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48th Congress of the European Regional Science Association Liverpool, England, August 27-31, 2008

Sub-Regional Impact of HEIs – IO simulation of demand impacts on the City of Glasgow K. Hermannsson, P. McGregor, N. Pappas and K. Swales Fraser of Allander Institute, Department of Economics University of Strathclyde and CPPR. 48th Congress of the European Regional Science Association

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48th Congress of the European Regional Science Association Liverpool, England, August 27-31, 2008

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  1. Sub-Regional Impact of HEIs– IO simulation of demand impacts on the City of Glasgow K. Hermannsson, P. McGregor, N. Pappas and K. SwalesFraser of Allander Institute, Department of Economics University of Strathclydeand CPPR 48th Congress of the European Regional Science Association Liverpool, England, August 27-31, 2008

  2. Outline • Overview • Glasgow’s HEIs • Construction of Glasgow City IO • Simulation results • Future Work

  3. Background • Impact of HEIs initiative • 15 UK Universities • 9 projects • http://ewds.strath.ac.uk/impact/Home.aspx • Glasgow project: • Extension of the HEIs impact initiative backed by CPPR and Strathclyde University • Model the impacts of HEIs at a sub-regional level • Use multi-sectoral regional and inter-regional models • I-O, SAM and CGE

  4. Glasgow’s HEIs • Strong presence in the city • Spent £618m in 2006 • Staff 10,000 FTE • Students 61,000 (Full time = 48.000) • Diverse institutions

  5. Income of Glasgow’s HEIs by source2005/06, £ thousands. (HESA, 2007)

  6. Income of Glasgow’s HEIs by source (2) 2005/06, £ thousands. (HESA, 2007)

  7. Staff FTE by activity2005/06, £ thousands. (HESA, 2007)

  8. Students by institution and origin

  9. Glasgow and Strathclyde • Population (employment) • Scotland 5,095,000 (2,370,000) • Glasgow 578,000 (392,000) • Rest of Strathclyde 1,626,000 (566,000)

  10. Interactions over space (1) • Where do Scottish students go?≈ 94% in Scotland≈ 33% in Glasgow • Where do students in Glasgow come from? • Glasgow City 19% • Rest of Strathclyde 41% • Rest of Scotland 15% • Rest of UK 7% • Rest of World 18%

  11. Interactions over space (2) • How do HEI students in Glasgow live? • Halls: 8.4% • Other/Not known: 11.3% • Own home / Private rental: 44.9% • Parental / Guardian home: 35.3% • Where do they go to after graduation?* • Glasgow City: 42% • Rest of Strathclyde: 28% • Rest of Scotland: 22% • Rest of UK: 5% • Rest of World: 3% * According to a survey of EU students taken 6 months after graduation

  12. Interactions over space (3)

  13. Glasgow City IO • Estimated using Location Quotients (LQ) • Based on augmented Scottish IO • Simple approach • Not without faults • Interregional trade ↓→ impact↑ • Glasgow + ROS = Scotland

  14. Glasgow City IO (2) • Employment → industrial structure • Sector Gross outputs • Primary inputs • Final demands • Intermediate transactions • Scottish A-matrix * LQ’s

  15. Glasgow City IO (3)

  16. Simulation results:In a nutshell • GDP impact: £856m • 5.6% of Glasgow GDP • Of which: • Institutions and staff £628m – 4.1% of GGDP • Students £228m – 1.5% of GGDP

  17. Simulation results:Shutdown

  18. Simulation results:Student impacts

  19. Simulation results:External income + Scot Gov funding

  20. Model considerations • Accuracy of multipliers • Suspect them to be overstated • Boundaries • IO table implicitely captures ROS activity • General IO limitations

  21. Future work • Multi region IO • Interregional linkages • Hybrid IO table • More accurate sub-regional multipliers • SAM • Detailed treatment of households • CGE • Introduce supply side

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