Investing in universities produces great dividends

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This article was published 19/03/2018 (2783 days ago), so information in it may no longer be current.

Most people agree that universities help develop and build important skills in students, such as critical thinking, effective communications and adaptability.

Yet, the value of our universities goes well beyond the individual by affecting the local economy. In recent years, Canadian universities have started using accounting methods to calculate the economic effect of their activities on their provincial economies.

In Manitoba, the University of Winnipeg and Brandon University have undertaken this analysis. The 2014 analysis by Brandon University suggests that each dollar invested in BU’s operating grant returns $11.30 in economic activity to the province; a 2016 analysis at the U of W shows that $1 invested results in approximately $15 in economic activity.

How does this work? The primary purpose of a university is teaching and research. First, we examine the wage premium — most university graduates fare far better than non-graduates in terms of average wages. Statistics Canada says a university graduate working in Manitoba in 2016 made, on average, about $17,000 more annually than a non-university graduate. That person is earning more, spending more and paying higher taxes to all levels of government, all of which directly benefit Manitoba’s economy.

The second way to view the university’s impact on the local economy is to examine the effect of research on productivity. Universities transmit knowledge; research and knowledge are the bedrock of innovation. Universities help find new ways to tackle pressing problems, often collaborating closely with industry, First Nations, community organizations and government departments.

Several recent tangible examples of how U of W faculty, students and graduates contribute to our community include a project with the city of Winnipeg developing new methods to slow the spread of Dutch elm disease, the use of precision farming expertise and techniques to reduce the cost of producing corn and canola to create an advantage in the highly competitive food production industry, and working closely with Manitoba First Nations to examine how the ongoing support of an Indigenous doula can help women remain in their home community to give birth, thereby reducing travel, stress and expenses.

These are the real-world benefits that university research creates for all Manitobans.

This is true across the country. Statistics Canada says universities account for 40 per cent of total Canadian research and development. Canada’s universities conduct $1 billion in research for businesses and help build their competitive advantage, and community-based organizations also benefit: universities conduct $1.2 billion in research annually for the not-for-profit sector, which has nearly tripled since 2000.

Universities are a cost-effective way to raise wages and productivity. This high rate of return makes a strong case for investing in universities, particularly as we prepare for the new knowledge economy. Machine learning and artificial intelligence are impacting every industry, and will continue to do so over the next decade. The U of W has significant expertise in this shifting landscape; it is a transformation with tremendous implications across all sectors, from health care and hospitality to agriculture and aerospace.

Investing in innovation and collaborative partnerships is critical to the future economy of Manitoba and Canada. New ways of thinking must encourage researchers, governments, the community and the corporate sector to work together to solve complex problems and create new opportunities. A university degree is an investment that continues to give, and investing in Manitoba universities will provide strong value for individual students now, and higher rates of return in the future for all Manitobans.

Manish Pandey is the acting vice-president, research and innovation, at the University of Winnipeg and a professor in the department of economics.