1. The Economic Impacts of Higher Education Institutions on Scotland: An Input-Output Analysis K. Hermannsson, P. McGregor, N. Pappas and K. Swales Fraser of Allander Institute, Department of Economics, University of Strathclyde and CPPR 48th Congress of the European Regional Science Association Liverpool, England, August 27-31, 2008

2. Outline Background Augmentations of the Scottish IO tables Simulation approach Simulation results Future work

3. Background Part of an ESRC initiative with additional support from the Funding Councils Our project: –Model the impacts of HEIs at a regional and national level –Use multi-sectoral regional and inter-regional models –I-O, SAM and CGE

4. Scottish Input-Output Analysis Separately identify HEI sector from 2004 Scottish IO accounts : –Instructive as a set of accounts –Basis for all other multi-sectoral modelling –Perform conventional demand-driven analysis Disaggregate the Scottish IO sector into the component institutions.

5. HEI inputs: disaggregating the column Gross output Purchases of all inputs –Domestic intermediate –Imports –Taxes –Wages –Other value added (rents and profits)

6. Overview of Scottish HEIs (1) Total Income (£ m) Wages (£m) Student numbers Staff numbers Wages/ expenditure Output per staff (£) Output per student (£) Edinburgh43623923,7156,10056%71,40518,367 The University of Glasgow31219323,5904,82062%64,80713,242 Strathclyde19111325,1052,97361%64,2747,610 Dundee16410118,6102,81060%58,3538,811 Aberdeen1579813,7602,57061%61,08311,409 St Andrews109658,6451,88861%57,62212,581 Heriot-Watt University1005710,2251,46558%67,9499,735 Caledonian986317,0451,61365%60,5545,729 Stirling84508,9401,68361%49,7259,358 Napier University814914,8501,36867%59,4895,478 Totals for the year 2005/2006 Source: HESA

7. Overview of Scottish HEIs (2) Total Income (£ m) Wage s (£m) Student numbers Staff numbers Wages/ expenditure Output per staff (£) Output per student (£) The RG University754512,7901,29559%57,9805,871 The University of Paisley583513,04099562%58,7754,485 Scottish Agricultural College442677084859%51,51556,700 UHI Millennium Institute3536,6009010%392,9445,358 Abertay32194,12555059%59,0097,868 QMUC, Edinburgh28175,41043064%64,1165,096 Bell College20144,72042371%47,1574,221 Glasgow School of Art16101,55525564%61,95710,160 Edinburgh College of Art15101,70526366%56,0278,626 The RSAMD10668014563%71,57215,262 Totals for the year 2005/2006 Source: HESA

8. Log Income

9. HEI outputs: disaggregating the row Value of sales: –domestic intermediate demand –household consumption –NPISH –RUK exports –ROW exports – (investment, stocks, government)

10. Income and exports Income by sourceExports / output Funding Council grants Researc h grants Tuition fees & education grants Other income Endowment & investment income RUK exports ROW Exports Aberdeen40%28%17%13%1%12%22% Abertay56%4%20%18%1%4%20% Bell College50%1%39%11%0%1%10% Dundee37%26%20%17%0%12%19% Edinburgh College of Art60%3%26%10%2%1%21% Edinburgh University34%26%15%22%3%14%24% Caledonian University54%4%24%18%0%4%18% Glasgow School of Art63%4%23%9%1%2%18% Glasgow University42%24%17%15%2%13%18% Heriot-Watt University36%15%29%20%1%8%30% Totals for the year 2005/2006 Source: HESA

11. Income and exports (2) Income by sourceExports / output Funding Council grants Researc h grants Tuition fees & education grants Other income Endowment & investment income RUK exports ROW Exports Napier University50%3%33%14%1%3%20% The University of Paisley55%3%30%11%1%2%15% QMUC, Edinburgh49%11%27%11%1%6%18% The RG University42%4%36%15%3%4%23% The RSAMD59%1%22%14%4%1%19% St Andrews University32%26%23%18%2%13%31% Scottish Agricultural College45%17%5%32%0%9%28% The University of Stirling38%11%24%26%1%7%27% The University of Strathclyde45%15%27%11%2%8%19% UHI Millennium Institute57%22%12%9%0%12%7% Totals for the year 2005/2006 Source: HESA

12. Income by source (1) £ m, %Scottish GovernmentExternal IncomeOperational IncomeTotal Edinburgh18142%14333%11126%436 Glasgow16352%9330%5718%312 Strathclyde11259%4624%3418%191 Dundee8451%5131%2918%164 Aberdeen7950%5435%2415%157 St Andrews4340%4239%2321%109 Heriott Watt5151%2727%2222%100 Caledonian7274%88%1718%98 Stirling4655%1417%2428%84 Napier5973%1012%1315%81

13. Income by source (2) £ m, %Scottish GovernmentExternal IncomeOperational IncomeTotal Robert Gordon4965%1215%1519%75 Paisley4780%47%813%58 Scot Agr College2148%817%1535%44 UHI2468%822%310%35 Abertay2269%411%620%32 Queen Margaret1968%520%312%28 Bell College1788%01%211%20 GSA1275%213%212%16 Edinburgh Art1173%214%213%15 RSAMD768%17%325%10 Total Scotland1,119,05154%533,11626%412,16920%2,064,336

14. Student expenditure Demand category: –Household expenditure (domestic students) –Tourism expenditure? (RUK and ROW students) Information: –Total, RUK and ROW students –UK data on size and distribution of purchases –IO household consumption data for imports

15. Demand driven analysis Subject of studyMultiplier valueGeographic boundary St. Andrews University (Blake & McDowall, 1967)1.45 (GDP)St. Andrews (pop. 10,000) Stirling University (Brownrigg, 1973)1.24 - 1.54 Parts of Sterling and Perth (pop. 96,000) Strathlcyde, Stirling and St. Andrews Universities (Love & McNicholl, 1988) 1.34, 1.43, 1.36 (student spending)Scotland Aberdeen, Dundee and Stirling Universities (Love & McNicoll, 1990) 2.18 (output), 1.75 (GDP), 1.95 (employment)Scotland Aberdeen University (Battu et al, 1998) 1.46 (spending), 1.61 (employment)North East of Scotland Strathclyde University (Kelly et al, 2004)1.63 (output), 1.38 (employment)Scotland Strathclyde University (McNicholl, 1993)2.15 (output), 1.66 (income)Scotland Scottish HEIs (1) 19951.76 (output), 1.7 (employment)Scotland Scottish HEIs (2) 19991.73 (output), 1.42 (employment)Scotland Scottish HEIs (3) 20041.6 (output), 1.4 (employment)Scotland

16. Assumptions of demand driven IO –No supply constraints –No price effects –Linear homogenous production and demand functions Demand driven analysis

17. Hypothetical Extraction Hypothetical extraction of individual Scottish HEIs. –Sector is replaced by imports Expenditure impacts of RUK and ROW students. –These students lost to Scotland

18. GDP of Scottish HEIs University ImpactsStudent ExpenditureTotal impact of HEI Edinburgh509.4102.8612.2 The University of Glasgow381.6102.2483.8 Strathclyde229.4108.8338.2 Dundee199.980.6280.5 Aberdeen192.259.6251.9 St Andrews131.537.5169.0 Caledonian121.273.9195.1 Heriot-Watt University118.144.3162.4 Stirling100.938.7139.6 Napier University98.464.3162.7

19. GDP of Scottish HEIs University ImpactsStudent ExpenditureTotal impact of HEI The RG University90.555.4145.9 The University of Paisley70.656.5127.1 Scottish Agricultural College52.33.355.6 Abertay38.917.956.8 QMUC, Edinburgh33.923.457.3 UHI Millennium Institute29.428.658.0 Bell College25.520.546.0 Glasgow School of Art19.76.726.4 Edinburgh College of Art18.37.425.7 The RSAMD12.72.915.6 Total Scotland2,4749353,410

20. Multiplier impacts Aggregate multiplier effects of £100 million spent on HEIs (in general): output, GDP, employment, output multiplier, employment multiplier –Without offsetting reduction in government expenditure –With offsetting reduction.

21. Impacts disaggregated by sector (1)

22. Impacts disaggregated by sector (2)

23. Impact of HEIs external income (1) 26% of HEIs income external to Scotland –RUK & ROW research funding –Ex-EU tuition fees –2002: £ 399 m –2006: £ 533 m –↑ 34%

24. Impact of HEIs external income (2) External income (£m) GDP impact (£m) Employment impact The University of Edinburgh143.0172.84,284 The University of Glasgow92.8112.22,780 The University of Aberdeen54.265.51,623 The University of Dundee50.961.51,524 The University of Strathclyde45.655.11,366 The University of St Andrews42.451.31,270 Heriot-Watt University27.132.8812 The University of Stirling14.016.9418 The Robert Gordon University11.513.9345 Napier University9.711.8292

25. Impact of HEIs external income (3) External income (£m) GDP impact (£m) Employment impact Glasgow Caledonian University8.310.0248 UHI Millennium Institute7.89.5235 Scottish Agricultural College7.59.1226 Queen Margaret University College, Edinburgh5.56.6164 The University of Paisley4.14.9122 University of Abertay Dundee3.64.4108 Edinburgh College of Art2.12.562 Glasgow School of Art2.02.460 The Royal Scottish Academy of Music and Drama0.80.923 Bell College0.3 8 Total Scotland533.1644.415,970

26. Future work Better disaggregation of the row (Scottish Government) Better information on student consumption More detailed work on intermediate inputs