LERU universities contribute €100 billion to economy

Investment in leading research universities generates a substantial return for the wider economy, and the 23 members of the League of European Research Universities or LERU are contributing almost €100 billion (US$117 billion) to the European economy and 1.3 million jobs, according to a new study.

The €100 billion figure is calculated as gross value added or GVA – revenues less cost of revenues. For every €1 of income received, LERU universities produce €4.83 of GVA, “a worthwhile investment by any measure”, the study found. And each €1 of GVA directly contributed by the universities generates €6.87 of GVA in the wider economy.

Extrapolating from that finding, the study suggests that the research universities sector as a whole across Europe may be contributing more than €400 billion and supporting 5.1 million jobs.

This is equivalent to 2.7% of the total GVA of the European economy and 2.2% of all European jobs.

“Universities transform lives and shape society. It is widely accepted that they are also a major driver of growth, and the analysis presented here underlines the extent to which the LERU member universities constitute a powerhouse within the European economy,” says the study.

LERU commissioned BiGGAR Economics in the UK to investigate its member universities’ combined direct impact upon the economy through their investment and direct employment of staff and indirectly through research and its commercialisation and the employment of graduates.

At a conference in Brussels on 30 November these numbers were presented and the BiGGAR Economics report was published, revealing a significant increase of €28.2 billion GVA contributed by the group of universities from 2014 to 2016.

The largest contributing factor to the growth in contribution to the European economy was the growth in the size and scale of the LERU members, the study said.

At the most fundamental level, universities are “major organisations with a significant role to play in their own local economies”, it says.

“They can be anchor institutions in a region, as major employers of thousands of people across many occupational areas, purchasers of enormous quantities of goods and services and major contributors to cultural life and the built environment. So, the investment in the infrastructure of a university institution to support its core business has its own important regional economic effect.”

It says many universities also play an important leadership role regionally and nationally through their involvement in the advisory boards of private, public and non-profit organisations.

Staff and student bodies undoubtedly contribute to the vibrancy of their host cities and towns. Universities also contribute to the attractiveness of a region as a knowledge centre.

They provide a space for discussion and create connections between academia, students and companies that would not otherwise exist.

“This fosters an environment for innovation. It creates clusters of people, which lead to the creation of entire university ecosystems, which in turn draw more people to the place,” the report says.

Regions that have a university ecosystem can become the most attractive places to invest, the study says. It cites analysis of the locations of nearly 15,000 universities across 78 countries that found that increases in the number of universities are positively associated with future growth of gross domestic product or GDP per capita.

“Doubling the number of universities per capita is associated with a 4% higher future GDP per capita,” the study says.

The contribution of research universities

The study says university research is of crucial importance in driving innovation. It contributes to improved productivity, entrepreneurialism and the generation of “knowledge spill-overs”, where information and knowledge collected generate new ideas and new applications.

“Universities are a vital source of technological innovation through commercialisation activities such as spin-out companies and intellectual property licensing,” the study says, “and LERU universities are adept at commercialising their research licensing.”

They also enable businesses to access academic specialists creating opportunities to transfer knowledge into new areas, the study says.

Summing up their core contribution to the European economy, the study says universities contribute directly by generating income and employment, but also by spending on supplies and services, by providing income to their staff, and through capital spending.

They also contribute via students’ spending, working, volunteering and undertaking placements; by knowledge transfer, entrepreneurial and innovation activity; via tourism activity of visitors to staff and students and events held at the universities; and by lifetime productivity gains from teaching and learning delivered by each institution – the ‘graduate premium’.

The combined student population of LERU’s 23 member universities is 789,000, with an estimated 222,800 full-time employees and 184,800 full-time equivalents.

Between 2014 and 2016 the LERU members grew significantly producing 18% more graduates in 2016, attracting 14% more students, employing 19% more staff and generating 27% more income.

This is a significantly greater growth factor compared to universities in general in those 12 countries with members in the LERU network, where European statistics have reported a full-time student population growth of 3.1% between 2013 and 2015.

Although the study provides a snapshot of the economic contribution of the LERU universities in 2016, it says the long-term dynamic economic and social impact is, however, much more significant with talented graduates and professionals transforming the organisations within which they work and with universities acting as local as well as global hubs for knowledge production and exchange.

Professor Kurt Deketelaere, LERU’s secretary-general, said: “The message is clear. If you want to deliver on growth and jobs, invest in research and universities! If you want a budget focused on results, invest in research and universities! We all need to speak up for research. This report provides sound and convincing economic evidence to support our arguments.”

The 23 members of LERU are: University of Amsterdam, University of Barcelona, University of Cambridge, University of Copenhagen, Trinity College Dublin, University of Edinburgh, University of Freiburg, University of Geneva, Heidelberg University, University of Helsinki, Leiden University, KU Leuven, Imperial College London, University College London, Lund University, University of Milan, Ludwig Maximilian University of Munich, University of Oxford, Pierre and Marie Curie University (Paris), University of Paris-Sud, University of Strasbourg, Utrecht University and University of Zurich.