Ecomonic impact of institution on provincial economy pegged at $12.3B

EDMONTON - A report by two professors from the Alberta School of Business claims the University of Alberta has an annual economic impact of about $12.3 billion on the provincial economy, an amount they say is 135 times higher than that of the Edmonton Oilers.

“We essentially took the economic impact of the university divided by the revenue of the Oilers in 2009. And so it’s basically that,” said Dr. Anthony Briggs, who co-authored the report with Dr. Jennifer Jennings. “The Oilers’ number is more the fuzzy one because the region doesn’t necessarily see all that revenue, so it’s sort of an ambitious number for the Oilers.”

The study replicates the methods of other Canadian regional impact studies, beginning with the University of British Columbia economic impact study in 2009 and later adopted by Simon Fraser University in 2011 and the University of Ottawa in 2012.

The report is part of a larger research project conducted by Briggs and Jennings in the Department of Strategic Management and Organization at the School of Business. It is the first in a series of studies that aim to better understand the university’s impact on the broader society. This component of the study is designed specifically to estimate the direct and induced economic impact of the university in the province.

The eight-month study found the university is one of the largest drivers of the provincial economy; that it induces a much higher level of regional economic activity than other studied peer institutions, both proportionally and as a total measure; and at the individual level, the high education premiums that accrue to alumni suggest that university education means more in Alberta than in other provinces.

It found a direct and induced impact of $2 billion in institutional spending, which includes employment and services rendered; $212.5 million in direct and induced visitor spending, based on an average three-day stay and $315 spent per visitor per day; $293 million in direct and induced student spending, based on the university’s monthly cost-of-living estimate of $1,255 and incorporating only full-time students; a direct and induced educational impact of $4.13 billion and a research impact of $5.65 billion, determined as an attributed portion of the province’s GDP growth.

“The university employs people and delivers service. It is a major economic player, right. That’s a simple number. That’s around a billion,” said Briggs, who broke down the other categories.

“Most of the alumni at the University of Alberta stay within the region and these alumni on average engage in much higher value economic activities than people without a university education. Essentially, they have higher salaries. We take that large number of alumni and their increase in salaries and this creates the education premium. That’s a very solid number.”

Briggs said the figure of $4.13 billion is actually conservative because it does not include the taxes paid by alumni members. All in, he said the education impact is actually closer to $7 billion.

“The second type of induced impact is research impact. This is very, very difficult to estimate so we estimated it the same way (other schools) did,” he said. “The idea here being that the university is the largest source of research in Alberta, or one of the largest sources. So as an organization we do a lot. It’s known that research has a significant long-term benefit to economic growth and economic growth is kind of where everyone wins — you get better salaries, better products and services, increased revenue, those sorts of things.

“And so that’s estimated based on a proportion of GDP growth that is generally attributed to R and D. So all sorts of organizations do R and D, but the University of Alberta does a lot more of a share than some of those other universities.”