However, not all observers agree that higher education and economic growth are obvious
or necessary bedfellows. Prominent studies have reported that the direct and indirect
economic impacts of universities on their local communities and regions have often been
overestimated (see studies cited below). Moreover, work by Vedder (2004) has questioned
whether spending more on higher education necessarily provides larger returns for the
local economy. Vedder’s work in the USA has found that states with higher spending on
colleges and universities often fail to have faster economic growth than states with lower
spending, even after controlling for differences in other key variables. While Vedder does
not question whether higher education is an important ingredient in promoting economic
growth, he does suggest that the returns to public investment in higher education may be
limited.