The University and the Economy

The University and the Economy

Pathways to Growth and Economic Development

Aldo Geuna and Federica Rossi

This book provides readers with an in-depth understanding of the many ways in which universities contribute to economic development and growth. It demonstrates the causal interactions between universities’ activities and economic outcomes, and presents up-to-date quantitative and qualitative data in support. The authors present the theoretical tools and evidence to explain the manner and degree to which universities’ activities impact the economy, as well as analysing the comparative strengths and weaknesses of specific university systems.

Chapter 2: The university and the economy: a multifaceted relationship

Aldo Geuna and Federica Rossi

Subjects: business and management, management and universities, economics and finance, economics of education, economics of innovation, education, management and universities, innovation and technology, economics of innovation


The essential role played by the university in its contribution to a country’s or region’s competitiveness is increasingly acknowledged alongside the role it plays in the development of the ‘knowledge economy’. This term has been used to highlight how the organization of many economic systems has radically changed through time. This is due to the transition from industrial economies, based mainly on the exploitation of resources such as labour, tangible capital and material inputs, to economies which are more and more based on the creation, diffusion and exploitation of knowledge (Freeman and Hagedoorn 1995; OECD 1996; David and Foray 2002). A more restricted interpretation of the term ‘knowledge economy’ instead emphasises its features of, on the one hand, the diffusion of information and communication technology, the impact of which on the organization of economic activity has led to increased productivity and has accelerated the rate of technological innovation, favouring economic growth (Rodrigues 2002; Soete 2002). On the other hand, it is characterized by the emergence and growing importance of sectors that produce and exchange products ‘based on knowledge’ such as intellectual property rights. These sectors include the advertising industry, financial and consulting services, new media, video entertainment, broadcasting, biotechnologies and the pharmaceutical industry, as well as health and training services (Quah 1998), all industries in which the university system plays an active role.

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