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“Policy Scepticism†and the Impact of Scottish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints under Devolution

  • Kristinn Hermannsson

    ()

    (Fraser of Allander Institute, Department of Economics, Strathclyde University)

  • Katerina Lisenkova

    ()

    (Fraser of Allander Institute, Department of Economics, Strathclyde University)

  • Peter McGregor

    ()

    (Fraser of Allander Institute, Department of Economics, Strathclyde University)

  • Kim Swales

    ()

    (Department of Economics, University of Strathclyde)

A “policy scepticism†has emerged that challenges the results of conventional regional HEI impact analyses. Its 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 the public-sector expenditure constraints that are binding under devolution. We show how conventional impact analyses can be augmented to accommodate regional public sector budget constraints. 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.

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File URL: http://www.strath.ac.uk/media/departments/economics/researchdiscussionpapers/2010/10-15.pdf
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Paper provided by University of Strathclyde Business School, Department of Economics in its series Working Papers with number 1015.

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Length: 42 pages
Date of creation: Sep 2010
Date of revision:
Handle: RePEc:str:wpaper:1015
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  1. Jan Oosterhaven & Dirk Stelder, 2002. "Net Multipliers Avoid Exaggerating Impacts: With A Bi-Regional Illustration for the Dutch Transportation Sector," Journal of Regional Science, Wiley Blackwell, vol. 42(3), pages 533-543.
  2. 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.
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