Want higher GDP & more democratic attitudes? Open more universities: Study

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There is a direct, positive link between the Gross Domestic Product (GDP) per capita and the number of universities in a country, a study has revealed.

Doubling the number of universities in a country can lead to an increase in GDP per capita by 4%. An increase in the number of universities also has several other positive effects such as stronger pro-democratic attitudes, innovation and so on.

The results were published in a research paper by the National Bureau of Economic Research, a US-based private nonprofit research organisation. The authors of the paper, Anna Valero and John Van Reenen, hail from the London School of Economics.

"Our estimates imply that doubling the number of universities per capita is associated with 4% higher future GDP per capita. Furthermore, there appear to be positive spillover effects from universities to geographically close neighboring regions," the authors say.

The study looks at a new data set based on UNESCO source materials on the location of nearly 15,000 universities in about 1,500 regions across 78 countries, some dating back to the 11^th Century.

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Positive effects of universities

Greater skill supply (more skilled individuals)

1. More innovation

2. Support for democratic values

3. Demand

The study points out that the relationship between economic growth and universities is not purely governed by direct expenditures of the university, its staff and students.

"Part of the effect of universities on growth is mediated through an increased supply of human capital and greater innovation (although the magnitudes are not large). The study also finds that within countries, higher historical university presence is associated with stronger pro-democratic attitudes," states the study.

A growth in the number of universities also appears to have a positive effect on geographically close neighboring regions.

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Expansion of universities in India

The period following World War II (since 1950) witnessed the highest growth in universities, a trend also observed in India.

"This period is of particular interest because in the years following World War II, university expansion accelerated in most countries; a trend partially driven by the view that higher education is essential for economic and social progress expansion accelerated in most countriespartially driven by the view that higher education is essential for economic and social progress," the study states.

The trend of universities expansion In India occurred after independence in 1947. During the colonial era, the upper classes would be sent to England for education.

"The British Raj oversaw the opening of universities and colleges from the late 1800s, but university density only started rising more rapidly after 1947 and recently has picked up pace again," the study adds.

However, the study notes that there are just 0.4 universities per million people in India.

Explaining the need for the study, the authors state: "While there is an extensive literature on human capital and growth, there is relatively little research on the economic impact of universities themselves."

Edited by Blassy Boben

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