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Cultivating a knowledge-based economy II

Universities in regional development

As locally established creators and disseminators of knowledge, universities are presumed to play a key role in the knowledge-based economy and wider regional infrastructure (Glasson, 2003; Soursa, 2007; Cooke et al., 2000). Thus questions have been increasingly raised as to the contribution universities can make to the development of their regions (Chatterton and Goddard, 1999), framed as potential providers of critical inputs to the development agenda, including technological resources, management of strategy or provision of skilled labour (Charles, 2003). Some of the changing roles ascribed to universities include the shift from elite to mass Higher Education (HE), the increased role of technology in the learning process, the identity of universities in relation to their monopoly on production, and the distribution of knowledge (Charles, 2006). Other wider influencing factors include the increased rates of students attending university more locally, the increased competition from HE providers globally, and the changing skill demands within the labour market (Chatterton and Goddard, 1999).


At the turn of the century, the OECD asked questions about the relationship between HE and regional needs, about what contribution universities can make to their local areas and the ability to harness the education to promote local, social, and economic objectives (OECD, 1999). The recommendations were directed towards governments; to enhance inter-ministerial collaboration, for education departments to gather more information on the geography of HE institutions within their nations and to provide more incentives and funding programmes, fostering stronger links, dialogues and partnerships between regional providers of education. From the university side, the OECD recommended a greater mapping of regional links, as well as each university undertaking a self-evaluation as to their institutional capacity. This may take the form of describing the university’s distinct focus, its geographical identity, its understanding of regional policy or how its learning programmes are tailored to suit regional market intelligence (OECD, 1999).


In the UK, the Dearing Report: Higher Education in the Learning Society (1997) by the National Committee of Inquiry into Higher Education noted four main purposes of HE, including “to increase knowledge and understanding for their own sake and to foster their application to the benefit of the economy and society”, “to serve the needs of an adaptable, sustainable, knowledge-based economy at local, regional and national levels” and “to play a major role in shaping a democratic, civilised, inclusive society.” This shift has put universities under increased scrutiny from successive governments, regional development bodies and electorates seeking to harness the high level education universities provide and direct their research towards issues containing social and economic objectives (Chatterton and Goddard, 1999). Exploiting ‘knowledge capital’ to become economically competitive is ever more a critical policy angle, with governments mounting pressure on universities to become entrepreneurial, commodifying and commercialising their knowledge to contribute towards economic development.


National governments are increasingly seeking to incentivise universities to support regional level development and innovation, encouraging interaction with regional innovation strategies and local industries (Charles, 2006). In more successful regions it is supposed that universities are a critical element in the facilitation of the innovation and learning processes, capable of developing high-tech districts and training of labour (Kitagawa, 2010). The European Regional Development Fund is important to mention here, as HE actors are well established as primary delivery agents in the design and implementation of programmes that seek to foster regional partnerships on issues of innovation (Charles, 2003). However there is still scope for HE policies, especially those with a regional dimension, to become more embedded into wider policy frameworks, including not just science, technology and innovation, but also social policies (Kitawaga, 2010). Furthermore, as the linear, sequential model of entrepreneurship and innovation shifts to emphasise interaction with social institutions and the values and legal frameworks at play, encouraging the “localisation of universities” (Kitagawa, 2010: 838) thus requires more sustainable partnerships to be brokered between the HE institutions and their regions. A key question therefore is: “How do universities negotiate with regional governance systems to deliver mutually desirable policy outcomes?” (Charles, 2006: p12). Consequently it is important to frame any changes in the Higher Education (HE) sector within the wider set of transformations in government policy (Charles, 2003).


Perhaps the most significant development in HE in recent years was the Further and Higher Education Act 1992. This Act allowed for the expansion of the university sector in the UK, transforming around 40 polytechnics into universities which included large and innovative HE institutions, accounting for almost 50% of the country (Glasson, 2003). Yet, this expansion has brought with it an uneven development process between the old and new. Even though traditional universities have historically framed themselves as national institutions with weak ties to regional development at large, the nature of obtaining research funding in the UK perpetuates a disproportionate concentration of research resources in Oxford, Cambridge and London (Charles, 2006). This is despite that fact that the performance of modern universities in QAA (Quality Assurance Agency) has often been outstanding, with a specific strength rooted in their mission aims of recognising their potential role in regional development (Glasson, 2003).


In 2016 the Department for Business, Skills and Innovation released a White Paper: Success as a Knowledge Economy: Teaching Excellence, Social Mobility and Student Choice. The paper describes the substantial shift the HE sector has undergone since 1992, the need for reform, and the importance of universities, granting them a “paramount place” within the new knowledge-based economies. The paper acknowledges the strong correlation between increased economic growth and the opening of universities, noting that between 1982 and 2005 around 20% of growth came directly from the accumulate increase in graduate skills. Moreover, the paper also references research that indicated long-term productivity increases between 0.2% - 0.5% as the share of the workforce with a degree increases by 1%. However, what the paper lacks is a fundamental recognition of the links between the university and its region, of the connection between SME’s and their local university and the spill over effects of HE to the local area.


With knowledge and human capital intrinsic drivers of development and prosperity, universities have much to offer their surrounding regions. The geographical embeddedness and proximity of universities produces benefits for both the university and the wider area, especially for driving a common purpose amongst diverse actors (Harrison and Turok, 2017). The University Alliance’s 2016 publication: Creating innovative regions: The role of universities in local growth and productivity references the visibility of universities in “local innovation ecosystems”, their ability to successfully connect with LEPs (sitting on their boards, contributing to the local innovation strategies etc.), academic and professional bodies, and individual businesses. Universities are also capable of cultivating and disseminating knowledge both formally and informally, establishing fruitful networks that not only permit their participation in regional governance, but under some conditions even take on the leadership role in the development policy process (Bonaccorsi, 2017). The publication also acknowledges the university’s “bridging mechanisms” capable of connecting both locally and globally, acting as anchor institutions which transcend spatial restrictions pulling through local, national and global research.


Most interesting however is the University Alliance’s allusion to the notion of resilience, referencing regional ecosystems and highlighting a role of the university in avoiding the risk factor of becoming too inward-looking. The paper argues that universities are inherent supporters of new technologies and of new market opportunities, supporting the knowledge-based economy by identifying fresh sources of transformative knowledge. The University Alliance, whose membership consists of 11 professional and technical universities around the country, report that two in five of their member’s graduates stay to work in the same area post-graduation, which they suggest creates a cohesiveness between universities, businesses and the local economy. It is clear there exists strong evidence to suggest a strengthening of the links between government, university and industry elicits potential benefits for regions. A fundamental task moving forward therefore will be the introduction of strategies that facilitate the development of productive relationships between all parties. A key example of a university that has managed to foster strong links with regional SME’s and contribute towards the development of a regional knowledge-economy is the University of Oxford.


Case Study: University of Oxford

The University Alliance refers to the impact of the University of Oxford’s research as the “Oxford Boom”. Centred on the Oxford Sciences Innovation (OSI) which began life in 2015, the investment hub has gone on to finance science-based companies “on a scale previously unseen at a UK institution” (University Alliance, 2016: 33). Investing in “life science, AI and software, healthcare, and deep tech” the OSI has so far raised over £600m to build a ‘technological ecosystem’, a network of entrepreneurs and investors that are seeking to tackle some of the most fundamental issues affecting the planet. Moreover Oxford University Innovation (OUI), a wholly-owned subsidiary that manages the University’s technology transfer and consulting activities, seeks to create an innovation ecosystem at Oxford that has so far proved immensely successful.

Figure 1: Timeline of the University of Oxford’s ‘third stream initiatives’ (Smith and Bagchi-Senv, 2012).


Regionally speaking, the success of the University of Oxford’s innovation strategies has spilled over to the local area, producing a burgeoning high-tech economy across the region. Oxfordshire is a county with ‘diverse specialisation’ as entrepreneurship has accelerated with the growing high-tech services, including biotechnology, software consultancy and pharmaceuticals (Smith and Bagchi-Senv, 2012). These knowledge intensive organisations are placing the Oxford region at the forefront of research into such areas as vaccines, robotics, regenerative medicine and autonomous vehicles which constitute a research ecosystem fuelled by an ever diverse range of investors (OUI Annual Review, 2018).

The OUI state that their core mission is the development of an “innovation ecosystem with the University at its heart”, building a research community and providing opportunities for impact that allow both the university and the wider Oxford region to prosper (OUI Annual Review, 2019). In 2017 the OUI reported that more than 80 of the spinouts which were launched by the OUI are still active in the wider Oxfordshire area, supporting 1,886 jobs and generating £132m for the local economy (OUI Annual Review, 2017). Looking ahead, the OUI aspires to increase the societal and economic impact of their strategy, creating an ‘innovation arc’ that joins up with the Cambridge tech cluster with their own Milton Keynes in the middle and thus by combining, strengthening the output of two world-class tech clusters (OUI Annual Review, 2018).


Britain’s Leading Edge

Britain’s Leading Edge is home to a number of research intensive, regionally engaged universities aware of their position as key drives of economic growth in their areas. Below are a few interesting examples:


Lincolnshire: As a region, Greater Lincolnshire has been historically beset by low wages and low productivity. As a public research institution, the University of Lincoln works closely with local authorities to support economic growth, aware of its critical role in translating their knowledge and research to support the development of the region. Professor Toby Wilkinson, Deputy Vice-Chancellor at the University of Lincoln notes the underlying ethos of the university, its foundation “established by and for the people and businesses of Lincoln and Lincolnshire” and its civic responsibility which still runs to the heart of its mission today. The scale of the University of Lincoln’s commitment to this endeavour is recognised by central government. In 2014 the Rt Hon David Willetts, then Minister of State for Universities and Science, reported that since its opening in 1996, the university has contributed to doubling the size of the local economy, creating 3,000 new jobs and describing their success as “growth and transformation in action.”


Professor Mary Stuart, Vice-Chancellor, reports on the economic successes of the university so far, noting that in the City of Lincoln the university is the fifth largest revenue generator and given the scale of the regional economy, the university’s impact is proportionally higher than many other larger universities. In their recent publication, The New Civic University: a University working with its communities, the Vice-Chancellor aligns the university’s priorities of tackling local deprivation and low skills with the government’s Industrial Strategy set on addressing low productivity and regional inequality. Taking the UK Commission for Employment and Skills, which estimates the East Midlands region will need 214,000 additional graduates between 2014 and 2024, the university places itself as an essential institution to meet this gap, noting that already 31% of University of Lincoln graduates find employment in the local area. In terms of innovation, a £20 million investment has created the Lincolnshire Science and Innovation Park, a joint venture between businesses and the university that is the only dedicated space in the region for science, innovation and R&D. The publication notes that the university has thus played a “pivotal role in creating and sustaining an innovation ecosystem” within the region, encouraging the creation of start-ups, collaborating with major businesses and fostering technical expertise. As such the university’s business innovation ventures, Sparkhouse and Think Tank, have gone on to support more than 400 businesses, adding 433 new jobs. For Professor Stuart the university remains committed to regional development, “reinventing the civic in a new era, a true civic university for the 21st century.”


Dorset: Bournemouth University (BU) recognises its position as an essential part of Dorset’s economic development, acknowledging their place within the local community and working to disseminate research and expertise throughout the region. At a policy level, BU is a member of the Dorset Local Enterprise Partnership, which seeks to enhance local businesses through investment and lobbying. At a local community level, BU hosts a number of annual events which sees it engage widely with the local population, including the Festival of Enterprise and a Festival of Design & Technology, and the Festival of Learning. The latter seeks to provide a platform to share BU’s research in an accessible format, offering learning opportunities and professional development to people in the local region.


Herefordshire: In 2015 Herefordshire county, in conjunction with engineers, MP’s and businesses launched the development of a new university for the region, New Model in Technology and Engineering (until it receives its Royal Charter) – the first new university in England for almost forty years. In March 2017 the county received £8 million worth of funding to continue the project, secured from the Marches Local Enterprise Partnership. The University will focus solely on engineering, encouraging more women into the profession while addressing the 40,000 shortfall of engineering graduates the UK requires. As a county, Herefordshire is unique in being one of the few in England to have no university and Professor Elena Rodriguez-Falcon, President and Chief Executive of the NMiTE, notes that the new HE provider will be a boon to the local economy, offering new opportunities for a new generation. This exciting new project may offer solutions to Herefordshire’s student retention problem, revitalising the regional economy while providing the country with the engineers it needs for the future.

Next Steps

Universities have traditionally played an important role in nation building, but as the wider economy continues to diversify and become more regionalised, universities as a resource base are required to play an increasingly significant role in institutional networking and capacity building (Chatterton and Goddard, 1999). The HE system in the UK has historically favoured competition (in the form of grants, student numbers, widening access etc.), over collaboration and this is a crucial aspect that requires change. Moreover, to establish a truly localised, dynamic learning region in the globalised economy these networks must stretch beyond the local and interact with national and global actors – the university is well placed as an institution to bridge these gaps (Kitagawa, 2010). What the examples above demonstrate is that not only are universities a powerful potential hub of regional innovation, but they can add to social and economic prosperity, resilience and diversification by their integration of knowledge and human capital into the development process (Kitagawa, 2010).

However, the impact of a university in terms of regional development is not only greatest when the university understands what it can offer the regional economy, but when regional governance and local agencies offer strong and focused direction (Legčević, 2014). This also calls for a place-based approach to strategy, repudiating a one-size-fits-all model and acknowledging that “different universities in different national and regional contexts with different governances and different innovation contexts will need to adopt different combinations” (Charles, 2006).


In the context of rural and peripheral regions, this raises key questions as to the potential impact of universities in generating sustainable and globally reaching innovation ecosystems. Innovation and the knowledge-based economy offer the possibility to cultivate new and dynamic ways of practicing regional development in peripheral regions where populations, institutions and economic activity are more dispersed (Park, 2004). A critical element for policy moving forward could therefore include increasing the status of public education and research organisations, be it establishing new educational centres of excellence, attracting fresh research-orientated institutions and strengthening regional knowledge networks (Pelkonen and Nieminen, 2016).

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