nep-edu New Economics Papers
on Education
Issue of 2006‒06‒03
seventeen papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Birth Order Matters: The Effect of Family Size and Birth Order on Educational Attainment By Alison Booth; Hiau Joo Kee
  2. Estimating Returns to Education: Three Natural Experiment Techniques Compared By Andrew Leigh; Chris Ryan
  3. Can Vietnam Achieve One of its Millennium Development Goals? An analysis of schooling dropouts of children By Vo Tri Thanh; Trinh Quang Long;
  4. Nonlinear Hedonics and the Search for School District Quality By Michael T. Owyang; Abbigail J Chiodo; Ruben Hernandez-Murillo
  5. The Growing Allocative Inefficiency of the U.S. Higher Education Sector By James D. Adams; J. Roger Clemmons
  6. The Drift to Private Schools in Australia: Understanding its Features By Chris Ryan; Louise Watson
  7. Income Contingent Loans for Higher Education: International Reform By Bruce Chapman
  8. Industry R&D Location – the role of accessibility to university R&D and institutions of higher education By Andersson, Martin; Gråsjö, Urban; Karlsson, Charlie
  9. Why Are Black-Owned Businesses Less Successful than White-Owned Businesses? The Role of Families, Inheritances, and Business Human Capital By Robert Fairlie; Alicia Robb
  10. Optimal Control Theory for Undergraduates By Ernst Juerg Weber
  11. Funding Higher Education and Wage Uncertainty: Income Contingent Loan Versus Mortgate Loan By Migali, Giuseppe
  12. The Effectiveness of University Technology Transfer: Lessons Learned from Qualitative and Quantitative Research in the U.S. and U.K. By Phillip H. Phan; Donald S. Siegel
  13. The Impact of Minimum Quality Standards on Firm Entry, Exit and Product Quality: The Case of the Child Care Market By V. Joseph Hotz; Mo Xiao
  14. Are Elite Universities Losing Their Competitive Edge? By E. Han Kim; Adair Morse; Luigi Zingales
  15. Does Expansion Cause Congestion? The Case of the Older British Universities, 1994 to 2004 By Tony Flegg; David O. Allen
  16. Economic activity and the knowledge infrastructure in the Oslo region By Keith Smith; Thor Egil Braadland; Finn Ørstavik; Heidi Wiig Aslesen
  17. Company R&D and University R&D - How Are They Related? By Charlie Karlsson; Martin Andersson

  1. By: Alison Booth; Hiau Joo Kee
    Abstract: We use unique retrospective family background data from the 2003 wave of the British Household Panel Survey to explore the degree to which family size and birth order affect a child’s subsequent educational attainment. Theory suggests a trade off between child quantity and ‘quality’. Family size might adversely affect the production of child quality within a family. A number of arguments also suggest that siblings are unlikely to receive equal shares of the resources devoted by parents to their children’s education. We construct a composite birth order index that effectively purges family size from birth order and use this to test if siblings are assigned equal shares in the family’s educational resources. We find that they are not, and that the shares are decreasing with birth order. Controlling for parental education, parental age at birth and family level attributes, we find that children from larger families have lower levels of education, that there is a separate negative birth order effect, and that the family size effect does not vanish once we control for birth order. Our findings are robust to a number of specification checks.
    Keywords: family size, birth order, education, inter-generational effects
    JEL: I2 J1
    Date: 2005–12
  2. By: Andrew Leigh; Chris Ryan
    Abstract: We compare three quasi-experimental approaches to estimating the returns to schooling in Australia: instrumenting schooling using month of birth, instrumenting schooling using changes in compulsory schooling laws, and comparing outcomes for twins. With annual pre-tax income as our measure of income, we find that the naïve (OLS) returns to an additional year of schooling is 13%. The month of birth IV approach gives an 8% rate of return to schooling, while using changes in compulsory schooling laws as an IV produces a 12% rate of return. Finally, we review estimates from twins studies. While we estimate a higher return to education than previous studies, we believe that this is primarily due to the better measurement of income and schooling in our dataset. Australian twins studies are consistent with our findings insofar as they find little evidence of ability bias in the OLS rate of return to schooling. Our estimates of the ability bias in OLS estimates of the rate of return to schooling range from 9% to 39%. Overall, our findings suggest the Australian rate of return to education, corrected for ability bias, is around 10%, which is similar to the rate in Britain, Canada, the Netherlands, Norway and the United States.
    Keywords: returns to education, instrumental variables, compulsory schooling, twins, Australia
    JEL: I21 I28 J24
    Date: 2005–08
  3. By: Vo Tri Thanh; Trinh Quang Long;
    Abstract: The objectives of this study are to identify the underlying determinants of the schooling dropout in Vietnam and to project its trend in the future up to 2015. Our examination is largely based on the three Vietnam’s Living Standard Surveys conducted in 1992/93, 1997/98 and 2001/02 and the conventional framework of educational investment at the household level. The major determinants of the schooling dropout choice by households are found to be variables of child’s characteristics (such as age, working time, primary education, and number of siblings) and household economic situation (such as parental education, household’s per capita expenditure, and cost of schooling). In general, the effects of these determinants on the schooling dropout probability are statistically significant. In particular, the schooling dropout probability has been very sensitive to the changes in the household’s per capita expenditure and the direct costs of schooling, whereas recently the other determinants have had only minor impacts. In terms of schooling, girls have benefited more than boys did from their household's per capita expenditure increase, while they have suffered more than boys did from an increase in the direct cost of schooling. These differences, however, recently have narrowed substantially. The dropout situation is also regional specific and hence, a comprehensive approach is needed to deal with it. Moreover, at present the low quality of education is serious problem. Together with the parents' incorrect perception of and the community’s attitude to education values, this may increase the possibility of children’s schooling dropout. The dropout situation is also very much dependent on the public funding for education, which is still not effective in reducing the household current excessive financial burden and still biased against the poor regions. The projection outcomes of the schooling dropout probability of children in the future up to 2015 is very much depending on the assumptions of the changes in the household’s per capita expenditure and the cost of schooling. When the growth rate of the cost of schooling is much higher (for example, by 1.2 percentage points) than that of the household’s per capita expenditure, the dropout rate would first decrease and increase again after 2010. The tentative assessments suggest that in these cases, there is a chance for Vietnam to achieve the national targets of the primary and lower secondary net enrolment rates in 2010. However, Vietnam could very hardly to achieve the MDG on the universal completion of primary education in 2015 and moreover, the achievements recorded by 2010 would be deteriorated. Regarding the scenarios, where the pace of changes in the cost of schooling is lower than that of the household’s per capita expenditure, the projections seem to provide a rather bright picture in terms of achieving the national education targets in 2010 and the MDG on education in 2015. The projections also show that there is a reason to be more optimistic about the elimination of the gender gap in education by 2010.
    Keywords: Vietnam, education, MDGs
    JEL: D10 I20 I29 C31
    Date: 2005–06–01
  4. By: Michael T. Owyang; Abbigail J Chiodo; Ruben Hernandez-Murillo
    Abstract: Since the pioneering work of Tiebout (1956), economists have recognized that the quality of public services, especially schools, influence house prices. Many empirical studies have attempted to discern the extent to which the quality of public education affects house prices. Initially, researchers estimated hedonic pricing equations (Rosen, 1974). In a simple hedonic pricing model, a house's value depends on its comparable neighborhood and school district characteristics. A house's comparable characteristics include aspects such as the number of bedrooms, square feet, etc. Neighborhood characteristics typically include the distance to the nearest major downtown area, racial composition, and median household income. Education quality may be proxied by variables such as per-pupil spending, pupil/teacher ratio, and property taxes, which are usually available at the school district level, or it may be measured directly by state or local standardized tests scores, which are usually available at the school level. In an influential study, Black (1999) argues that past research estimating hedonic pricing functions (see Rosen, 1974) may introduce an upward bias due to neighborhood quality effects that are unaccounted for in the data. Specifically, she notes that better schools may be associated with better neighborhoods, which could independently contribute to higher house prices. Black circumvents this problem by estimating a linear hedonic pricing function using data only from houses which border the school attendance zone boundaries. She rationalizes that, while test scores make a discrete jump at attendance boundaries, changes in neighborhoods are more smooth. Black's linear specification presupposes that the marginal valuation of worse-than-average schools is equal to the valuation of better-than-average schools and results in a constant premium on school quality. Moreover, if school quality is normalized (i.e., expressed in terms of deviations from the mean), the linear capitalization term implies a penalty (increasing as quality decreases) for houses in attendance zones of schools performing below average. Thus, a linear model implies there exists a substantive pecuniary penalty for a really bad school compared to just a bad school. In this paper, we formulate a simple housing search model that yields a theoretical nonlinear pricing function. The nonlinearity in our model reflects two aspects of the market for public education via housing. First, alternative schooling arrangements (e.g., private school, home schooling, magnet schools, etc) can provide home buyers with high quality education even if they choose to live in below average school districts. The existence of these options underlies our belief that an increasing penalty for below average quality school attendance zones may be theoretically unappealing. Second, if buyers have positive valuations for education, they may concentrate their efforts among the highest quality attendance zones, yielding an increasing market tightness as school quality increases. Thus, buyers may face incresed competition for the highest quality schools and a rapidly increasing premium for houses in those attendance zones. Motivated by our theoretical specification, we extend Black's analysis and examine the relationship between school quality and house prices in the St. Louis, Missouri metropolitan area. A previous study by Ridker and Henning (1967) found no evidence of education capitalization in St. Louis house prices. While their main concern was to determine the negative effect of air pollution on housing prices, they included a dummy variable which indicated residents' attitudes about the quality of the schools (above average, average, and below average). Our goal is to determine the degree of education capitalization in the St. Louis MSA. We first measure education capitalization employing Black's methodology of considering only houses near attendance zone boundaries to control for neighborhood quality. This allows us to determine the extent to which Black's results extend to the St. Louis metro area. Then, we advance Black's methodology by considering the possibility that education capitalization affects house prices nonlinearly, as indicated by our theoretical framework. Black, Sandra E. "Do Better Schools Matter? Parental Valuation of Elementary Education," Quarterly Journal of Economics, May 1999, 114(2), pp. 577-599. Ridker, Ronald G. and Henning, John A. "The Determinants of Residential Property Values with Special Reference to Air Pollution," Review of Economics and Statistics, May 1967, 49(2), pp. 246-257. Rosen, Sherwin. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, January-February 1974, 82(1), pp. 34-55. Tiebout, Charles M. "A Pure Theory of Local Expenditures," Journal of Political Economy, October 1956, 64(5), pp. 416-424.
    Keywords: education, captialization, hedonic pricing, search
    JEL: C21 I20 R21
    Date: 2004–08–11
  5. By: James D. Adams (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA); J. Roger Clemmons (Institute for Child Health Policy, College of Medicine of the University of Florida)
    Abstract: This paper presents new evidence on research and teaching productivity in universities. The findings are based on a panel that covers 1981-1999 and includes 102 top U.S. universities. Faculty size grows at 0.6 percent per year, compared with growth of 4.9 percent in the industrial science and engineering workforce. Measured by papers and citations per researcher, productivity grows at 1.4-6.7 percent per year and productivity and its rate of growth are higher in private than public universities. Measured by baccalaureate and graduate degrees per teacher, teaching productivity grows at 0.8-1.1 percent per year and growth is faster in public than private universities. A decomposition analysis shows that growth in research productivity within universities exceeds overall growth. This is because research shares grow more rapidly in universities whose productivity grows less rapidly. Likewise the research share of public universities increases even though productivity grows less rapidly in public universities. Together these findings suggest that allocative efficiency of U.S. higher education declined during the late 20th century. Regression analysis of individual universities finds that R&D stock, endowment, and postdoctoral students increase research productivity, that the effect of nonfederal R&D stock is less, and that research is subject to decreasing returns. Since the nonfederal R&D share grows and is much higher in public universities, this could account for some of the rising allocative inefficiency. The evidence for decreasing returns in research, which are greater than in teaching, suggests limits on the ability of more efficient institutions to expand and implies that differences in the scale of the teaching function are the primary reason for differences in university size. Besides all this the data strongly hint at growing financial pressures on U.S. public universities.
    JEL: J3 L3 O3
    Date: 2006–05
  6. By: Chris Ryan; Louise Watson
    Abstract: Government subsidies have provided a major source of funds to private schools in Australia for three decades. The increasing level of private school subsidies since the mid-1970s has contributed to a steady increase in the proportion of students enrolled in private schools. This growth in the private school share of enrolments was not inevitable, but has been the outcome of government policies. We use an economic framework that focuses jointly on the price and quality of schooling and find that private schools have used government subsidies to increase the quality of their services (ie. to reduce staff: student ratios) rather than to reduce their fees. This strategy has ensured that the 10 percentage point increase in the enrolment share of private schools since 1975 has not substantially altered the socio-economic composition of their student body. One consequence is that a higher proportion of government school students now come from low socio-economic status (SES) backgrounds than 30 years ago. Therefore, schools in the government sector now educate more students from lower SES backgrounds than in 1975. The implications for public policy of these phenomena are discussed and directions for future research identified.
    Keywords: private schooling, choice, government subsidies, student background
    JEL: I21 I28 H52
    Date: 2004–09
  7. By: Bruce Chapman
    Abstract: It is well known that higher education financing involves uncertainty and risk with respect to students’ future economic fortunes, and an unwillingness of banks to provide loans because of the absence of collateral. It follows that without government intervention there will be both socially sub-optimal and regressive outcomes with respect to the provision of higher education. The historically most common response to this market failure — a government guarantee to repay student loans to banks in the event of default — is associated with significant problems. Income contingent loans offer a possible solution. Since the late 1980s ICLs have been adopted in, or recommended for, a significant and growing number of countries, and it is this important international policy reform that has motivated the Chapter. An ICL provides students with finance for tuition and/or income support, its critical and defining characteristic being that the collection of the debt depends on the borrowers’ future capacity to pay. ICL have two major insurance advantages for borrowers over more typical arrangements: default protection and consumption smoothing. With reference to countries with both successful and unsuccessful ICL, the paper illustrates that the operational and design features of such schemes are of fundamental importance with respect to their potential efficacy. It also seems to be the case that in many institutional and political environments there is not yet the administrative sophistication to make ICLs viable, although for reasons documented this is unlikely to be the case for the vast majority of OECD countries. For one country, Australia, there is now a significant amount of research into the consequences of an ICL, and the evidence is explored in some detail. The investigation into the Australian experience helps in the development of a research agenda.
    Keywords: income contingent loans, student loans, higher education financing, HECS
    JEL: I00 I20 I21 I22 I28 J2 J24
    Date: 2005–06
  8. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Gråsjö, Urban (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Karlsson, Charlie (
    Abstract: The rapid globalization in recent years has created a radically new competitive situation for the rich industrialized countries. Newly industrialized countries and not least China have become more and more successful in penetrating the markets in the rich industrialized countries with increasingly more advanced export products. This has generated a discussion in the rich industrialized countries on how to meet this increased international competition. In some countries demands for various protective measures have been raised while in others the discussion has mainly focused on how to develop a competitive strategy mainly concentrating on making the own products more sophisticated by increasing their knowledge content. This is by no means since the direct product development is controlled to a high extent by multinational firms, which to an increasing degree are foreign owned. Governments mainly have to rely on indirect measures, such as increasing the volume of higher education and public, mainly university R&D. This raises the question: how responsive is private industry to these kinds of indirect measures. Against this background, the purpose of this paper is to analyze to what extent that the location and the extent of higher education and university R&D, respectively, influence the location and the extent of industry R&D in Sweden using an accessibility approach. After an extensive literature survey, we develop a simple theoretical model for the location of R&D from the perspective of a multinational enterprise. From this theoretical model, we then deduce our empirical model, which we then estimate in the form of a Tobit model using data from Swedish labour market regions and municipalities. We show that the location of industry R&D in Sweden can be partly explained by the intra-municipal accessibility to students in higher education, while the accessibility to university R&D turned out to be insignificant
    Keywords: industry R&D; university R&D; higher education; region; municipality; location; accessibility; Tobit model; Sweden
    JEL: O30 O38 O52 R11 R12 R32
    Date: 2006–05–31
  9. By: Robert Fairlie; Alicia Robb
    Abstract: Four decades ago, Nathan Glazer and Daniel Patrick Moynihan made the argument that the black family "was not strong enough to create those extended clans that elsewhere were most helpful for businessmen and professionals." Using data from the confidential and restricted access Characteristics of Business Owners Survey, we investigate this hypothesis by examining whether racial differences in family business backgrounds can explain why black-owned businesses lag substantially behind white-owned businesses in sales, profits, employment size and survival probabilities? Estimates from the CBO indicate that black business owners have a relatively disadvantaged family business background compared with white business owners. Black business owners are much less likely than white business owners to have had a self-employed family member owner prior to starting their business and are less likely to have worked in that family member's business. We do not, however, find sizeable racial differences in inheritances of business. Using a nonlinear decomposition technique, we find that the relatively low probability of having a self-employed family member prior to business startup among blacks does not generally contribute to racial differences in small business outcomes. Instead, the lack of prior work experience in a family business among black business owners, perhaps by limiting their acquisition of general and specific business human capital, negatively affects black business outcomes. We also find that limited opportunities for acquiring specific business human capital through work experience in businesses providing similar goods and services contribute to worse business outcomes among blacks. We compare these estimates to contributions from racial differences in owner's education, startup capital, geographical location and other factors.
    Date: 2005–06
  10. By: Ernst Juerg Weber (Department of Economics, The University of Western Australia)
    Abstract: Dynamic optimization is widely used in financial economics, macroeconomics and resource economics. This is accounting for some tension between the undergraduate and graduate teaching of economics because most undergraduate programs still concentrate on static economic analysis. This paper shows how, with the help of the Microsoft Excel Solver tool, the principles of dynamic economics can be taught to students with minimal knowledge of calculus. As it is assumed that the reader has no prior knowledge of optimal control theory, some attention is paid to the main concepts of dynamic optimization.
    Keywords: Optimal Control Theory, Economic Education, Microsoft Excel
    JEL: A22 C61 D91 D92 Q00
    Date: 2005–01
  11. By: Migali, Giuseppe (University of Warwick)
    Abstract: In a world where graduate incomes are uncertain (observation of the UK graduate wages from 1993 to 2003) and the higher education is financed through governmental loan (UK Higher Education Reform 2004), we build a theoretical model to show which scheme between an income contingent loan and a mortgage loan is preferred for higher level of uncertainty. Assuming a single lifetime shock on graduate incomes, we compare the individual expected utilities under the two loan schemes, for both risk neutral and risk averse individuals. We extend the analysis for graduate people working in the public sector and private sector, to stress on the extreme difference on the level of uncertainty. To make the model more realistic, we allow for the effects of the uncertainty each year for all the individual working life, assuming that the graduate income grows following a geometric Brownian motion. In general, we find that an income contingent loan is preferred for low level of the starting wage and high uncertainty.
    Keywords: Choice ; Risk Aversion ; Uncertainty
    JEL: D81 H20
    Date: 2006
  12. By: Phillip H. Phan (Lally School of Management & Technology, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA); Donald S. Siegel (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA)
    Abstract: In recent years, there have been numerous studies of the effectiveness of university technology transfer. Such technology transfer mechanisms include licensing agreements between the university and private firms, science parks, incubators, and university-based startups. We review and synthesize these papers and present some pointed recommendations on how to enhance effectiveness. Implementation of these recommendations will depend on the mechanisms that universities choose to stress, based on their technology transfer "strategy." For example, institutions that emphasize the entrepreneurial dimension of technology transfer must address skill deficiencies in technology transfer offices, reward systems that are inconsistent with enhanced entrepreneurial activity and the lack of training for faculty members, post-docs, and graduate students in starting new ventures or interacting with entrepreneurs. We conjecture that business schools are best positioned to address these skill and educational deficiencies through the delivery of targeted programs to technology licensing officers and members of the campus community wishing to launch startup firms.
    JEL: M13 D24 L31 O31 O32
    Date: 2006–04
  13. By: V. Joseph Hotz; Mo Xiao
    Abstract: We examine the impact of minimum quality standards on the supply side of the child care market, using a unique panel data set merged from the Census of Services Industries, state regulation data, and administrative accreditation records from the National Association of Education for Young Children. We control for state-specific and time-specific fixed effects in order to mitigate the biases associated with policy endogeneity. We find that the effects of quality standards specifying the labor intensiveness of child care services are strikingly different from those specifying staff qualifications. Higher staff-child ratio requirements deter entry and reduce the number of operating child care establishments. This entry barrier appears to select establishments with better quality into the market and alleviates competition among existing establishments: existing establishments are more likely to receive accreditation and higher profits, and are less likely to exit. By contrast, higher staff-education requirements do not have entry-deterrence effects. They do have the unintended effects of discouraging accreditation, reducing owners’ profits, and driving firms out of businesses.
    JEL: L5 L8
    Date: 2005–12
  14. By: E. Han Kim; Adair Morse; Luigi Zingales
    Abstract: We study the location-specific component in research productivity of economics and finance faculty who have ever been affiliated with the top 25 universities in the last three decades. We find that there was a positive effect of being affiliated with an elite university in the 1970s; this effect weakened in the 1980s and disappeared in the 1990s. We decompose this university fixed effect and find that its decline is due to the reduced importance of physical access to productive research colleagues. We also find that salaries increased the most where the estimated externality dropped the most, consistent with the hypothesis that the de-localization of this externality makes it more difficult for universities to appropriate any rent. Our results shed some light on the potential effects of the internet revolution on knowledge-based industries.
    JEL: D85 I23 J24 J31 J62 L23 L31 O33
    Date: 2006–05
  15. By: Tony Flegg (School of Economics, University of the West of England); David O. Allen (School of Economics, University of the West of England)
    Abstract: This paper examines whether the rapid growth in the number of students in British universities in recent years has led to congestion, in the sense that certain universities’ output could have been higher if this expansion had been less rapid. The focus of the paper is on 45 older universities that were in existence prior to 1992. The analysis covers the period 1994/5 to 2003/4. Several alternative methods of measuring congestion are examined and, to check the sensitivity of the results to different specifications, three alternative DEA models are formulated. The results indicate that congestion was present throughout the decade under review, and in a wide range of universities, but whether it rose or fell is uncertain, as this depends on which congestion model is used. A crucial point here is whether one assumes constant or variable returns to scale. Nonetheless, all models point to a rise in congestion between 2001/2 and 2003/4, and this may well be a result of the rapid growth that occurred in this period. All models also record a sharp drop in mean technical efficiency in 2003/4. A possible explanation of the absence of a clear-cut trend in congestion is that the student : staff ratio in these universities was relatively stable in the decade under review, rising only gently from 2000/1 onwards.
    Keywords: British universities; congestion; DEA
    Date: 2006–05
  16. By: Keith Smith (The STEP Group, Studies in technology, innovation and economic policy); Thor Egil Braadland; Finn Ørstavik; Heidi Wiig Aslesen
    Abstract: This report is an overview of existing information on the Oslo region, drawn up as part of the Oslo region RITTS project. The objective of this part of the project is to collect, summarise and interpret existing information relevant to production, innovation and technology transfer in the Oslo region. The material covered is of three kinds: Firstly, the project overviews and discusses existing literature in the form of reports, articles, and books which cover aspects of regional innovation, regional industrial policy and industry performance in the Oslo region. Secondly, the project collects and summarises relevant industrial statistics on output, employment and industrial structure for the region. Thirdly, the project describes the basic elements of the supply infrastructure in the areas of technology creation and transfer in the Oslo region. In addition, the report does two other things: It provides an overview of relevant data sources and databases for empirical information on the Oslo region It incorporates an annotated bibliography in Norwegian and English on Oslo regionIn terms of studies of the Oslo region, the literature is large. There are a significant number of studies of important industrial clusters, mainly written within the framework pioneered by Michael Porter. These include studies of the food industry, health-related (pharmaceutical and medical equipment) industry, the printing and other media-related industry, energy-related technological industry, shipping and maritime industry, the IT-industry and retailing. For all these sectors, performance conditions were evaluated, and concrete proposals were made for policy action which could improve the prospects of growth and competitiveness in the industries. An important argument emerging from these studies is that Oslo is the most important Norwegian region in terms of the creation of new companies in new sectors. Oslo and Akershus have the highest shares of employment of IT-qualified staff among the regions of Norway.The second part of the report deals with economic activity in the Oslo region. A first important trend is a long term shift in industrial structure, with sustained growth in service sector activities; these now make up more than 80% of economic activity in the region. The most important service activities are retail trade, transport, and the residual category 'other services' . In manufacturing, there are two main clusters of activity, in the food sector and in printing and publishing. There are smaller but significant activities in chemicals and in electrical and optical engineering. However the main growth sector, in terms of share of output, is printing and publishing, which now has over 40% of all industrial employment.Oslo support a major 'knowledge infrastructure' in the form of research institutes, universities, science parks and consulting firms. We estimate approximately 75 non-university research institutes in all fields, 3 science parks, and 20 higher education institutions with approximately 60,000 students. The technological and R&D capabilities of the research institute sector cover the whole range of relevant technologies for the region's production structure. Oslo Research Park currently has 49 firms, of which 60% are in the fields of IT and media, with the remainder spread between biotechnology, materials, pharmaceuticals and consultancy. The science park at Kjeller has major capabilities in energy and environmental technologies, aerospace, telecommunications and IT (especially satellite communications) and industrial mathematics applications. The science park at Ås has specialisation in agriculture, aquaculture, environmental sciences, forestry and food sciences. Finally the region has a wide range of venture capital institutions, consultancies and technology transfer institutions.Keywords: Akershus, clusters, industry, industrial structure, innovation, innovation system, knowledge infrastructure, Oslo, Oslo-region, R&D, regional development, regional policy.
  17. By: Charlie Karlsson; Martin Andersson
    Abstract: At the same time as we can observe strong tendencies of a globalisation of R&D, we also can observe a strong spatial clustering of R&D and related innovative activities. The standard explanation in the literature of the clustering of innovative activities is that such clusters offer external knowledge economies to innovative companies, since they are dependent upon knowledge flows and that knowledge flows are spatially bounded. Obviously, location is crucial in understanding knowledge flows and knowledge production, since knowledge sources have been found to be geographically concentrated. There are two major performers of R&D: industry and universities. It seems rather straight-forward to assume that industrial R&D might be attracted to locate near research universities doing R&D in fields relevant to industry. Already as far back as in the 1960s a number of case studies confirmed the important roles played by Stanford University and MIT for commercial innovation and entrepreneurship. During the years a large number of formal studies have presented evidences of a positive impact of university R&D on firm performance. The question is, does it also work the other way around? Does industrial R&D function as an attractor for university R&D? We may actually think of several reasons why university R&D may grow close to industry R&D. First of all political decision-makers may decide to start or expand university R&D at locations where industry already is doing R&D. Secondly, we can imagine that industry doing R&D in a region might use part of their R&D funds to finance university R&D. Thirdly, universities in regions with industrial R&D might find it easier to attract R&D funds from national and international sources due to co-operation with industry. Obviously, not all types of university R&D attract industrial R&D. There are reasons to believe that, in particular, university R&D in natural, technical and medical sciences attracts industrial R&D but that there are also strong reasons to believe that there are variations between different sectors of industry regarding how dependent their R&D is to be located close to university R&D. The above implies that there are behavioural relationships between industrial R&D and university R&D and vice versa. However, the litrature contains few studies dealing with this problem. Most studies have concentrated on the one-directional effect from university R&D to industrial R&D and the outputs of industrial R&D in most cases measured in terms of the number of patents and neglected the possible mutual interaction. However, if there is a mutual interaction between university and industry R&D, and if there are knowledge externalities involved, then we can develop a dynamic explanation to the clustering of innovative activities based on positive feedback loops. This would imply strong tendencies to path dependency and that policy initiatives to transfer non-innovative regions to innovative regions would have small chances to succeed. The fact that knowledge flows seem to be spatially bounded implies that proximity matters. Most contributions analysing spatial knowledge flows have used very crude measures of proximity. However, there are some authors that have argued that proximity could be measured using accessibility measures. Accessibility measures can be used to model interaction opportunities at different spatial scales: local, intra-regional and inter-regional. The purpose of this paper is to analyse the locational relationship between industry R&D and university R&D in Sweden using a simultaneous equation approach and to analyse existing differences between different science areas and different industry sectors.
    Date: 2005–08

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