Friday, July 10

What happens when you decentralise education?

The current British Government is well known to centralise down to buttock clenching levels right up to the Prime Minister’s backside. Specially with targets, budgets, inspections, report cards and the like. Typical control freaks. But what happens when you decentralise education? let it be free? become easy to control at a local level? Well, a peek across to Sweden will give us some indications (I quote some bits from the paper)


Sweden undertook a conscious spatial decentralization of its system of higher education beginning in 1987. This policy was motivated by a complex variety of political, social, and economic factors. In this paper, we analyze the effects of university research activity on economic productivity and upon the level and distribution of innovative activity in the economy. We provide quantitative evidence on the effects of the decentralization policy upon output per worker and upon the award of commercial patents for innovations and discoveries. We also provide new evidence that the policy has increased aggregate productivity and economic output, but that the economic impacts are greatly attenuated over space and distance.

During the past 15 years, Swedish higher education policy encouraged the decentralization of post-secondary education. We investigate the spatial and economic effects of this decentralization on productivity and creativity. We provide several tests of the hypothesis that the establishment or expansion of university research in a region improves productivity and enhances creativity. We find systematic evidence that output per worker is higher and the award of patents is greater in regions that have received larger university-based investments as measured by the number of researchers employed on staff. We also find that changes in productivity are higher and new patent awards are more frequent in regions in which the “new” universities and institutions are located than in regions in which the “old” universities are located.

Our analysis permits us to hold constant the important factors affecting economic activity by municipality, labor market area and time, thereby improving the precision of estimates. The results are broadly consistent across theoretical models and statistical results. There is strong evidence that an expansion of university presence in a community, measured by the number of university-based researchers, is associated with increased output per worker in that community and with increases in the patents awarded to inventors in that labor market area.

The importance of the university in affecting productivity and creativity is consistently larger at the margin for the new institutions. For patents, at least, this could arise if the new institutions specialize more narrowly in technical specialties than do the more traditional institutions of higher education. Of course, some of the new institutions are, in fact, expansions of institutions that formerly provided some technical training (e.g., military facilities). This may explain some of the differences.30

The productivity gains are highly localized. The spillovers from researchers employed at the old established institutions are concentrated. Roughly 40% of the cumulative gain in productivity is within 10 km of the institution. For the new universities the attenuation is even more pronounced; between one-third and one-half of the total effect upon productivity is registered within 5 km of the university.

Our findings are consistent with a substantial, but highly attenuated, external effect of investment in higher education, augmenting the productivity of local areas and the local economies in which they are situated.

Now this is quite interesting. And lessons are to be learnt from this. The first one is that the universities need to have their purse strings removed from central government and handed over to local regional authorities. That will push the decision making lower down the chain. Second that I would say is that the local universities should also have their fees handcuffs taken off. If you can charge more, go ahead and charge, plus with a system of bursaries if required to top up on means tested students. Third, local industry and banking/financial services needs to be brought into the picture for the universities to make sense of potential employment and/or SME generation. Finally, overall investment in universities helps in dramatic improvement in local labour productivity, the holy grail. But looking at this anal, stupid government, I despair that anything of import will be done. They will starve the universities by tying them to the government and because of their anal controlling nature, will not let them loose either. Why on earth cannot we have more private universities, I dont understand. Even India is letting them being setup now. sighs.

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