51 public universities due to lack of national administrative datasets, limiting generalizability. Private universities were not included despite their growing role in Vietnam’s higher education system. Analyses are primarily descriptive; causal relationships and dynamics were not examined. Future work should include larger, more representative samples encompassing private institutions and employ inferential designs such as panel data or Bayesian analysis to explore antecedents and consequences of financial diversification.