Universities generate $19.95 billion in regions
15 May 2017 | media
New research shows that New Zealand’s universities contribute up to $19.95 billion to the regions where they are located and individually drive between 1.6% and 6.5% of regional GDP.
Chris Whelan, Executive Director of Universities New Zealand, says, “The NZIER research demonstrates just how important universities are to our regional economies. And in turn, our regions are important to the country’s economy and the quality of life and opportunities for New Zealanders.
“To give some idea of their scale and therefore their impact today, New Zealand universities have a major physical presence across seven of New Zealand’s 16 economic regions; they have 146,000 students enrolled from across all regions and attract 26,000 international students from around the world. In fact, today international education is New Zealand’s 4th largest export industry, with universities alone generating over $1 billion annually.
“In addition, universities directly employ over 20,000 academic and professional staff and which generates another 3,000-4,000 jobs in the wider economy in support.
“Our universities also work with startups, SMEs and large business helping to commercialise their ideas and to bring ground-breaking innovations in technology and research to life. Research within universities, and with other research institutions, is addressing the pressing issues we face today, bringing benefits that extend well beyond campus boundaries and often beyond New Zealand’s borders.
"All except our smallest university are listed among New Zealand’s Top 100 companies based on number of employees."
Chris Whelan says 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.
“Collectively New Zealand universities’ direct expenditure of approximately $3.4 billion (2015), 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 “the benefit of universities is not confined to the region where they are built but “spills over” to neighboring regions, having the strongest effects on those that are geographically closest”. They also note that “increases in university presence are positively associated with faster subsequent economic growth”. 
“Earlier research has shown 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."
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.
“Our regions matter. And our universities make a significance difference to our regions,” says Chris Whelan.
- The report is available at http://www.universitiesnz.ac.nz/NZIER-Regional-Impact-of-Universities
- The findings build on research released last year that highlighted the university sector’s contribution to New Zealand’s economy. NZIER, 2016. “Economic impact of universities” http://www.universitiesnz.ac.nz/news-issues-and-evidence/nzier-economic-impact-universities
- Anna Valero and John Van Reenen, London School of Economics. 2016. “The Economic Impact of Universities: Evidence from Across the Globe”. http://cep.lse.ac.uk/textonly/_new/staff/ValeroMimeo2016.pdf
University spending that contributes directly to regional GDP (2015) $million
University activity that contributes to regional GDP is spending on people and capital plus operating surplus and student spending less GST. This is a different measure of contribution to the regional economy from the expenditure footprint measure shown in the previous table. Note that this looks at major campus locations only. Smaller offices and teaching facilities are not counted.
Universities as local employers – number employed
University employment (total full time equivalent from 2015 annual reports) compared to jobs filled by salary and wage earners in the territorial authority where the university is located. Note that this looks at major campus locations only. Smaller offices and teaching facilities with small numbers of staff are not counted.
Source: NZIER analysis of data provided by Universities New Zealand and the 'Linked Employer Employee Database’ from Statistics New Zealand