Why Great Unis Matter

It occurs to me I haven't explained why it's important to have more very good universities. The answer lies in one of the consequences of very large numbers. Michael Kremer of Harvard University has shown that the rate of technological progress is proportional to population. Essentially, the more people you have, the more brilliant ideas they come up with. Not only that, but those brilliant ideas move through those populations remarkably quickly.

Australia has a small population. Fundamentally, and even in the most extreme scenarios, that is not going to change in the next 40 years or so. UN population projections show that even if we had, say 36 million people, by 2050 we will still be dwarfed - and not only by India (1.458 billion) and China (1.181 billion). The US will have 437 million, Nigeria: 302 million, Uganda: 167 million and Yemen: 144 million.

In our region, in addition to the megagiants, we'll be dealing with Pakistan (409 million), Indonesia (273 million), Bangladesh (260 million), the Philippines (129 million), Vietnam (110 million) and Thailand (70 million). Earlier I said, even if we had 36 million we'd be dwarfed. But the overwhelming likelihood is that we'll have 10 million fewer - 26 million people. Population-wise, we're heading for the same level of relevance as New Zealand (4 million), and as Coral Bell has pointed out, this is going to present a rather testing set of challenges for us.

It would help our rather small country if it is also an extremely clever one. We can't rely on sheer brute numbers to generate brilliant ideas, so we need to have more brilliant people - more proportionally than all the others I've mentioned (except New Zealand) - if we are to compete and prosper.

Extremely good universities are key to getting them. They attract very bright people from overseas to study and work here. They train the very bright people we've grown ourselves. The best universities also generate valuable intellectual property, which can be commercialised by entrepreneurs, as well as 'pure' knowledge that tells us more about our world and ourselves. This generates a virtuous circle - the innovation and the ideas attract the people, and the people contribute more innovation and ideas.

But I think, in a way, the IP is the less important, it's the people that really matter. McKinseys was right - there really is a War for Talent. But it's not just happening at the level of the corporation, countries are in it too. As a small country, we need to be a winner and our universities will be vital in making us one.