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Innovation Fact of the Week: Doubling Number of Universities Will Grow Country’s GDP By Average of 4%

University

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Innovation thrives off well-educated and high-skilled workers, and institutions of higher learning, such as universities, play a key role in developing such workers. Establishing a university generates a self-reinforcing cycle of human capital development by generating and disseminating knowledge. As workers learn and develop more advanced skills, they in turn contribute more to the innovative capacity of high-tech sectors.

Economists Anna Valero and John van Reene from the London School of Economics developed a data set that catalogued universities in 185 countries between 1950 and 2010. They estimate that when a country doubles the number of universities, it leads to an average of 4 percent higher GDP over the long-run. To illustrate their findings, they estimate that if the United Kingdom were to establish 10 more universities, it would increase its GDP by £11.3 billion. In terms of weighing cost versus benefit, expected GDP growth would be five times the cost of opening these 10 institutions.

Read last week’s Innovation Fact of the Week

Photo Credit: Tony Brooks via Flickr

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About the author

John Wu is an economic research assistant at ITIF His research interests include green technologies, labor economics, and time use. He graduated from the College of Wooster with a bachelor of arts in economics and sociology, with a minor in environmental studies.