“Policy Scepticism†and the Impact of London-based Higher Education Institutions (HEIs) on the economy of England: Accounting for Alternative Uses of Public Expenditure

Kristinn Hermannsson, Katerina Lisenkova, Peter McGregor and John Swales ()

No 1029, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: This paper replicates the analysis of Scottish HEIs in Hermannsson et al (2010a) for the case of London-based HEIs’ impact on the English economy in order to provide a self-contained analysis that is readily accessible by those whose primary concern is with the regional impacts of London HEIs. A “policy scepticism†has emerged that challenges the results of conventional regional HEI impact analyses. This 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 alternative uses of public expenditure, and show how conventional impact analyses can be augmented to accommodate this. 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.

Keywords: London Higher Education Institutions; Input-Output; England; Impact study; Multipliers. (search for similar items in EconPapers)
JEL-codes: H75 I23 R15 R51 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2010-12
New Economics Papers: this item is included in nep-geo
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