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Growing New Zealand’s economy

New Zealand’s universities are large institutions, collectively employing approximately 20,000 full-time staff and turning over $3.8 billion annually.  The universities teach around 174,000 students and produce more than 43,000 graduates each year (90% at bachelor’s degree level or higher).  Universities spend around $960 million on research and are home to 70% of the country’s researchers. 15% of their income comes from the commercialisation of research outputs. National and international evidence suggests that investing in universities is a positive way to grow an economy.

Universities, their staff, graduates and educational and research activities form an important backbone to the New Zealand economy. Universities train and produce highly-skilled workers. They produce research that underpins new growth and development. They nurture and develop the country’s future researchers and innovators. Well-regarded universities, such as New Zealand’s eight universities, attract talented staff and students from across the country and around the world, with positive flow-on effects for the regions that house them and for the country as a whole. New analysis estimates that NZ’s Gross Domestic Product (GDP) is 3-6% higher because of the impact that a university education has on the productivity of the workforce. New Zealand’s universities are estimated to 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. International research suggests that GDP is 4.1% higher on average in regions that have universities.

Some key facts

  • 173,880 students in 2016, including 51,575 post-graduate students (30%).1
  • $3.8b total expenditure annually - accounts for around 1.2% of NZ’s gross domestic product. 2,3
  • NZ’s GDP is 3-6% higher because of the impact that a university education has on the productivity of the workforce. 3
  • GDP is 4.1% higher on average across regions that have universities. 4
  • 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. 5
  • A 10% increase in higher education research spending will ultimately increase GDP by 1.75-1.84%.3
  • $877m spent by New Zealand universities on research last year. 6
  • 20% estimated annual return on university research. 7
  • $500m + generated each year through commercialising university research - about 15% of total university income. 8
  • Universities account for 28% of New Zealand’s R&D expenditure, driving 65% of all of NZ’s basic research expenditure and 25% of applied research expenditure. 6
  • Around 54% of university research expenditure is on physical and information sciences, health, infrastructure and our economic framework. 6
  • NZ universities are home to around 27,100 researchers (70% of all of New Zealand’s researchers, including postgraduate research students).6
  • The stock of all knowledge generated by NZ universities, and adopted across the wider economy, accounts for around 9% of GDP. 12
  • NZ universities attract high-calibre international students: 16% are studying at PhD level. Overall, 42% are enrolled in postgraduate qualifications. 9
  • International Education is NZ’s 5th largest export earner, generating $4.5 billion annually. Universities alone generate over $1 billion annually. 9,11
  • For every $1m spent by international students, GDP is estimated to increase by $1.6m – supporting more than 30,000 jobs. 3
  • Half of all international PhD students say they plan to work in NZ after graduation – most in education and training, healthcare, and science and technology. 12
  • Across the university sector, 49% of income comes from government tuition grants, government research funding and the Performance Based Research Fund (PBRF), 29% from student fees (domestic and international), and 22% from other sources (non-student and non-government, including other funded research, commercialisation and trading revenue).2
  • New Zealand’s public investment (including public subsidies to households and other private entities, like student loans, allowances, scholarships and other grants) in all forms of tertiary expenditure is relatively high - 1.8% of GDP compared with an OECD average of 1.5%. 13
  • However, a greater proportion of that funding goes to private individuals than many other countries. Excluding this element, NZ’s public expenditure on tertiary education is 0.9% of GDP - below the OECD average (1.1%). 13

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[1]  Education Counts, Tertiary Statistics. ENR.10 “Domestic and international students by qualification level and sub-sector 2008-2016”. 2016 data. Updated September 2017. 

[2]  2016 university annual reports. Consolidated/group figures.

[3]  NZIER report to Universities New Zealand – Te Pōkai Tara, 2016. “Economic impact of universities: An analysis of the contribution of New Zealand universities to economic activity”. (Note: report based on 2014 data)

[4]  Valero, A and Van Reenen, J. “The Economic Impact of Universities: Evidence from across the globe”. Working Paper 22501. National Bureau of Economic Research. August 2016. © 2016 by Anna Valero and John Van Reenen.

[5]  NZIER, 2017. "Regional activity of universities: Data sources for assessing New Zealand universities share of regional economic activity".

[6]  Statistics New Zealand, 2017. “Research and Development Survey: 2016 (revised)".

[7]  Deloitte Access Economics, 2015. “The economic contributions of Australia’s research universities – the UNSW example”.

[8]  University Commercialisation Offices of New Zealand, 2012. “University Research Commercialisation: Driving innovation and development”.

[9]  Education Counts, Tertiary Statistics. ENR.26 “International students by sub-sector, region of citizenship and qualification level 2016.” Updated September 2017.

[10]  Media Statement, Hon Steven Joyce, Minister for Tertiary Education, Skills and Employment (8 November 2016). 

[11]  Education New Zealand, 2016. “Statement of Intent 2016–2020”.

[12]  Graduate Longitudinal Study New Zealand, 2012. “Extended Baseline Report: Graduate Longitudinal Study New Zealand, 4 April 2012”. 

[13]  OECD, 2017. "Education at a Glance 2017: OECD Indicators". Tables B2.1 and B2.3. Updated September 2017.