Universities and Hospitals as Anchor Institutions

How large, rooted institutions like universities and hospitals support local economies, attract talent and can help regions grow.

Anchor institutions are large organisations, such as universities, hospitals and major public bodies, that are rooted in a place and unlikely to move. They can play a major role in regional economies.

How they support local economies

Employment: universities and hospitals are often among the largest employers in their cities.
Spending: they buy goods and services from local businesses.
Talent: universities train skilled graduates, some of whom stay locally.
Research and innovation: universities create knowledge that can lead to new businesses, patents and industries.
Attracting firms: companies locate near universities to access research and graduates.

Evidence

Research has found that universities can raise local economic activity. A study by Anna Valero and John Van Reenen of university expansion across many countries found that increases in the number of universities in a region were associated with higher future GDP per person in that region.

Famous examples

Stanford University helped create Silicon Valley.
Research Triangle Park in North Carolina grew around three universities.
Pittsburgh, once a steel city, reinvented itself around universities and hospitals, such as Carnegie Mellon University and the University of Pittsburgh Medical Center.
In India, cities like Bengaluru and Pune benefited from clusters of engineering colleges and research institutions. The Indian Institutes of Technology, founded from 1951 onward, trained generations of engineers who helped build India’s technology industry.

Limits

Anchor institutions alone may not transform a region. Their graduates may leave for bigger cities, and their benefits may be concentrated among highly skilled residents. Deliberate efforts to link them with local businesses, schools and communities can widen their impact.

The steel city reinvents itself

When Pittsburgh's steel industry collapsed in the 1980s, the city lost many jobs. Over the following decades, its universities and hospitals grew, attracting research funding and technology companies, including work on robotics and self-driving cars. Health care and education became the region's largest employers. Anchor institutions helped the city find a new economic base.

Thinking universities only benefit students

Universities also create jobs, spend locally, generate research and attract firms, shaping the economy of their whole region.

Key takeaways

Anchor institutions like universities and hospitals are rooted in their places.
They provide jobs, local spending, talent and research.
Research links university expansion to higher regional GDP per person.
Pittsburgh and Silicon Valley show how anchors can reshape regions.