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Regional Impact Analyses and the Appropriate Treatment of Regional Budget Constraints under Devolution: An Application to the Impact of Scottish HEIs

  • Kristinn Hermannsson


  • Katerina Lisenkova


  • Peter G McGregor
  • J Kim Swales

There have been numerous studies of the “impact” of HEIs on their host regions. These have typically focused on the demand for goods and services in the host region. The best of these studies employ regional input-output analyses. However, there has developed a “policy scepticism” about the value of such analysis based on notions of either demand-side (binding budget constraints) or supply-side (binding resource constraints) “crowding out”, to the point where the demand side impact of HEIs is regarded as negligible. In this paper we provide a systematic critique of this policy scepticism. While we reject the extreme form of policy skepticism we do acknowledge the importance of binding public sector budget constraints under devolution, and argue that such constraints should be accommodated in future impact studies. We focus our own impact analysis on the HEI sector’s impact net of its public income by simulating the effect of switching public expenditure funds between HEIs and other activities using a modified HEI-disaggregated input-output model of Scotland. The results suggest that conventional impact studies do overestimate the impact of HEIs, but importantly that the policy scepticism that treats the demand-side impact of HEIs neglects some important impacts of these institutions, in particular their export intensity.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa10p1595.

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Date of creation: Sep 2011
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Handle: RePEc:wiw:wiwrsa:ersa10p1595
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  1. 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.
  2. 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.
  3. Learmonth, D. & McGregor, P.G. & Swales, J.K. & Turner, K.R. & Yin, Y.P., 2007. "The importance of the regional/local dimension of sustainable development: An illustrative Computable General Equilibrium analysis of the Jersey economy," Economic Modelling, Elsevier, vol. 24(1), pages 15-41, January.
  4. 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).
  5. 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, Pion Ltd, London, vol. 39(12), pages 3008-3027, December.
  6. 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.
  7. 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.
  8. 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.
  9. Brownrigg, M, 1973. "The Economic Impact of a New University," Scottish Journal of Political Economy, Scottish Economic Society, vol. 20(2), pages 123-39, June.
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