‘Policy Scepticism’ and the Impact of Scottish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints under Devolution

A ‘policy scepticism’ has emerged that challenges the results of conventional regional higher education institution (HEI) impact analyses. This paper provides a systematic critique of such scepticism. While rejecting its extreme form, the limiting effect of the binding public-sector expenditure constraints under devolution is noted and it is shown how conventional impact analyses can be augmented to accommodate these constraints. While the results suggest that conventional impact studies overestimate the expenditure impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity.