Globally competitive, Locally engaged: Higher Education and Regions - Remarks by Angel Gurría


Remarks prepared for delivery, by Angel Gurría, OECD Secretary-General
Conference for the dissemination of recommendations and outcomes of the OECD review  "Supporting the contribution of Higher Education Institutions to Regional Development"

Valencia (Spain), 19 September 2007

Doña Mercedes Cabrera, Ministra de Educación y Ciencia, Don Juan Juliá Igual, Rector Magnifico de la Universidad Politécnica de Valencia, Doña Ana Patricia Botin, Presidenta de la Fundacion CYD, His Excellency Francisco Ballestero, Ambassador of Spain to the OECD.

Honoured guests, Ladies and Gentlemen,

In the name of the OECD I would like to express my warm thanks to the Regional Government of Valencia, to the Spanish Ministry of Education and Research, to the Fundacion CYD and to the Technical University of Valencia for taking the initiative, hosting and sponsoring this meeting.

I am very pleased to be launching an important OECD report on education here in Valencia today, in fact, the second one in only two days! As some of you may know, the new issue of Education at a Glance, our flagship report on education indicators, was released yesterday. Timing is thus perfect for me to follow up, looking into education issues and particularly at the role of higher education institutions in regional development

In my remarks this afternoon, I would like to underline the importance of higher education for regional development, and thus the need for universities to participate more in this area.
Higher education is indeed important for economic development. Globalisation and the emergence of new players in the world economy have intensified competition. Many OECD countries are turning production towards high value-added, knowledge-intensive products and services. Innovation is the key here, but it requires access to new technologies, knowledge and skills. And human capital, that is education, mobility and life-long learning, is a major, if not the most important factor in this process.

OECD countries’ capacity to compete in the global knowledge economy will increasingly depend on whether they can meet the fast-growing demand for high-level skills. This in turn, will hinge on universities’ abilities to provide quality education that is adapted to the needs of companies.  One specific area that showcases the link between education and growth is regional development. Provision of higher education at the tertiary level helps increase employment rates and earnings for individuals, and universities’ contributions to innovation are vital.

In most countries, higher education institutions account for the largest share of public research and development. While industry still funds only a fraction of research in higher education, more firms are now drawing on academic knowledge and research. Universities can create science parks or similar facilities to stimulate spin-offs and encourage synergies with innovative businesses. And one of the most effective mechanisms is of course the so-called “knowledge transfer on legs”:  students – whether as trainees, interns or full-time employees.

Not withstanding the shrinking distance due to information technology, innovation continues to cluster around specific regions and physical proximity still plays an important role. The exchange of tacit knowledge takes place at the regional level, and with growing distance the linkages between partners tend to erode. 

There are some famous regions where the link between the engagement of higher education institutions and the regional knowledge economy is particularly visible. All of us are familiar with areas such as Silicon Valley around Stanford University in California; MIT and its surrounding wider Boston area; or the University of Cambridge. These are, of course, rather spectacular examples and it is quite clear that not all regions will be able to turn themselves into silicon valleys. 

Economically advanced regions provide the best opportunities of co-operation between higher education and industry. In fact, we estimated in 2004 that just ten hub regions, among them areas such as the Tokyo region, Ile de France, and Baden-Wurttemberg, account for almost 40% of all researchers in the OECD.  Moving away from the big cities, co-operation often becomes more difficult, therefore it may be more promising to upgrade existing industries instead of trying to create new technology-based activities.

The empirical evidence shows that higher education institutions can give a boost to regional development. But unfortunately the evidence also tells us that in most countries higher education institutions are not responsive enough to the needs of regions. Here in Spain, for instance, the economy is booming and R&D in universities is thriving, but university-industry collaboration appears to be declining. The CYD Foundation noted that more than 80% of Spanish companies have never sought the help of universities to carry out research projects nor have they hired scientific-technical services or even just requested analysis and reports. Spain is not alone here. In the UK, only ten per cent of businesses currently interact with universities.

Why is this so? Are universities not offering the right knowledge and skills to companies? Are companies feeling that higher education has nothing to offer for their business? Our report found three reasons why higher education institutions fail to be responsive partners in regional development.
First, national higher education systems often impose regulations which limit the ability of institutions to engage regionally, leaving little room for institutional autonomy and flexibility. Higher education policy does not yet have a regional dimension.

Second, funding and incentive structures are often inadequate. Higher education institutions are faced with competition, new tasks and cost-cutting. International university rankings increase the pressure on universities to become national players in education rather than regional champions.

And third, there are specific barriers to co-operation between higher education institutions and firms in R&D. Higher education institutions and firms, particularly small and medium-sized enterprises, might have divergent priorities as well as difficulties in identifying partners. Often, universities show only limited interest in the research topics proposed by businesses, and firms find academia not sufficiently business-like. Companies’ restrictions on publishing research results can also turn away researchers whose academic career depends on publishing.

But the outlook is not as bleak as it seems. There is much that regions can and should do to remove the obstacles. The report we are launching here today seeks to assist policymakers in this task. It is the product of a series of reviews. We examined 14 regions in 12 OECD countries, one of them in Spain, the Autonomous Region of Valencia, which is why we are here today.
Several policy measures are recommended in our report.

A first set of policy recommendations concerns reforms of higher education institutions.  The very basic approach is to make sure that higher education policy has a regional dimension.  A more ambitious approach requires changing the culture and direction of higher education institutions in line with entrepreneurial activities and regional engagement. This means far-reaching legal and regulatory changes to strengthen the autonomy of higher education institutions.

Increased autonomy alone will not be enough. Lack of funding is often the main bottleneck for regional engagement. Long-term core funding for universities tied to regional engagement could thus provide a strong incentive.

Another key policy message calls for regions to look beyond hi-tech. Too many regions try to emulate Silicon Valley. Too many higher education institutions, regardless of their critical mass, make high technologies a priority. Far too little attention is given to services, which account for 70% of the workforce in the OECD countries. Employment-intensive sectors such as health, tourism, finance, and non-high technology activities, including retail, transport, construction, are often the driving forces in their regional economy. For example, in the United States, more than half of all patents and trademarks granted are in low-tech areas.

We also need to establish permanent partnership structures of local and regional authorities, business and higher education institutions. Symbiotic co-operation with regional public agencies in Finland or the United States has shown that universities can bring key contributions in this area.

To promote simultaneously innovation, internationalisation and regional engagement of higher education institutions requires co-ordinated action between ministries of education and those responsible for industry, regional development or SMEs. Greater policy coherence can be achieved through interministerial committees, such as the Finnish Science and Technology Committee chaired by the Prime Minister and the recently created Haut Conseil à la Science et à la Technologie in France. Joint projects and programmes between ministries should be encouraged even if they may cost more. I will not pretend that getting organisations to work together well is an easy task, but it is worthwhile.

Finally, the success of the proposed policy measures will also require close monitoring of outcomes. Data, indicators and benchmarking remain a weakness in most countries. Regional engagement policies will not be improved without sound evaluation processes.

I want to close by thanking each and every one of the many people who have contributed to this work. I believe that citizens and authorities from the 14 regions involved can be proud of what they have achieved as they continue to build on the results of the review. And we at the OECD are proud to be contributing to your discussions, over the next days, and in the future.


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