TAILIEUCHUNG - Higher Education, Innovation and Economic Development

The contrasting experiences of Austin and Syracuse occurred in countless other areas as well. This article provides 14 additional examples of pairs of metro areas that had similar tax and growth patterns. 1 The experiences of all 15 pairs of metropolitan areas provide valuable lessons for distressed areas everywhere. Keeping tax burdens low appears to be an important ingredient in the recipe for economic prosperity. If high-tax, low-growth metro areas like Detroit, Milwaukee, Buffalo, and Syracuse want to be more like high-growth areas such as Dallas, Tampa, San Antonio, and Austin, they should lower their onerous burden of taxation and bring spending under control | Higher Education Innovation and Economic Development Bengt-Ảke Lundvall Department of Business Studies Aalborg University Denmark Paper to be presented at the World Bank s Regional Bank Conference on Development Economics Beijing January 16-17 2007. Abstract This paper links higher education to economic development through an analysis of how graduates contribute to innovation and learning and it draws policy implications for economic development. The starting points are two original contributions to the understanding of the role of higher education in relation to economic change Nelson and Phelps 1965 Schultz 1979 . On this basis we move ahead and referring to recent empirical research we demonstrate that graduates act both as innovators and equilibrators in what we call the learning economy. We end the analytical part concluding that investment in higher education may not give substantial rates of return in a technologically stagnant economy. Since the alternative to invest in higher education is to remain in stagnation forever we focus our policy discussion on two questions. First how to design higher education in such a way that it helps to break the vicious circle of stagnation and stagnating demand for graduates Second how to design a general strategy for vitalising national innovation systems that includes investment in higher education as important element We recommend less developed countries to build universities more strongly rooted in the regional context - a model referred to in the paper is the US land grant college including its extension services. We also recommend deep reform of teaching methods establishing stronger emphasis on problem-based learning where problems are taken from the domestic reality as well as integration of local practical experience in study programs. Such reforms should be used to strengthen the third mission. Without reform and with focus on building universities as national centres of excellence the major outcome of .

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