Regional impact analyses and the appropriate treatment of regional budget constraints under devolution: an application to the impact of Scottish HEIs

“Policy scepticism” has developed about regional impact studies of HEIs, based on notions of either resource- or budget constraints. This paper provides a systematic critique of this policy scepticism. While the extreme form is rejected the importance of a binding public-sector budget constraints under devolution is recognised. The HEIs sector’s impact is estimated net of public funding by breaking impacts down by funding source. Results suggest that conventional impact studies overestimate the expenditure impacts, but they also demonstrate that the policy scepticism that treats these as irrelevant neglects some important aspects of HEIs, in particular their export intensity.