ABSTRACT
Many public policies are based on the popular assumption that investment in university research and infrastructure benefits regional economies. This chapter examines the relations between higher education, industry and economic development. It provides a review of the literature with emphasis on how universities impact economic development and technological change with specific emphasis on the places where they are located. The chapter explains the student of higher education to the theoretical background of university-based growth, including major concepts of increasing returns to scale and institutional economies. It focuses on the ways the universities affect regional economies and addresses the literature that presents the concepts of tacit and codified knowledge and agglomeration economies to explain the mechanisms of knowledge spillovers from universities to companies and industries. The new growth theory and the concepts of increasing returns to scale, knowledge spillovers and knowledge externalities form a basis for creating a framework for technology-based regional economic development.
