How does HE fit into the wider economy?

I was lucky to be in the audience for White Noise, University Alliance’s seminar on the policy implications of the HE White Paper. The event was quite well attended and, I felt, indicative of the sort of seminars that mission groups should be putting on. UA evidence was presented and then an open discussion had, which raised some interesting points, two of which have continued to play on my mind. The first came from UA’s Director, Libby Hackett. She said that, within the white paper, the wider view of higher education and how it fits into the economy is limited. In fact, it’s barely discussed. At the time I tweeted that I have never agreed with a sentence more and I stand by that.
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I was lucky to be in the audience for White Noise, University Alliance’s seminar on the policy implications of the HE White Paper. The event was quite well attended and, I felt, indicative of the sort of seminars that mission groups should be putting on. UA evidence was presented and then an open discussion had, which raised some interesting points, two of which have continued to play on my mind.

The first came from UA’s Director, Libby Hackett. She said that, within the white paper, the wider view of higher education and how it fits into the economy is limited. In fact, it’s barely discussed. At the time I tweeted that I have never agreed with a sentence more and I stand by that.

Consistently, economic theories are used to explain and justify BIS’ proposals, but when you look at the wider economic implications I’m not sure they stand up to scrutiny. In my paper, soon to be published by BSI,‘Y Curious: Knowledge Management between the Generations’ I briefly touch upon the impact the HE sector has on our wider economy. The economic benefits of higher education are clear. Kelly, McLellan and McNicoll found that in the 2007/2008 financial year the sector added £59.25 billion economic output, of which £22.44 billion was direct and £35.81 billion was indirect. This meant a GDP contribution of £33.41 billion which split to direct and indirect contributions of £15.16 billion and £18.25 billion respectively. Their evidence led them to conclude,“Higher education is particularly effective in generating GDP per capita, compared to several other sectors of the economy.” (Kelly, McLellan, & McNicoll, 2009)

The positive impact of higher education to the economy is reaffirmed by London Economics, who detail that the net present value for the government in funding an undergraduate degree is currently £81,875 per degree awarded. The study goes further to say, “The Exchequer rate of return resulting from the funding of undergraduate degrees stands at between 11.0% and 12.1% overall” (London Economics, 2011).

Even the OECD agree that higher education has a significant impact to the wider economy, saying: “Issuing government bonds to finance these investments will yield significant returns and improve public finances in the longer term” (OECD, 2010)

These studies all look at the tangible financial benefits. When you consider the less instant, “softer” benefits, even more evidence emerges showing that the impact to economies of higher education is anything but short term. We have seen a steady progression away from an industrial-led manufacturing economy towards a knowledge economy. Peter Drucker was arguably one of the first noticed this trend, saying, “To remain competitive-maybe even to survive-[most businesses] will have to convert themselves into information-based organizations, and fairly quickly.” (Drucker, 1988)

In 1993, Drucker expanded this vision to look at whole economies, publishing ‘Post-Capitalist Society’. The importance of knowledge as a key driver of a national economy is backed by Buchbiner, who looks at universities being a catalyst for this new economy: “The academic staff, charged with the production and transmission of knowledge are the core of the university along with the students who are recipients of that knowledge and often engage in its production as well.” (Buchbinder, 1993)

When you consider all the sources here, as well as the many others I haven’t touched upon which support this perspective, how can higher education not be considered within a wider economic context? How can we say there are too many universities and too many people going to university when there are so many jobs in the employment market which require this education? I have only touched on part of the debate here, but it seems clear that the economy has rebalanced and, as a result, so too must the way we train and educate future generations of workers. This is not to say that further education and apprenticeships should play a lesser role than higher education, in fact I believe the exact opposite. I believe we need to reconsider the cut-off point for open access, freely available education for the economy’s sake and consider tertiary education as a catalyst for social mobility and economic performance.

I feel standardization is suffering the exact same problems as higher education in struggling to communicate the importance of its role in the wider economy as a knowledge management catalyst. Why are we both struggling to get an infrastructure and society to support us, when there is so much evidence which appears to do just that? Going back to the University Alliance White Noise seminar, Professor Mary Stuart made what I feel is a very salient point in that our dialogue may be too myopic.

I completely agree with Prof Stuart, but would go even further. We can tackle the issue of infrastructural ignorance by engaging with ministers and civil servants outside of the directly relevant departments of BIS & DofE. So many are working on experiential knowledge and haven’t been able to digest the other supporting knowledge which can, if presented the right way, change perspectives for both sectors benefit. I don’t think we should stop there, though. We must open up our communication and our debates to include wider society; the harder and greater task.

I feel we may be talking to people too much and not listening and responding enough creating open discussions. Seminars like White Noise could be the first step in listening to, and understanding what those outside the sector feel about the future, and help increase their understanding of education’s role in it. It perplexes me why the public aren’t fighting as strongly for education as they are the NHS. It is their children and grandchildren who will be relying more on tertiary education, as the economy becomes even more dependent on knowledge in the future.

2 responses to “How does HE fit into the wider economy?

  1. Whoops! I stupidly forgot to attach my sources:

    Kelly, U., McLellan, D., & McNicoll, I. (2009). The Impact of Universities on the UK Economy, Fourth Report. London: Universities UK.

    London Economics . (2011). The Future of Higher Education: Written submission from London Economics. London: Her Majesty’s Stationary Office.

    Organisation for Economic Co-operation and Development (OECD). (2010). Education at a Glance 2010: OECD Indicators. Paris: OECD.

    Drucker, P. F. (1988). The Coming of the New Organisation. Boston: Harvard Business School Publishing.

    Buchbinder, H. (1993). The Market Oriented University and the Changing Role of Knowledge. Higher Education, 331-347.

    I think it’s well worth reading the OECD document as it makes reference to funding in a climate of recession which wasn’t entirely relevant to this subject, but is very interesting.

  2. Your concluding paragraph opens up a lot of interesting questions about the nature of the British view of HE. The reputation and the perception of the value of a university education in other countries -feels- as if it is more highly regarded than back in old Blighty.

    What is it that makes HE so hard to aspire to and love in Britain? Is it a cultural or social issue? Is it the fault of a sector not communicating its worth effectively? Is it a political conundrum?

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