The Relationship Between Universities and Economic Growth
Writing about web page http://www2.warwick.ac.uk/knowledge/business/gus
A blog post by Dr Wendy Piatt, Director General of the Russell Group of Universities
All the evidence shows our leading research-intensive universities are the engine room of long-term, sustainable growth and prosperity.
Russell Group universities are major contributors to the economy in their own right, supporting more than 270,000 jobs and generating an economic output in excess of £30 billion a year.
This benefit is spread right across the UK and, in many of our major cities up and down the country; universities are key contributors to the regional economy.
For example, the University of Birmingham generated £1.1 billion of spending in the region in the 2011/12 academic year. The value-added contribution to the West Midlands economy was almost double that of the region’s eight largest football clubs.
Russell Group universities contribute out of all proportion to their size - just 24 universities account for more than 60 per cent of the spin-out companies which survive for three years or more.
Higher education overall is one of this country’s most successful export industries and is estimated to contribute more than £8.2 billion a year in overseas earnings - on a par with earnings from the export of electrical equipment or manufactured food products. In Sheffield alone, international students pump £120 million into the local economy every year.
And the contribution from our universities is growing apace. The economic impact has increased from £28 billion to £30 billion in just one year. That’s 7 per cent growth at a time when growth across the whole economy was flat.
Our universities are far removed from the image of remote ivory towers. A recent report by the World Economic Forum ranked the UK among the best countries in the world for business-university collaboration.
The skills and expertise developed by one student at the University of Warwick Business School helped to rejuvenate the management techniques and company culture within a local manufacturing SME.
Discoveries like graphene and spin-outs like the University of Oxford’s Natural Games Motion, now widely used in the film and games industries, which will lead to real growth.
Universities also increase productivity by helping to make existing businesses more efficient. A collaboration between Rolls-Royce plc and researchers at the University of Birmingham resulted in a breakthrough technology which is saving the company millions of pounds every year.
In highly developed economies such as the UK, growth increasingly needs to come from investments in research, innovation and human capital - all areas in which the role of universities is critical.
But successful commercialisation requires sustained and patient investment in research, often over many years or even decades. 125 case studies across the Russell Group showed the timescale from research to first realising a commercial return averages more than 17 years.
The Chancellor rightly recognised the importance of research last year when he explained his approach to scientific investment to the Royal Society and said: “Let us identify what Britain is best at – and back it.”
That’s why we believe the science and research resource budget must continue to be ring-fenced in the forthcoming spending review if the UK is to lift itself out of the economic doldrums and set a course for long-term success.
This blog is part of a regular series on the Knowledge Centre looking at issues in higher education ahead of the Global University Summit (May 28-30 2013), hosted by the University of Warwick in Whitehall, London. As part of the Summit, a declaration of commitment and policy recommendations will be drawn up for the G8 summit of world leaders, taking place in Northern Ireland in June.
Image: Magdalen College, Oxford. Source (Flickr).
Dr Wendy Piatt is the first Director General and Chief Executive of the Russell Group, which represents 24 major research-intensive universities in the UK. She was appointed to set up an organisation providing strategic direction and policy development underpinned by research and communications. She was previously deputy director and head of public service reform at the Prime Minister’s Strategy Unit where she also led work on social mobility, local government, education and skills and digital inclusion. Prior to that, she was head of education policy at the Institute for Public Policy Research, specialising in higher and further education.