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Every euro invested in a university generates five for the economy – or does it?

According to a fresh study, investments in Finnish universities generate billions of euros for the national economy. However, at least one critic says that the evaluation making this claim lacks any "rational criteria".

Helsingin yliopiston ulko-ovet.
Image: Petteri Paalasmaa / AOP

According to the Scottish consultancy BiGGAR Economics, Finnish universities produce 14.2 billion euros in gross added value for the Finnish economy, and their activities support around 136,000 jobs.

This corresponds to 6.6% of Finnish economic output, and 5.5% of total employment in Finland. It is calculated that the direct and the indirect effect of every euro invested in Finnish universities produces, on average, 5.26 euros in return. These are lower-bound estimates, and the report says the real impact is likely larger.

The commissioned study was a joint project between The Confederation of Unions for Professional and Managerial Staff in Finland (Akava), the Confederation of Finnish Industries (EK), the Association of Finnish Independent Education Employers (AFIEE), the National Union of University Students in Finland (SYL), and Universities Finland UNIFI.

The main sources of this economic impact are the core educational and research activities of the universities, student activities, and the business and innovation support that the universities provide. Other sources include the health benefits and tourism.

In 2016, Finland's 14 Finnish Universities had a full-time student population of approximately 148,000 students, a staff complement of around 32,000 people and a combined annual budget of approximately 2.7 billion euros.

Confusing costs and benefits?

Heikki Pursiainen, who is director of the Helsinki-based, independent think tank Libera, is highly critical of this report by BiGGAR Economics, telling Yle that the evaluation mixed up costs and benefits.

As an example, he points to a section of the study which classifies purchases of goods by universities as an economic benefit.

"The thinking here is that spending money is automatically beneficial," he says.

Pursiainen slammed the report for failing to fulfill "any kind of rational criteria".

"The results of the evaluation are not credible. If investing in universities brought multiple financial returns, things would be very easy," he argues.

Libera's Heikki Pursiainen also thinks that the universities should have used their own researchers to carry out the evaluation rather than an outside consultancy.

"This is one in a series of reports commissioned from consultants that always have the same message: the money put into the activities of whoever orders the report generates multiple returns," claims Pursiainen.

He points out that similar types of studies are constantly being published.

"In this case," says Heikki Pursiainen, "what's peculiar is that it was ordered by universities that should be battling against this kind of trash."

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