First-class universities, economic development, and the middle-income trap

Abstract

First-class universities play an extremely important role in cultivating high-quality talents and technological innovation, serving as a significant indicator of a country's level of higher education development, developmental strength, and potential. However, there is little literature studying the long-term impact of first-class universities on a country's economic development. To better understand this long-term influence, our study examines the effect of first-class universities on per capita income based on cross-national samples, particularly their role in overcoming the “middle-income trap,” and analyzes whether general higher education can bring about equivalent effects. The main research conclusions are: First, both general higher education and first-class universities can significantly improve a country's per capita income, but compared to general higher education, first-class universities have greater marginal effects on national per capita income, and can more effectively enhance domestic average income levels and promote sustainable economic growth over time; Second, first-class universities have the greatest marginal effect on improving per capita income in middle-income countries, and compared to general higher education, first-class universities play a larger role in helping developing countries break through the “middle-income trap”; Third, both general higher education and first-class universities positively affect innovative activities, but first-class universities play a more significant role in promoting technological innovation, which can better facilitate high-quality economic development. Our study not only enhances the understanding of the effects and differences between general higher education and first-class universities on long-term economic development, but also contributes to the understanding of the economic miracle that China has created since its reform and opening up. It also provides clear policy implications.