Focus: The country's future success depends on continued investment in its already excellent higher education sector

Published on Thursday 9 April 2009 20:27

INVESTMENT of £1.14 billion from the Scottish Funding Council in universities, announced last week, ensures our continued contribution to society and the economy.

It could be said that this is a time when the strength of the knowledge economy offers a way out of recession, and well-funded universities have a pivotal role to play in this.

Scottish universities are one of the few areas where Scotland can truly say it is internationally excellent. The sector has an annual income of more than 2.1 billion and employs nearly 35,000 people.

Only 51 per cent of this money actually comes from core public funding, and the rest has to be competitively won. The balance of public and private funding has changed significantly over the past 20 years as institutions have been successful in diversifying their income base, and this is set to continue. Today, institutions raise almost half of their income themselves on the basis of their reputation, nationally and internationally.

As an example, Heriot-Watt's income from government represents only around 30 per cent of its total. About a third of our on-campus students come from overseas and of our nearly 20,000 registered students, 11,800 are studying for our Scottish degrees abroad through partnerships in around 150 countries.

This shows that higher education is one of Scotland's key export sectors: our universities earn 400 million for Scotland. In addition, we win more than our population share of UK and international research funding. This is money that flows to Scotland and helps create and maintain jobs. Our challenge is to continue to grow our reputation and our income to supplement our funding.

The impact and influence of universities are far-reaching in terms of efficiency and productivity. A report from Universities Scotland shows that Scotland has one of the most productive higher education sectors in the world, and is improving its productivity faster than any other public service in Scotland in recent years.

The sector punches well above its weight in academic debate, producing more academic papers and citations per 10,000 of the population than any other country in the world. And in transferring this knowledge to industry, Scotland's universities are judged more efficient than some of the top institutions in the United States.

A nation's competitive advantage is never in a particular sector, but for an advanced country it can generally be in knowledge-based industry and services. That requires creation of the right conditions for innovation to thrive and new industries and services to emerge. This requires a combination of investment in domestically generated skills and knowledge and the ability to translate knowledge generated outside Scotland into innovation. With the appropriate infrastructure and supporting services we can attract new knowledge-intensive sectors into Scotland and create industrial and organisational structures that generate demand for knowledge within Scotland.

Because of universities, Scotland can have a thriving biotech sector, renewable energy technology, advanced manufacturing, nanotechnology or data storing and processing, or a whole host of other high-tech sectors. It could have a resurgent financial and tradable services sector which develops innovative processes and products.

The key to developing a base for more rapid growth through new products and services lies in exploiting the one area where Scotland already has a global competitive advantage: Scotland needs the translation into innovation of our major existing strengths in university research, particularly in science and technology, but also more generally in areas such as social sciences. Without internationally competitive universities, Scotland's economy cannot match the growth rates of other countries.

We can do this because we already have some of the world's leading minds in these areas. The key will be in having the courage to continue to invest in our science base, as well as increasing investment in knowledge exchange, even during a recession.

Other OECD countries are already seizing this opportunity by investing counter-cyclically in science, technology and innovation. The next two to three years will see whether Scotland has the vision and drive to follow this, the right route out of recession.

It is clear that Scotland needs more graduates to compete internationally with knowledge-based economies that are investing in high-level skills. We need more graduates and we need to get better at using graduate skills in business and industry.

To achieve this, universities have to be flexible about how people can study, whether part-time or through distance learning. And as the population ages, we must be more flexible in the ways we encourage people into education and increase the numbers from groups that don't usually go to university. In the current economic climate we must also be aware of the financial pressures on students and help through hardship funding where possible.

Higher participation levels are also the key to widening access. Other countries have increased opportunities and social mobility by increasing the percentage of school-leavers going to university. Scotland should do the same.

&#149 Professor Anton Muscatelli is principal of Heriot-Watt University.