Local economic impact of universities

Abstract

The local economic impact of a large tertiary education institution such as a university is an issue which has attracted considerable attention in literature. Beck et al (1995, 246) define economic impact as „the difference between existing economic activity in a region given the presence of the institution and the level that would have been present if the institution did not exist.” Generally, there are three substantial problems. First, the definition of impact, second, measuring and estimating first-round expenditures and avoiding double-counting, third, estimating the correct value of the multiplicator. The economic impact study has become a standard tool used by Western universities to persuade state legislatures of the importance of expenditures on higher education. If this tool is to be used effectively, it must be applied with a methodological rigor that promotes integrity of the process. As economic impact studies become a political tool in the review of education, conservative assumptions and methods should be used to promote objectivity in the research process.