Higher education makes Europe rich

The LERU and BIGGAR Economics studied the economic contribution of the research-intensive universities in five different domains. Core contribution (jobs, expenditure on supplies etc.), student-related contribution (student expenditure, employment), knowledge transfer, tourism contribution and graduate premium.  

Not a negligible fact

In total the Gross Value Added in 2014 is estimated at €71.2 billion and over 900.000 jobs created. The scale of this impact is substantial, and implies that each €1 GVA directly generated by the LERU Universities contributes almost €6 to the European economy and every job directly created by the LERU Universities supports almost 6 jobs throughout the European economy. The LERU members attract over 50,000 students from outside the EU, which contributes to European export earnings, estimated at €1.7 billion per year for the European economy, through the fees that they pay and their spending in the wider economy.

According to LERU-chair prof. Alain Beretz these findings show to what extent investing in research and education pays off. “The wide impact of research universities (and universities in general) should be better acknowledged. As indicated in the report, the contribution of research universities is greater than that of the direct GVA and employment of the automotive industry, the pharmaceutical and real estate sectors in Europe. That is certainly not a negligible fact.”

The economic contribution of the LERU Universities has been used as a basis for estimating the contribution of the Research Universities sector as a whole. By extrapolating the findings it can be estimated that the entire European Research Universities sector contributes over €300 billion GVA, and supports 3.8 million jobs across Europe. Although the magnitude of this contribution is considerable, the true contribution of Research Universities is much larger than these figures indicate, as there are limitations to assessing economic contribution.

Difficult to account for

For example, the LERU Universities are collectively engaged in a wide range of world-leading research that will ultimately provide the foundations for the technologies of the future to be developed. However these significant time lags make it difficult to account for these contributions. In addition, many technological and medical breakthroughs are collaborative efforts building on the research undertaken by other universities and industry partners.

They are also often the result of an open innovation approach whereby universities co-locate with companies and knowledge spillover effects come into play. Therefore even if all the contributions could be quantified the significant interplay would make it impossible to separate these effects. Additionally, Research Universities have many wider impacts, which although unquantifiable, are equally important.

For example, all of the LERU Universities are involved in medical research and even when the outputs of research are commercialised or translated directly into clinical practice it is impossible to quantify the wider benefits that this has for society. Research Universities also impact wider society by improving social cohesion, facilitating social mobility, encouraging better health and wellbeing and greater civic engagement.

Pushing the boundaries of academic discovery

Furthermore, each of the LERU Universities contributes to the overall character and vibrancy of the cities and regions in which they are located by attracting students, staff and tourists to the area. The value of these outcomes to individuals and the collective impact on society as a whole simply cannot be quantified but should not be overlooked. Research Universities also have a crucial overarching role as drivers of long term sustainable economic growth in Europe. Economic growth in advanced economies is driven by productivity growth, which is in turn driven by knowledge and its diffusion (innovation).

Research Universities have a unique role to play in this by pushing the boundaries of academic discovery and increasing the pool of knowledge available to society and, at least as importantly, their ability to diffuse this knowledge throughout the economy to provide the basis for future productivity improvements and therefore economic growth. Research Universities support the diffusion of knowledge by providing high quality graduates for the labour market as well as through their commercialisation activities, such as spin-out companies and intellectual property licensing.

Contribution to Horizon 2020

In doing so they contribute to the strategic aim of Horizon 2020, to achieve economic growth and create jobs by investing in research and innovation. Particularly in the current economic climate the role of Research Universities in driving economic growth should not be underestimated. Moreover, Research Universities create highly successful innovation ecosystems that are major clusters of activity.

They provide a space for discussion and create connections between academics, students and companies. They therefore make the regions they are located in attractive places to invest in and so are vital to drawing inward investment. This university ecosystem is entirely built on the world-class research undertaken at Research Universities, as it is this that attracts students, researchers, businesses and investment, helping to catalyse innovation and create the knowledge sectors of the future.

The full report can be read here