Universities and economic growth go together

Some say of newer institutions that more means less, but that’s not true – more universities mean a larger economy

March 31, 2016
Hand holding growing pile of money (economic growth)
Source: iStock

One of the lines of attack that newer universities often have to fend off is that more means less; that new universities open higher education to students who aren’t up to it or won’t benefit (and take finite resources away from the “elite” as they do so).

There are 101 ways to rebut this criticism (ask someone arguing this whose child they would like to see excluded – you can guarantee it won’t be their own). But perhaps the best is to demonstrate the impact that university expansion has had on society and economies.

A study from the London School of Economics, “The economic impact of universities: evidence from across the globe”, aims to do just this, assessing the link between growth in university numbers and gross domestic product per capita between 1950 and 2010, using data on 15,000 universities in 78 countries.

The conclusion of authors Anna Valero and John Van Reenan is that doubling the number of universities per capita is associated with over 4 per cent higher GDP per capita within the region, and that this also “spills over” to neighbouring regions.

What’s striking in their analysis, which suggests not just correlation but causation, is how historical periods of university expansion underpin specific periods of economic growth in different countries.

In the UK, for example, there were just seven universities established between 1100 and 1800, then a clear wave of expansion that coincided with industrialisation.

In the US, there were nine colleges founded between 1636 (Harvard University) and the American Revolution, then a sharp rise instigated by Thomas Jefferson, which continued throughout the 1800s as the country industrialised (it is noteworthy that the US had far more universities in relation to the size of its population than the UK during this peak – about 13 universities per 1 million people in 1900, compared with two per million in the UK).

The pattern in France saw this university “density” accelerate when the grandes écoles were established in the late 19th century, coinciding with the country’s slightly later industrialisation, then again in the 1960s at the time of de Gaulle’s economic reforms.

Germany took a different path. Its first universities date from the late 14th century, but population growth outpaced university expansion in the 1800s as more people were educated via apprenticeships than was the case elsewhere. This was tackled in the 1960s with a push to boost university numbers, a move that the study says was “motivated by economic reasons: in particular the need to compete in technology and science against the backdrop of the Cold War, but also social reasons, namely the notion that education is a civil right to be extended beyond the elites, and is crucial for democracy”.

The researchers also look at China and India, noting that despite dramatic growth since the middle of the past century, there are still significantly fewer universities (0.4) per million people than there are in the most successful systems, while globally the number of universities has exploded as a result of dramatic expansion in emerging markets such as Brazil, the Philippines and Mexico.

So as leaders of newer universities gather at the Times Higher Education Young Universities Summit in Barcelona between 5 and 7 April, we can be clear that, as long as quality is paramount, growth is good. More doesn’t mean less.



Print headline: Set more places for bigger pie

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Reader's comments (1)

This is an interesting finding and curious to find out if this study covers Africa. I am currently looking at universities in Nigeria and economic growth. I will be interested to follow up on this study and how I can obtain full report.


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