Russian universities will be forced to compete for students and funds under a new system of state orders for specifically qualified graduates being drawn up by the ministry of education, regional authorities and heads of key industrial sectors.
The policy is designed to ensure Russia's universities train specialists that the economy needs after a decade of purely market and student demand-driven changes that have marginalised many traditional skills.
The Programme of State Orders for the Training of Specialists is due to be introduced from September 2003 following analysis of labour market data on supply and demand for particular technical disciplines.
State and private universities will be given the chance to compete to satisfy local demands for particular graduates - engineers, IT experts and other technical specialists - with per capita funding of 16,000-32,000 roubles (£350-£700) tied to the quality of prospective students.
Students with top grades will attract full funding, those with slightly lower, half funding and below that, nothing at all, forcing institutions to emphasise their benefits to would-be students.
Precise details of the range and number of specialities demanded by each of Russia's 89 regions will become clear only after analysis of labour-market data, collected since February, begins this month.
Viktor Glukhov, vice-president for academic affairs at St Petersburg State Technical University, said the long-term impact of the measure would be to force the weakest and smallest universities into mergers or out of the market.
"There's been a five-fold drop in the number of engineering students at technical universities in the past ten or 15 years in favour of more popular courses such as economics," Professor Glukhov said.
He added:"The number of school-leavers has halved in the past ten years and next year will be smaller than the number of available university places. The combined effect of this and the competition forced on institutions by the introduction of state orders will be to force the weakest out of the market."
Universities such as his will do well out of the new system: officially it is ranked second to Moscow's Bauman State Technical University. But those lower down the ranking - the state textile and industrial institutes or provincial technical colleges with poor resources and ageing lecturers - will be put under pressure.
"One aim of this reform is to liquidate the outdated and inefficient institutions. It's a classical market measure - the survival of the fittest," Professor Glukhov said.
Universities will be prevented from freely spending the per capita funding by rules regulating a division of the cash between salaries, maintenance and investment in new equipment.