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Results Briefs February 19, 2018

Tertiary Education Finance for Results Project III


Wold Bank.

The Tertiary Finance for Results Project III, commonly referred to as MECESUP 3, awarded 179 Performance Agreements to tertiary education institutions (TEIs) to enhance the quality and relevance of tertiary education for students. The project’s achievements include an increase in the number of faculty members with PhDs, improved student retention rates, and a redesigned teacher and vocational training curricula. These achievements are expected to lead to positive outcomes for students, including a reduction in the time needed to graduate, as well as improved employment and wage prospects.


Chile’s efforts to expand tertiary education in the late 1990s and early 2000s yielded successful increases in student enrollment. Chile’s efforts to expand tertiary education while maintaining quality levels were widely recognized. However, key challenges in tertiary education persisted. The OECD/World Bank Review of Tertiary Education (2009[1]) highlighted gaps in quality and relevance. Related challenges included replacing mandatory theoretical content with the skills-based training required by employers, reaching a critical mass of qualified professors to develop and deliver such curricula, and shifting policy to encourage students to seek shorter degree programs with closer connections to employment prospects.


Gaps in the quality of tertiary education could be addressed by increasing the percentage of professors with PhDs, making curricula and teaching practices more rigorous and effective, and by raising academic readiness to better ensure the success of new students from the lowest income quintiles. Gaps in the relevance of tertiary education could be addressed by redesigning academic programs to replace theoretical content with the skills-based training required by employers. Despite the acknowledged challenges, many TEIs in Chile lacked sufficient resources to fund initiatives to improve quality and relevance. Furthermore, Chile’s government recognized the need to bolster planning and management capacity at higher educational institutions to ensure that future initiatives could be successfully implemented and maintained.   

Two previous MECESUP projects established competitive funds, allocated based on merit and results, to finance improvements at TEIs. The experience gained from those projects guided the design of MECESUP 3, which expanded the performance agreement financing approach. Performance agreements were recognized as beneficial to the government in that they fostered stronger TEIs while reserving the government’s right to choose investments that reflected its goals for tertiary education. The agreements were also beneficial to the TEIs since they could be designed to address shortcomings unique to their institutions. 

Performance agreements were competitively awarded to TEIs to implement 60 “Institutional Improvement Plans” in three categories: Teacher Training Improvement, Technical/Professional Training Improvement, and Academic Innovation. Performance agreements were also awarded for 119 “Improvement Plans” that focused on targeted activities to enhance teaching, learning, and management at the educational institutions.


The following are the related improvements in the quality and relevance of education at TEIs that implemented performance agreements:

  • Full-time faculty members who hold PhDs increased from 5,109 at the appraisal period of the project in 2011 to 8,332 at the close of the project in 2016. More highly trained teachers boosted the quality of educational instruction for students at TEIs.
  • First-year student retention increased from 68.4% in 2011 to 73.8% in 2016. Increased retention rates resulted in larger numbers of professionals joining the work force and raising their standard of living. 
  • The percentage of students pursuing teaching degrees in programs with redesigned curricula increased from 25% in 2015 to 70.5% in 2016. The percentage of students in vocational training programs with redesigned curricula reached 89.4% at the close of the project, up from 50% in 2015. Improved curricula allowed more students to complete their degrees on time, and to graduate with skill sets aligned with labor market needs.

Students experienced positive outcomes as a result of the improvements that flowed from the performance agreements. For example, students completing study programs with redesigned curricula graduated more quickly and with more relevant skill sets., which allowed them to start work and earn sooner.  Following is a sampling of performance agreement data that points to this outcome:

  • Credit transfer systems were a component in all redesigned curricula. In 2016, the TEIs that received MECESUP 3 support to refine their curricula reported that 245,788 students had earned credit units based on previous coursework and employment, thus shortening their time to graduation.
  • Pontificia Universidad Católica de Chile redesigned its engineering curricula to eliminate duplication in course material and unnecessary testing, and the percentage of students graduating on time rose from 17.5% to 30% during the three-year implementation period of the performance agreement. Since redesigning its pedagogy curricula, the percentage of students graduating on time rose from 75% to 88%.

[1] “Reviews of National Policies for Education: Tertiary Education in Chile”, OECD and The World Bank, 2009.


beneficiaries were reached by the project by closing, 51% of whom were female.

Bank Group Contribution

The World Bank, through the International Bank for Reconstruction and Development, provided a US$40 million loan toward the US$160 million project cost. The Government’s Institutional Development Fund financed the remaining US$120 million.

Most of the Bank’s lending (US$38 million) helped to finance the awarding of performance agreements to TEIs, which were used to implement initiatives to increase the quality and relevance of tertiary education. The other US$2 million provided by the Bank supported the provision of policy support and the execution of studies to improve the design of tertiary education reforms.


The Government of Chile has been a valuable partner in the tertiary education sector since 1997, contributing technical assistance, policy analysis, and co-financing. Together, the Bank and the government have designed, appraised, implemented, and co-financed three projects under the MECESUP program umbrella: MECESUP 1 (1998-2005), MECESUP 2 (2005-2010), and MECESUP 3 (2012-2016).

Moving Forward

MECESUP 3 performance agreements funded plans designed by TEIs to remedy problems within their institutions. The resulting improvements in quality and relevance overcame acknowledged weaknesses, allowing the TEIs to work to sustain and build upon their successes. TEIs are more likely to succeed because of the strengthened institutional capacity gained through implementing performance agreements under MECESUP 3.

The Bank recently approved a follow-up project to sustain its support to the Chile’s higher education system: The Strengthening of State Universities in Chile Project (P163437). The objectives of the project are to improve quality and equity within Chile’s state universities (SUs) and to strengthen their institutional capacity to address regional and national development challenges. Actions supported by the proposed project are expected to: (a) reduce drop-out rates, especially for socio-economically disadvantaged students; (b) improve qualifications of SU institutional staff; and (c) increase the quality of SU produced research. Direct beneficiaries will include an estimated current and future population of 382,000 students and 17,000 faculty at state universities nationwide. Indirect beneficiaries will include regional governments, local stakeholders from the productive sector, and other national and international universities.


The project’s main beneficiaries include the following stakeholders at the TEIs that received performance agreements: 1) current and future students enrolled at TEIs who benefit from more coherent curricula delivered by better-qualified instructors, shorter degree programs, and expanded remedial support targeting less-advantaged students; 2) lecturers who pursued advanced study to improve their credentials and teaching methods; 3) administrators who received training to improve their management skills; and 4) employers who profit from more highly qualified job candidates better aligned with  labor market demands. The project reached a total of 279,883 beneficiaries by closing, 51% of whom were female.


Substantial video content related to the MECESUP 3 project and individual performance agreements implemented by TEIs can be found online. The following links provide several examples:

  1. The Ministry of Education’s MECESUP 3 mini-site contains extensive information about the project, and includes many links to download supplemental information.
  2. For a Performance Agreement awarded in 2013 to the Universidad Adolfo Ibanez for an Institutional Improvement Plan in the “Teacher Training Improvement” category.
  3. For a performance Agreement awarded in 2012 to the Centro de Formación Tecnica San Augustin for an Institutional Improvement Plan in the “Technical/Professional Training Improvement” category.
  4. For a Performance Agreement awarded in 2015 to the Universidad de Chile for an Institutional Improvement Plan in the “Academic Innovation” category.
  5. For Performance Agreements awarded for Improvement Plans in the two most popular categories: