Each franc invested in the ETH Domain generates more than five times its value in Switzerland, and each job creates another five jobs. This is the result of a study that has just been published. This demonstrates that the ETH Domain is an important actor in the Swiss national economy. With the education of specialists, its top-level research and close cooperation with business and the authorities, it makes a vital contribution towards Switzerland’s competitiveness and the quality of life in this country.

In spring of 2017, BiGGAR Economics, an economic consultancy firm based in Edinburgh, Scotland, was commissioned by the ETH Board to assess the impact of the institutions of the ETH Domain  on the economy of Switzerland and beyond, applying a broadly based and internationally well-established methodology. The present report has four objectives: it should

  • estimate the extent of the economic contribution of the institutions of the ETH Domain;
  • identify the range of impacts;
  • demonstrate the revenue of private and public investment;
  • show government and authorities the benefits and positive impacts that the institutions of the ETH Domain provide.

The institutions of the ETH Domain make a decisive contribution to the competitiveness and value added of the economy and to the quality of life in Switzerland. In education, research and innovation in Switzerland they play with CHF 3.6 billion (2016) from all their sources of funding, a workforce of 21,000 employees (around 18,000 full time equivalents), more than 800 professors and 30,000 students and Doctoral students an absolutely central role. Through teaching they make a significant contribution to the supply of the labor market with highly qualified personnel and management staff. In certain disciplines they even are the only education provider in Switzerland. With research and development, they repeatedly develop completely new scientific insights and achieve technological breakthroughs that lead to completely new and often disruptive technologies, that is technologies which displace existing technologies, existing products or services. The ETH Domain is one of the 20 most important patent applicants from Switzerland. It also licenses numerous inventions. The ETH Domain produces up to 50 spin-off companies a year, which acquire a significant share of venture capital in Switzerland.

The strong partnership of the ETH Domain with industry and the public sector (Confederation, cantons and municipalities) is shown, among other things in around 3,500 on-going collaborations in joint projects. This cooperation is even more intense as the ETH Domain provides small and medium-sized enterprises (SMEs) and industrial laboratories with expensive and resource-intensive research facilities and equipment, and runs pilot and demonstration facilities with them. Institutions of the ETH Domain are involved in various science, technology and innovation parks, offering premises and support for spin-off companies and attracting existing research-intensive companies. This also generates added value and employment.

The ETH Domain provides important support for the public sector in the fulfillment of its tasks with advice, training and joint projects. In doing so, it generates a variety of non-quantifiable, long-term benefits that are of great value to individuals, society, and science as a whole, e.g. prevention of damages caused by natural disasters through observation and prevention. Due to their uniqueness in Switzerland, the services of institutions of the ETH Domain are in certain economic and social partly highly sensitive issues such as radioactive waste or natural hazards absolutely indispensable.

Quantifiable findings

Overview

The report shows that in 2016 the institutions of the ETH Domain generated an estimated CHF 13.3 billion of gross value added (GVA) and employment for 98,700 jobs ("headcount") in Switzerland alone. On a global scale, and thus in total, their contributions amounted to CHF 16.5 billion in GVA and about 123,800 jobs. This implies the following:

  • In 2016, the institutions of the ETH Domain received credits from the Federal Government within the ETH Domain's payment framework of around CHF 2.5 billion. Thus, every franc used for direct business activities of the ETH Domain generated around CHF 5 (5.4) in GVA in Switzerland and a total of around CHF 7 (6.6) on a global scale.
  • In 2016, the ETH Domain had 21,000 employees ("headcount"). Every job that exists in the ETH Domain induces about 5 jobs in Switzerland and 6 jobs altogether.

Sources of quantifiable findings

The economic and quantifiable contributions of the institutions of the ETH Domain can be summarised in two main groups: 1) direct demand and 2) indirect increase of benefits and competitiveness.

Direct demand of the institutions of ETH Domain

The direct demand from all institutions of the ETH Domain and thus their GVA results from the following components:

  • Core contribution: In 2016, from the core contribution of the ETH Domain institutions, consisting of federal financial contribution and investment loan buildings, CHF 2.5 billion, personnel CHF 2.0 billion, suppliers CHF 0.9 billion, construction real estate and research infrastructure CHF 2.745 billion, a GVA was generated of CHF 5.7 billion and 40,500 jobs in Switzerland.
  • Student contribution: In 2016, 23,800 Bachelors and Masters students studied at the two Federal Institutes of Technology. Student loans, student employment (outside the ETH Zurich and EPFL) and student volunteer work generated additional CHF 0.765 billion in GVA and 7,400 jobs in Switzerland through their consumer demand and part-time work.
  • Tourism: Students, friends and family visitors as well as participants in conferences and events of the institutions of the ETH Domain generated an estimated CHF 66 million in GVA and supported almost 700 jobs in Switzerland.

This corresponds to a total of CHF 6.53 million in GVA or 49% of the total contribution of the ETH Domain to GVA generated in Switzerland in 2016.

Indirect increase in performance and competitiveness

The second group of quantifiable contributions includes GVA and jobs resulting from services provided by the ETH Domain, which specifically promote innovation and productivity growth in the economy and public authorities. They represent around CHF 7 billion or 51% of the total contribution to the GVA generated in Switzerland.

Graduate Premium: The contribution of the ETH Domain's training activities differ conceptually from the other contributions covered in this report, as it takes place over a much longer period. The benefits of education for individuals and society have several aspects, some of which can be quantified and many others not, such as studies on health and well-being, social cohesion and spill-over benefits in the workplace have shown. For individual graduates aspects are relevant such as social skills, self-confidence, contentment, health and well-being. Non-quantifiable or difficult to quantify are spill-overs in connection with the transfer of ETH graduates into the economy or public administration, such as the diffusion of the latest knowledge, the introduction and use of personal characteristics such as creativity, initiative and leadership, or the associated manifold informal contacts between their employers and ETH Domain. All of this improves the ability of their employers to absorb and exploit new insights and technologies. The monetarily quantifiable, individual added value for graduates, the "Graduate Premium", covers the additional earnings of the graduates during their working life, which result from their education with a university degree as opposed to a lower level of education. In the present report, the added value of an ETH graduation compared to a degree of a University of Applied Science (UAS) has been taken into account. This contribution was estimated at CHF 1.5 billion for the MBA / MSA of the two Federal Institutes of Technology within Switzerland, and CHF 1.9 billion worldwide. The Graduate Premium for graduates of an ETH in comparison to the upper secondary level is significantly higher and was estimated CHF 2.9 billion in Switzerland and CHF 3.8 billion on a global scale.

Commercialisation: Institutions of the ETH Domain carry out a wide range of commercialisation activities. These include licensing inventions patented by the ETH Domain and supporting the creation of new companies. The royalties from licenses issued by the ETH Domain of around CHF 13 million have been extrapolated according to values based on international experience for GVA and employment. This resulted in a GVA of CHF 161 million in Switzerland, CHF 135 million abroad and thus in a total of CHF 296 million and employment totaling 2,400 jobs. On average, every seventh new and highly innovative company in Switzerland is a spin-off from the ETH Domain and thus creates future potential and jobs. More than half of the venture capital in Switzerland goes to them. For the estimation of GVA of the spin-off companies from the ETH Domain, all previously created and still active in 2016, i.e. 659 spin-offs were considered. Their activities together generated 2016 in Switzerland GVA of an estimated CHF 2.2 billion and 22,900 jobs.

Knowledge transfer: The institutions of the ETH Domain support the transfer of knowledge with companies from the private sector and with public authorities: this includes their services such as consulting, contract research and further education. As part of their studies, 3,000 to 4,000 students complete internships in companies averaging 12 weeks per year. In doing so, both sides benefit from new skills, new knowledge and experience. The ETH Domain provides companies with access to world-class large-scale research facilities, e.g. for measuring times at the Swiss Light Source (SLS). As a supplier, companies benefit from their involvement in the development, construction and maintenance of these research facilities. PSI's Center for Proton Therapy, which deals with the treatment of deep-seated tumors, extends life and enhances the quality of life of its patients. Various science, technology and innovation parks in and around institutions of the ETH Domain attract research-intensive companies, stimulate research collaboration and provide space and contact opportunities for start-up and spin-off companies. E.g. on the grounds of the EPFL Innovation Park around the 150 companies are active. All these activities contribute to the intensification of cooperation between business and academia and to the promotion and dissemination of the application of new technologies. The knowledge transfer of the ETH Domain generates estimated CHF 3 billion in GVA and 27,200 jobs in Switzerland.
The close cooperation of the institutions of the ETH Domain with other academic institutions both within Switzerland and abroad, their active exchange with the public administration and their diverse and intensive cooperation with industry mean that the full value of the knowledge exchange activities exceeds the total of each relationship: There is a network effect. Thus, the actual GVA should be higher than the one quantified above.

Comprehensive, unquantifiable effects

The institutions of the ETH Domain generate comprehensive, unquantifiable added value for the individual, the economy, science and society as a whole, nationally and internationally. It is essential that these services are also taken into account to capture the totality of the effects attributable to the ETH Domain.

The institutions of the ETH Domain make a significant contribution to the attractiveness and international reputation of Switzerland in the fields of education, research and innovation. Investors in research and development from all over the world are looking for the proximity to highly qualified specialists and skills and high performance in research and development. That's why they chose the Swiss location, not least because of the ETH Domain. Prominent recent examples include Google, Disney Research (both in Zurich) and the Nestlé Institute of Health Sciences (in Lausanne), which operate research centers in Switzerland close to or in partnership with institutions in the ETH Domain. Traditionally very close links to the ETH Domain have been maintained by the research laboratories of IBM, ABB, Novartis and Roche,  e.g. the partnership of ETH Zurich and IBM in the joint laboratory for nanotechnology in Ruschlikon / Zurich or strong foreign companies in the Innovation Square EPFL e.g in the IT sector such as Intel, Texas Instruments and Cisco.

In addition, the institutions of the ETH Domain have a long-standing, high-performance network of cooperation, both within the ETH Domain and with other universities, with private business and public administration. This applies not only nationally but also worldwide. For example the Singapore-ETH Centre (SEC) of the ETH Zurich, which launched the Swiss Technology Impact Platform (STIP) to promote business contacts in the Asian region; or the MOOCs Africa program, with which the EFPL specifically supports education and training in African partner countries. All this leads to an intensive and rapid exchange of experiences and new insights through formal and in particular informal channels, an important factor for Switzerland's highly successful innovation system. The high degree of internationality of the institutions among students, staff and professors and the diverse networking with foreign countries not only contributes to good academic contacts, but also to potential business relations, to cultural exchange and to the strengthening of mutual understanding.

Institutions of the ETH Domain make an important contribution to the provision of public goods. Examples of this are contributions to improving the ecological situation: technologies, methods and knowledge for reducing air pollution, improving the quality of water or preventing damage to landscape and nature, generally for sustainable development. Scientific work deals with the quality and safety of the natural environment and its improvement or monitoring of natural hazards such as avalanches and the prevention of natural disasters. In economic terms this can be expressed by avoiding associated potential costs. In the course of these services, institutions of the ETH Domain support and advise public administration and contribute to improving their decisions. All these examples have an important indirect impact, e.g. in favor of quality of life, thus supporting the base for vital sectors for the Swiss economy, e.g. for tourism and agriculture. Due to the international networking of the ETH Domain, other countries also benefit of these services.

The institutions of the ETH Domain enjoy a strong presence in the public and in the media and make a decisive contribution to the positive image of Switzerland as a location for science. They form a strong brand with a positive aura. They evoke associations of high scientific quality, competence, mastery of new technologies, innovations and inventions. They also make a substantial contribution to the interest in and acceptance of new knowledge and groundbreaking technologies in business and society, an effect that particularly supports young people in a future-oriented career choice.

Comparisons

The extent of the economic contribution of the ETH Domain can be put into context with results from similar studies by BiGGAR Economics on the economic contribution of higher education institutions. The leverage effect of employment from one ETH Domain job to four is comparable to the ratio for Finnish Universities and slightly lower than the ratio for the LERU Universities (League of European Research Universities) with an average of 1: 6. The leverage effect of the ETH Domain with GVA 1 CHF: 5 CHF is slightly lower than the quotas for the Finnish Universities with € 1: € 8 and the LERU Universities with € 1: € 7.

It is important to point out that in this case the same is not compared to the same. Several factors are responsible for differences, which in general make the achievements of the ETH Domain seem somewhat smaller: 1) the lower number of graduates of ETH compared to foreign universities and the calculation of their Graduate Premium compared to a degree from a UAS and not from upper secondary level; 2) Teaching and research of many universities includes the field of medicine and has with manifold connections with hospitals; 3) the unique selling points of the ETH Domain, such as large research institutions with costly infrastructure, professional orientation and their special way of connecting with the economy; as well as 4) differences in the definition and collection of individual data.

Conclusions

Switzerland has a high-performing and internationally successful innovation system. In developing and promoting this system, the institutions of the ETH Domain play a central role through their teaching and research, their highly qualified graduates, their diverse cooperation network and the quality and extent of their knowledge transfer activities. They have an influence beyond the teaching and research on the economic and ecological quality in Switzerland, the progress of science and the health and social cohesion of the Swiss population.