The Impacts of Basic Local Governments’ Funding for Higher Education on Community Economic Development

This study aims to examine the impact of higher education financial support from basic local governments on the economic development of university locations. A balanced panel dataset was constructed using information from University Information Disclosure, University Finance Disclosure, KOSIS, and Urban Statistics for the years 2016-2020. The study employed Generalized Least Squares (GLS) to analyze the effect of higher education financial support from basic local governments on economic development, while controlling for regional characteristics, university characteristics, higher education financial support from central and provincial governments, and financial support from other basic local governments. The results showed that the total amount of higher education financial support from basic local governments had a positive effect on increasing GRDP per capita, raising employment rates, and reducing unemployment rates. Higher education financial support from basic local governments where universities are located also contributed to increasing employment rates and decreasing unemployment rates. However, contrasting results were observed in the impact on unemployment rates between four-year universities and colleges. Based on these findings, the following policy implications were derived. First, Legal and institutional improvements are required to enable basic local governments to actively provide financial support to universities. Second, It is necessary to establish a sustainable financial support system that can respond to the needs of local communities. Lastly, Efforts are needed to strengthen the link between higher education and employment.