Abstract
Higher education institutions can contribute into regional growth via the services of teaching they provide, the research activity they develop and the administration spillover effects on the local markets they operate. This paper attempts to quantify the impact of university expenditures on the regionally produced product (GDP). More specifically, we focus on the expenditure effects of the Hellenic Open University on the GDP of the 13 Greek regions. In our analysis we distinguish between direct and indirect effects by identifying as direct effects all initial expenditures incurred by the HOU while we identify and subsequently calculate as indirect effects the increases in local output caused by the interactions of different sectors of the regional economy. For the calculation of indirect effects we use the input–output methodology. An input–output system shows the intermediate transactions between sectors and the primary inputs, as well as, the final demand of each sector. This is a general equilibrium system that records all the inter-sector transactions presenting a complete picture of the economy under examination and being the appropriate system to be used for calculating the total effect of university expenditure on regional GDP. Our results suggest that the economic impact of HOU is (a) significant to the Greek peripheries and its size varies across regions; (b) indirect regional effects boost the direct regional effects by 60 % creating an overall size of the HOU expenses GDP multiplier by 1.6 on average. Moreover, our findings may have two straightforward policy implications that could be useful to those exercising policy making: first, the quantification of HOU economic impact on all Greek peripheries is not only useful for assessing the economic role of HOU at regional level but it could also been seen as a benchmark in assessing the impact of other similar regional educational activities. Secondly, the economic impact of HOU in each periphery can be a useful tool in assessing alternative non-educational, regional projects, aiming to fight the high unemployment arisen due to economic crisis that bedevils Greece and its peripheries in the last 5 years.
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Notes
On the overall economic effects but not in regional effects, see Oketch et al. (2014) for an excellent review of the impact of Tertiary Education on the overall development of a country. Another interesting analysis on the effects of UK Universities is the Kelly et al. (2014) as well as the Fray (2013) on economic growth through Education in Finland.
Hedin (2009) analyses Higher Education institutions as drivers of regional development especially in innovation and enterprises.
Swenson (2015) distinguishes between direct, indirect and induced effects the latter associated with the effects materialized within the Iowa state where University of Iowa operates, which clearly is not our case here.
If the distribution of expenditure were exactly the same among the sectors for each region the multipliers would have the same value.
No other university operated in places other that the regions where its headquarters is.
These activities could be financed either by the European Regional projects, central government funds or local authorities such as municipality funds.
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Acknowledgments
This research has been co-financed by the European Union (European Social Fund—ESF) and Greek national funds through the Operational Program “Education and Lifelong Learning” of the National Strategic Reference Framework (NSRF)—Funding Program: “Hellenic Οpen University”.
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Agiomirgianakis, G., Serenis, D. & Tsounis, N. A distance learning university and its economic impact in a country’s peripheries: the case of Hellenic Open University. Oper Res Int J 17, 165–186 (2017). https://doi.org/10.1007/s12351-015-0220-y
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DOI: https://doi.org/10.1007/s12351-015-0220-y