A distance learning university and its economic impact in a country’s peripheries: the case of Hellenic Open University

Higher education institutions can contribute into regional growth via the services of teaching they provide, the research activity they develop and the administration spillover effects on the local markets they operate. This paper attempts to quantify the impact of university expenditures on the regionally produced product (GDP). More specifically, we focus on the expenditure effects of the Hellenic Open University on the GDP of the 13 Greek regions. In our analysis we distinguish between direct and indirect effects by identifying as direct effects all initial expenditures incurred by the HOU while we identify and subsequently calculate as indirect effects the increases in local output caused by the interactions of different sectors of the regional economy. For the calculation of indirect effects we use the input–output methodology. An input–output system shows the intermediate transactions between sectors and the primary inputs, as well as, the final demand of each sector. This is a general equilibrium system that records all the inter‐sector transactions presenting a complete picture of the economy under examination and being the appropriate system to be used for calculating the total effect of university expenditure on regional GDP. Our results suggest that the economic impact of HOU is (a) significant to the Greek peripheries and its size varies across regions; (b) indirect regional effects boost the direct regional effects by 60 % creating an overall size of the HOU expenses GDP multiplier by 1.6 on average. Moreover, our findings may have two straightforward policy implications that could be useful to those exercising policy making: first, the quantification of HOU economic impact on all Greek peripheries is not only useful for assessing the economic role of HOU at regional level but it could also been seen as a benchmark in assessing the impact of other similar regional educational activities. Secondly, the economic impact of HOU in each periphery can be a useful tool in assessing alternative non‐educational, regional projects, aiming to fight the high unemployment arisen due to economic crisis that bedevils Greece and its peripheries in the last 5 years.