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

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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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