Theoretical Analysis on Economic Impacts of Universities on Regional Economies

Habtamu Kefelegn

doi:10.11648/j.ijeee.20200505.11

Abstract

Policy makers widely recognized that universities have dynamic contribution to individuals, to the regional and national economy and to society as whole. Now a days understanding the economic impacts of universities that convey to the hosted local economy and communities in which they are located is attracting extensive attention in scientific community. This paper tries to analyze the economic impact of universities on regional economies from empirical literatures. Methodologically, the paper used systematic reviewing approach that follows the distinct phases of planning, searching, screening, coding and synthesis. The results of the study found that universities hosted in different region of given country positively and significantly affect private consumption, public spending, investment, employment, urbanization and industrialization, human capital variables and sustained regional economy. Moreover, individuals, firms and local government and economy can be better-off with universities. These institutions also lead the agriculture, industry and service sectors growth of regional economy. Despite this, the result also suggests critical assumptions like quality of public infrastructure, quality of teaching and research, university-industry-community partnership, academic freedom and peace and stability of region determine the level of impact it works. Finally, the study suggests national government should lead efforts towards improving both the regional universities and local economy to promote efficiency and equitable development in the entire economic system of the nation.

Highlights

Policy makers of widely recognized that higher institutions especially universities have multidimensional contribution to individuals, to the economy and to society
A day understanding the economic impacts of universities that convey to the local economy and communities in which they are located is attracting extensive attention
International Journal of Economy, Energy and Environment 2020; 5(5): 69-73. This theoretical review of analysis on regional or local economic impact of universities was followed the principles of systematic reviewing with the following distinct phases [8]

Summary

Introduction

Policy makers of widely recognized that higher institutions especially universities have multidimensional contribution to individuals, to the economy and to society. Universities have growing economic importance both at national and regional level. A day understanding the economic impacts of universities that convey to the local economy and communities in which they are located is attracting extensive attention. Universities are a major economic forces in its community and largest sector of economic activity in the hosted region. Universities growing at an unprecedented rate lead regional economic activities to achieve fastest growing as well [1]. Universities in developing countries are valued for the contribution that can make national development [2, 3]. In Ethiopia, over the last decades there has been enormous expansion in university education across different areas and regions of the country

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