A new paper titled “The economic impact of universities: Evidence from across the globe” reveals how revitalizing and/or expanding your local university can often be central to revitalizing your local and regional economy. The research is by Anna Valeroa and John Van Reenen, and appears in the Economics of Education Review, Volume 68, February 2019, Pages 53-67.
Highlights
- Using international data on universities we study their impact on regional growth;
- Increases in universities are positively and robustly associated with higher growth;
- This effect spills over into neighboring regions within the same country;
- Increasing regional human capital and innovation matter help mediate this effect; and,
- The economic benefits of university expansion are likely to exceed the costs.
Abstract
We develop a new dataset using UNESCO source materials on the location of nearly 15,000 universities in about 1,500 regions across 78 countries, some dating back to the 11th Century.
We estimate fixed effects models at the sub-national level between 1950 and 2010 and find that increases in the number of universities are positively associated with future growth of GDP per capita (and this relationship is robust to controlling for a host of observables, as well as unobserved regional trends).
Our estimates imply that a 10% increase in a region’s number of universities per capita is associated with 0.4% higher future GDP per capita in that region. Furthermore, there appear to be positive spillover effects from universities to geographically close neighbouring regions. We show that the relationship between GDP per capita and universities is not simply driven by the direct expenditures of the university, its staff and students.
Part of the effect of universities on growth is mediated through an increased supply of human capital and greater innovation. Furthermore, we find that within countries, higher historical university presence is associated with stronger pro-democratic attitudes.
Photo of Queen’s University in Belfast, Northern Ireland is by Storm Cunningham.