Bridging Policy and Practice: Reassessing the Economic Role of Higher Education Institutions in Terengganu’s Development Trajectory

This study investigates the influence of higher education policies on regional economic development in Terengganu, Malaysia, emphasizing how universities serve as catalysts for innovation, human capital, and industry collaboration. Despite substantial investment in institutions like University Malaysia Terengganu (UMT), University Sultan Zainal Abidin (UniSZA), and University Technology MARA (UiTM) Terengganu, the region continues to experience a disconnect between academic outputs and economic impact. Employing a qualitative case study method, the research draws on interviews with policymakers, academics, and industry representatives to assess structural barriers such as limited research commercialization, skills mismatches, and underfunded innovation systems. The theoretical framing draws from Human Capital Theory and the Triple Helix Model to analyse how education, government, and industry interact within Terengganu’s socio-economic context. Findings highlight the urgent need for place-based funding, curriculum-industry alignment, and intermediary institutions to bridge gaps in collaboration and implementation. The research concludes with policy recommendations for enhancing the role of universities in driving inclusive, sustainable growth in peripheral regions. This study offers transferable insights for regions facing similar developmental constraints, reinforcing the strategic importance of localized higher education reforms in national economic agendas.