Regonal economics of world-class universities.

Having a world-class university does wonderful things for the local economy, in a virtuous cycle: universities generate ideas that are spun-off into companies, while simultaneously teaching a lot of people. These educated people leave the university to set up new companies or work in existing ones. The pay taxes, which feeds (eventually) into university funding, and the cycle continues. On top of that, the actual university employs people (administration), hires local companies (for maintenance, building, etc), and buys goods and services. This adds to the regional economy surrounding the university.

Want examples? Stanford and Silicon Valley, Harvard and MIT and Route 128, Cambridge University and Cambridge, and many more.

So, just how big is this impact? How much of a positive effect does having a world-class university have? For Stanford, the effect is well documented, and there have been some general reviews (for Alaska, for example). Now, a famous venture capital firm in Cambridge, UK, called Library House, has quantified, in great detail the economic impact of Cambridge University. The short answer: Cambridge Uni adds over £50 BILLION to the UK economy. That’s right, 50 billion pounds. To match this astounding number, Cambridge University created over 150 thousand jobs in the UK.

So what’s the point of this post? Higher education requires funding, both from governmental entities and the industry. The funding is an investment into the future, and the returns can be mind-boggling. The funding cycle affects everyone in society, and that’s the point.

[tags]economics, university, Cambridge, Harvard, MIT, Stanford[/tags]