Are universities useless in supporting economic development?

We have previously considered in this blog whether university programmes of teaching and research should be aligned with economic needs, and there is a variety of views on this point. But a lecturer in St Andrews University, Dr Ross Brown, has now claimed to have discovered in his research that regardless of whether universities should do this or not, they are not effective if they do. According to a report of his research on the university’s website, Dr Brown said:

‘The strongly engrained view of universities as some kind of innovation panacea is deeply flawed. As occurred in the past when inward investment was seen as a ‘silver bullet’ for promoting economic development, university research commercialisation has been granted an equally exaggerated role in political and policy making circles. Universities are not quasi economic development agencies.’

In this short quote there are about 20 different highly arguable points, but the one Dr Brown is particularly promoting is that universities don’t materially support economic development, in that research commercialisation doesn’t have a major impact.

For a start, I don’t think I know of anyone who has ever believed that research commercialisation is the key to economic development. It is a long game, which has the capacity, often over an extended period of many years, to create value for the researchers’ institutions and for those who funded the work (often the taxpayer). When that happens – and it only happens in a minority of cases – the economic impact will often be somewhere else, typically in the place where the last major investor runs their business.

The reason why universities prompt economic development has almost nothing to do with the commercialisation of research. Universities create a cluster of intellectual capital in a place which in turn has the capacity to support the economy: skilled graduates, leadership, facilities and infrastructure, a potential for value-adding partnerships in industry R&D projects – these constitute the raw material for economic development in particular areas. Nor is it hard to find the evidence. There are truckloads of studies that show the impact on value added and economic growth contributed to regions by resident universities; indeed one such study was done by Dr Brown’s own university. There are also studies that show how some regions fail to grow economically where they do not have universities.

I must confess I have not read the original study by Dr Brown, and it may of course be that in it he pursues a quite different argument from that presented in the summary report. Even there he is quoted as recognising the impact of universities, but seems to think that this is not a critical element in assessing their capacity to stimulate growth. In reality it is crucial. The recent Aberdeen City Region Deal is almost wholly based on the capacity of the region’s universities to promote innovation. While I must declare an interest here of course, I very much doubt that the assessment is wrong.

Universities are of course not everything in the drive for economic growth. But they are a very big something.

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2 Comments on “Are universities useless in supporting economic development?”

  1. Vincent Says:

    Ohh I’m not sure about any of this. You say yes, he says no. I think it depends on lots of things.
    Yes you can have regional innovation in a place like Oxford and Manchester, and any other centre. But why isn’t Birmingham on fire then. The same for all the other industrial revolution areas. Take Belgium, if universities was the answer why is the Walloon region not humming. But the area over the border in France doing quite well ta very much.
    How many of your people remain in your area beyond those that have a stake like a farm/shop/business anyway. Isn’t the Highlands and Islands a place of net outward migration.

    My twopenceworth would say the entire issue has more to do with local money being invested outside the area. Again if we look at Belgium. There isn’t a village that hasn’t some sort of small manufacture be it chocolate or those aluminium coffee pots. Bavaria is packed with village industry exporting assembled small white goods. Why aren’t we doing that type of work.
    Me, I suspect it’s mostly due to an error in focus where they view large scale industry as the thing. Civil servants can price a nice big shipyard, they have no training to assess risk of a few thousand small factories.
    Of course what they don’t quite grasp is that 70-80% of ALL business, large and small will fail in the first 5 years. Americans get that ad play to that strength, we see it as a sinful weakness.

  2. James Fryar Says:

    I think one of the areas where universities are currently quite weak is in terms of their alumni. Universities produce graduates, most of whom will head off into the private sector. And, inevitably, there will be a handful who, armed with that additional experience, will subsequently consider setting up their own companies.

    Since these people are no longer employees or students of the university, they are effectively now cut-off from that support network. They are no longer part of the ‘research framework’ of the institution and can not avail of the research commercialisation grants and supports that internal staff can. Sometimes these people will have left the university to join spin out companies from the university itself. In most cases they will probably fail, as Vincent points out, and when this happens, those people subsequently end up out of the fold.

    Many of these people will have technical ideas on which to base their company, be it in science, engineering, or software. But trying to set up such a company in the absence of university support is very tough particularly in terms of acquiring basic equipment.

    I think universities could be doing more to support small business ideas emanating from their alumni. Sure, there are ‘research innovation campuses’ but, for these people, they are really just ‘offices they can rent’ rather than representing any meaningful support.


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