Prosperity Scotland 2006.pdf - Universities Scotland

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analyses do not enable us to measure the economic impact of higher education in these industries, even though it islikely to be high. That does not mean we can afford to overlook that impact.So the evidence of the economic impact of the higher education sector’s research base is compelling. Models of theimpact of the research base include two factors – the ability of the research base to create and to transfer innovation andthe ability of the industry base to absorb the outputs of that research base. The better these aspects are in balance thebetter the overall economic impact is likely to be. However, there is clear evidence that Scotland has a mismatch betweenthese capacities. In fact, the evidence suggests that the Scottish higher education is relatively more sophisticated thanthe Scottish economy as a whole. A very recent report 6 which looked at the specifics of the Scottish innovation system,concluded:“A very consistent picture was drawn of the relative thinness of the SME sector in Scotland in terms of itsscientific and managerial competence, and the lack of absorptive capacity in the sector to make use of the (oftenworld-class) research being carried out in Scottish universities… The available data suggest that the perceptionthat there is a ‘problem’ of a lack of knowledge transfer and commercialisation among Scottish Higher EducationInstitutions unfounded. There is, however, a disconnect between the high-quality research being carried out inScotland and the indigenous SME sector.”Universities may need to play a greater role in developing greater innovation capacity in the Scottish economy. Scottishuniversities often have to seek knowledge transfer partners outside the Scottish economy which may not affect theeconomic impact of Scottish higher education but does affect the economic impact of higher education in Scotland. Tomake the most of the market advantage higher education offers Scotland, we need a more sophisticated industry base.Consultancy servicesThe mode of economic impact of higher education about which there has been the least analysis done is its role inproviding consultancy services to industry. This role is relatively new; consultancy offers a specialised and independentresearch service for the client. It is a fast and cost effective means to gain an objective, in-depth and realistic insight intoareas where organisations lack specific knowledge. The types of service which higher education provides range acrossspecifically tailored training packages, process analysis work, highly applied research contracts, policy advice and more.These are often overlooked when the economic impact is considered.Nevertheless, we do know some things about the consultancy role of the higher education sector 7 :•••••While the diversity of this activity makes it difficult to measure, estimates from the Higher Education BusinessInteraction (HEBI) Survey estimate the value of consultancy work to be £18.6 million in 2003/04.Consultancy as a means of knowledge transfer (and income generation) is growing rapidly. HEBI estimates thatincome to Scottish HEIs from consultancy contracts increased by 76 per cent over the period 2000/01 – 2003/04.In 2003/03 consultancy undertaken for SMEs accounted for 27 per cent of all consultancy work in universities inScotland.Scotland’s performance compared to the UK’s is also worthy of note. Despite having only eight per cent of thepopulation, the number of consultancy contracts won in Scotland accounted for 10 per cent of the UK total.Scotland’s income earned from these contracts was also worth nine per cent of the UK’s in 2003/04About a quarter of all academic staff do some consultancy work with the proportion varying according todiscipline. It is higher in engineering (36 per cent) and in management, accounting and business studies (38 percent) and lower in medicine (19 per cent) and humanities (22 per cent). Given what is known about the purchasersof consultancy services, this is as expected.• Scotland is keen to maximise this area of knowledge transfer. Nearly 80 per cent of Scottish universities havean enquiry point for SMEs looking for consultancy advice. Furthemore, Scotland is ahead of the rest of the UKin terms of the proportion of institutions that provide the necessary legal provisions necessary to assist staffundertake consultancy arrangements. More Scottish institutions provide indemnity insurance for staff and havecontracting systems for staff-business consultancy activities than the rest of the UK.Consultancy is an important and understudied area within Scottish higher education; the contribution made by manytalented individuals in this field has not been systematically measured and may be of great importance to the Scottisheconomy.Page
Hub and clusterA significant amount of economic theory points to the presence of ‘spatial agglomerations’ or industry clusters as beingan important factor determining which regions experience higher growth. It is generally accepted in economic geographyliterature that many industrial clusters exist because they facilitate localised knowledge creation across groups ofbusinesses. That is, the co-location of related or similar economic activities is beneficial, for example through spilloversof technology and knowledge and through common pools of labour, infrastructure or specialised business services.The clustering of inputs such as industrial and university research and development, groups of manufacturing firms inrelated industries and networks of business-service providers can potentially create scale economies in the creationof knowledge, and facilitate the transfer of knowledge to other firms in the area. Clusters are particularly important inknowledge based sectors where competitive advantage often requires proximity or regular face-to-face interactions.Universities have an important role in generating and sustaining business clusters. All cluster models include as primarydrivers of economic growth education, human capital and research and development. Higher education is involved in theproduction of all of these in Scotland. ‘Location’ economies arise from the scale or concentration of universities within aregion and ‘urbanisation’ economies where external firms benefit from information spillovers from the universities. Wecan describe some of the agglomeration economies which might be associated with universities:••••Enterprises are likely to cluster together with other related industries. As the major supplier and trainer ofskilled labour in a region, universities can clearly be seen as part of the upstream and downstream linkages of‘local clusters’.‘Urbanisation’ economies can be strongly associated with universities in Scotland. Financial services, musicand sectors with rapid turnaround such as design are believed to be strongly associated with universities inmetropolitan areasThe area around a large, successful university can be thought of as a ‘technoburb’ with almost invisible positiveexternalities which link the local industry cluster and the institution in a tight web of transactions of thought andmethod.Although the key role for universities is often sustaining clusters, studies in the US highlight examples whereclusters are a result of university initiatives (Silicon Valley, Route 128 and North Carolina’s Research Triangle).One report 8 emphasises the role of universities in creating and sustaining clusters and uses Scotland as an exampleof how this works. Clusters linked to universities are likely to be sustained in the long term because of the long-termcommitment of the university. Universities are often closely associated with the emergence of new industries that haveno technological antecedent in the region. This means that universities have an important role to play in developingnew industries which provide long-term employment and wealth in a region. This report cites the emergence of optoelectronicsin Scotland’s central belt as a classic example of this type of regional innovation.Scotland does not have a particularly innovation-rich economy. In this context, economists believe that universities canplay the role of a large high-innovation firm and configure the innovation environment around its spin-out companies byworking directly with other (primarily) small and medium enterprises in the following manner:•••••Research and development partnerships with other firmsEncouraging local suppliers to be more innovativeActing as knowledge-intensive business services and thus helping to build up levels of expertise.Building new networks and benefiting from cluster effectsSecond generation spin-outs can resultFinally, there is a growing body of economic theory which emphasises the economic effect of ‘externalities’ from highereducation. These are social impacts which create conditions for economic growth, such as:•••Improved appreciation of culture and cultural diversity.Improved ability to participate in political process.Better able to fully function as a member of society• Improved healthPage
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Prosperity Scotland 2006.pdf - Universities Scotland

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