Growing our regions

New research shows that universities contribute up to $19.95 billion to the regions in New Zealand where they are located and represent between 1.6% and 6.5% of GDP in their region.

New Zealand’s regions are important to the country’s economy and the quality of life and opportunity for the population. Regional growth has been a particular focus of this government in recent years, underscored by a regional focus to the Tourism Growth Partnership and MBIE’s placement of regions as a cross-cutting theme across its entire Business Growth Agenda.

New Zealand universities have a physical presence across many of New Zealand’s economic regions. They enrol 146,000 students from across all regions and attract 26,000 international students from around the world. They employ over 20,000 academic and other staff, generating another 3,000-4,000 jobs in the wider economy in support. Our universities also cooperate with businesses and other research institutions, bringing benefits that extend well beyond their campus boundaries.

Building on research released last year that highlighted the university sector’s contribution to New Zealand’s economy, new research shows just how important universities are to our regional economies. We already know that New Zealand’s GDP is 3% to 6% higher because of the impact that a university education has had on the productivity of the workforce with university qualifications.

Attached table

This new research highlights that the direct effects (salaries, purchase of goods and services, accommodation, food and travel etc.) of universities are dwarfed by the indirect effects (resulting expenditure by the industries that supply the goods and services purchased by universities and students) and induced effects (flow-on effects of university related activity beyond direct and indirect effects) of a university to a region.

In forthcoming analysis, New Zealand universities’ direct expenditure of approximately $3.4 billion (2014) increases to $5.8b when the spending of domestic students from inside and outside the region plus international students is included. This grows to $19.95b when estimated indirect and induced effects on regional expenditure are included.

International research backs up these observations. Work published last year by the London School of Economics found that “doubling the universities in one region increases that region’s income by four per cent and country-wide income by 0.5 per cent.”[1]

Our regions matter. And our universities make a significance difference to our regions.

Let’s continue to build on that strong relationship.

[1] LSE Business Review, 2016. “The more universities in a country, the faster is economic growth”. http://blogs.lse.ac.uk/businessreview/2016/03/23/the-more-universities-in-a-country-the-faster-its-economic-growth/

Links for further information:

NZIER, 2016. “Economic impact of universities”
/news-issues-and-evidence/nzier-economic-impact-universities

NZIER, 2017.”Regional activity of universities”. Forthcoming.