Abstract. This paper intends to critically examine the existing literature on the funding of the higher education and also trying to analyse this issue in Libyan context, which is a developing and oil dependent economy. The discussion will try to establish a full picture of the current model of funding allocation mechanisms in public university and the criteria used for distribution of funds, and motivations behind government funding. With recent globalization, the cross border movements of goods, services and people have increased in recent decades and it has brought new challenges to the higher education funding. The findings suggest that by looking at other factor such as motivation, which in Libyan case, to win over supports from different tribes and this seems to be for political purposes. The government in Libya seems to be seeking to achieve political purposes through the financing of higher education institutions.