University engagement as local economic development
Estimating the economic impact of a South African university using a Keynesian multiplier approach
Keywords:
Universities, economic impact, Keynesian model, anchor institution framingAbstract
Universities engage with their communities through a plethora of approaches. One largely neglected form of engagement is the contribution of the university to local economic development. Empirical studies on the economic impact of universities in Africa have been significantly lower compared to the global North. However, this is not because universities in Africa are not contributing to the economic development of their immediate and extended regions. This paper aims to contribute to closing that gap through an empirical study of a newly established South African university within a secondary city characterized by high unemployment, a declining economic sector, but with a growing staff and student body and high university expenditures. The analysis uses a Keynesian-type multiplier impact model, to demonstrate that the university contributes a minimum of R2 billion to the local municipality, which translates to about 19% of the district GDP. This contribution is made through a combination of direct and indirect activities of the university and its constituencies – staff, students, visitors, and local businesses. The paper concludes that intentional engagement policies and practices from the universities coupled with active commitments from local or provincial government and other external stakeholders could ensure the university serves a stronger anchoring and developmental role within the city and region.
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