Higher Education Institutions as Drivers of Regional Productivity

Higher education institutions can influence the economic performance of their regions both directly – via production and salaries for ongoing operations – and indirectly – via innovations, technology transfer, academic spin-offs and start-ups. Based on an econometric panel data analysis, the productivity effects of universities and colleges on their regions were estimated for the first time in Austria. The results show a significant and positive relation between the size of these institutions relative to the regional economy and the regional productivity level: an increase of the share of tertiary institution employees in total employment in a NUTS 3 region by 0.1 percentage point is, on average, linked to a short-term regional productivity increase of 0.3 percent to 0.4 percent and a long-term increase of between 0.6 percent and 0.9 percent. This underlines the role of tertiary institutions not only for Austria's overall competitiveness, but also for the development of the economy in the respective region.