Research, knowledge transfer, and innovation: The effect of Italian universities’ efficiency on local economic development 2006−2012

Abstract

We test whether there is a link between the performance of universities, measured through a concept of efficiency, and the economic development of the regions in which they operate. Indicators of teaching, research, and third mission are considered as outputs. To handle endogeneity problems between the efficiency of universities and economic development, a system generalized method of moments and then an instrumental variable approach are used. Our findings reveal that the presence of efficient universities fosters local economic development. Knowledge spillovers occur to areas that are in close geographical proximity to efficient universities. Results are robust to different estimation strategies.

Does graduate human capital production increase local economic development? An instrumental variable approach

“…These findings give credit to policy interventions and investments in tertiary education to the extent that the activities performed in such institutions foster economic competitiveness. However, our results show the presence of virtuous circles, meaning that the effect of human capital production on local economic development is stronger for universities located in territories with high economic growth which in turn stimulates the universities to reach higher performance levels (for a similar result, see Agasisti et al, 2019). This is an important issue to take into account, as Italy is a country characterized by different starting points of local economic development, as is the case with its north-south gap.…”

“…Secondly, while the pathways through which higher education activities can act to raise local economic development are clear, empirical evidence documenting the existence of a causal relationship is still scarce. To date, to the best of our knowledge, few papers have explicitly considered the direct link between university presence and economic performance (Abel & Deitz, 2012;Agasisti, Barra, & Zotti, 2019;Aghion, Boustan, Hoxby, & Vandenbussche, 2009;Andersson, Quigley, & Wilhelmson, 2004;Cantoni & Yuchtman, 2014;Cermeño, 2019;Kantor & Whalley, 2014;Kantor & Whalley, 2019;Valero & Van Reenen, 2019). Indeed, OLS estimates might not show a causal relationship if, in turn, local economic development at least in part determines universities' production of graduates (for instance, changes in economic conditions could lead to an increase in the demand or supply of graduates).…”

Formal and Non-Formal Education and Training As an Instrument Fostering Innovation and Competitiveness in EU Member Countries

“…Similar conclusions on the importance of skills (proxied by inter alia, educational levels) for increasing innovation were drawn up for Finnish companies by Leiponen (2005). The relevance of education on economic development in Italy was studied by Agasisti et al (2019), who showed a link between the performance of universities and the economic development of the regions in which they operate; based on the data set of 53 Italian public universities observed over the years 2006-2012, these findings revealed that the presence of efficient universities fosters local economic development. Universities boost local economic development via knowledge transfer through education and human resources development, via knowledge creation and regional innovation through research, and via technology transfer activities.…”

How Do the Characteristics of the Environment Influence University Efficiency? Evidence from a Conditional Efficiency Approach

“…Some examples of studies that utilize this methodology to analyze the influence of exogenous factors on university efficiency are as follows. [Agasisti, Barra, et al, 2019] include in the efficiency analysis such external factors as a dummy variable for having a medical school in the university, the number of years as a technology transfer office have been opened in the university, the percentage of dropouts by the end of the first year, the size of the lump-sum subsidy that central government transfers to the university, the size of the students body. [Agasisti, Egorov, et al, 2020] in a similar context used a list of exogenous variables that includes the share of Master's students in the university, share of full-time students, a dummy variable representing a university being in the region capital, the presence of a medical school and the university's share of the regional higher education market.…”