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Policy Scepticism and the Impact of London-based Higher Education Institutions (HEIs) on the economy of England: Accounting for Alternative Uses of Public Expenditure

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  • Hermannsson, Kristinn
  • Lisenkova, Katerina
  • McGregor, Peter G.
  • Swales, J. Kim

Abstract

This paper replicates the analysis of Scottish HEIs in Hermannsson et al (2010a) for the case of London-based HEIs’ impact on the English economy in order to provide a self-contained analysis that is readily accessible by those whose primary concern is with the regional impacts of London HEIs. A policy scepticism has emerged that challenges the results of conventional regional HEI impact analyses. This denial of the importance of the expenditure impacts of HEIs appears to be based on a belief in either a binding regional resource constraint or a regional public sector budget constraint. In this paper we provide a systematic critique of this policy scepticism. However, while rejecting the extreme form of policy scepticism, we argue that it is crucial to recognise the importance of alternative uses of public expenditure, and show how conventional impact analyses can be augmented to accommodate this. While our results suggest that conventional impact studies overestimate the expenditure impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity.

Suggested Citation

  • Hermannsson, Kristinn & Lisenkova, Katerina & McGregor, Peter G. & Swales, J. Kim, 2010. "Policy Scepticism and the Impact of London-based Higher Education Institutions (HEIs) on the economy of England: Accounting for Alternative Uses of Public Expenditure," SIRE Discussion Papers 2010-97, Scottish Institute for Research in Economics (SIRE).
  • Handle: RePEc:edn:sirdps:228
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    References listed on IDEAS

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    1. Hermannsson, Kristinn & Lisenkova, Katerina & McGregor, Peter G. & Swales, J. Kim, 2010. "An HEI-Disaggregated Input-Output Table for Scotland," SIRE Discussion Papers 2010-52, Scottish Institute for Research in Economics (SIRE).
    2. Linda Ferguson & David Learmonth & Peter G McGregor & J Kim Swales & Karen Turner, 2007. "The Impact of the Barnett Formula on the Scottish Economy: Endogenous Population and Variable Formula Proportions," Environment and Planning A, , vol. 39(12), pages 3008-3027, December.
    3. Hermannsson, Kristinn & Lisenkova, Katerina & McGregor, Peter G & Swales, J Kim, 2010. "The Expenditure Impacts of London-based Individual Higher Education Institutions (HEIs) and their Students on the Economy of England: Homogeneity or Heterogeneity?," SIRE Discussion Papers 2010-106, Scottish Institute for Research in Economics (SIRE).
    4. Hermannsson, Kristinn & Lisenkova, Katerina & McGregor, Peter G & Swales, J Kim, 2010. "The Expenditure Impacts of Individual Higher Education Institutions (HEIs) and their Students on the Welsh Economy: Homogeneity or Heterogeneity?," SIRE Discussion Papers 2010-88, Scottish Institute for Research in Economics (SIRE).
    5. Brownrigg, M, 1973. "The Economic Impact of a New University," Scottish Journal of Political Economy, Scottish Economic Society, vol. 20(2), pages 123-139, June.
    6. Patrizio Lecca & Peter McGregor & Kim Swales, 2010. "Balanced Budget Government Spending in a Small Open Regional Economy," Working Papers 1020, University of Strathclyde Business School, Department of Economics.
    7. Christopher Blake & Stuart McDowall, 1967. "A Local Input-Output Table," Scottish Journal of Political Economy, Scottish Economic Society, vol. 14(3), pages 227-242, November.
    8. Siegfried, John J. & Sanderson, Allen R. & McHenry, Peter, 2007. "The economic impact of colleges and universities," Economics of Education Review, Elsevier, vol. 26(5), pages 546-558, October.
    9. Richard I. D. Harris, 1997. "The Impact of the University of Portsmouth on the Local Economy," Urban Studies, Urban Studies Journal Limited, vol. 34(4), pages 605-626, April.
    10. Kristinn Hermannsson & Katerina Lisenkova & Peter G. McGregor & J. Kim Swales, 2014. "'Policy Scepticism' and the Impact of Scottish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints under Devolution," Regional Studies, Taylor & Francis Journals, vol. 48(2), pages 400-417, February.
    11. Harvey W. Armstrong, 1993. "The Local Income and Employment Impact of Lancaster University," Urban Studies, Urban Studies Journal Limited, vol. 30(10), pages 1653-1668, December.
    12. Peter Mcgregor & Kim Swales, 2005. "Economics of devolution/decentralization in the UK: Some questions and answers," Regional Studies, Taylor & Francis Journals, vol. 39(4), pages 477-494.
    13. Scott Loveridge, 2004. "A Typology and Assessment of Multi-sector Regional Economic Impact Models," Regional Studies, Taylor & Francis Journals, vol. 38(3), pages 305-317.
    14. Hermannsson, Kristinn & Lisenkova, Katerina & Lecca, Patrizio & McGregor, Peter G & Swales, J Kim, 2010. "The Importance of Graduates for the Scottish Economy: A Micro-to-Macro Approach," SIRE Discussion Papers 2010-80, Scottish Institute for Research in Economics (SIRE).
    15. Harminder Battu & John Finch, 1998. "Integrating knowledge effects into university impact studies. A case study of Aberdeen University," Working Papers 98-08, Department of Economics, University of Aberdeen.
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    1. Hermannsson, Kristinn & Lisenkova, Katerina & McGregor, Peter G & Swales, J Kim, 2010. "The Expenditure Impacts of London-based Individual Higher Education Institutions (HEIs) and their Students on the Economy of England: Homogeneity or Heterogeneity?," SIRE Discussion Papers 2010-106, Scottish Institute for Research in Economics (SIRE).

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