More Business Schools, more growth, more everything...?

The positive impact of higher education on a country's economy is beyond all question: there are many studies and surveys that show that investing in higher education and economic development correlate.

(You may read Larry Gigerich's and Elisa Stephen's articles if you want more information).

But is this also true for business schools? Given that many MBA programs are really, really expensive and elitist, one would expect that the most developped and fastest growing countries also have the most business schools. Some people don't think so, like Thomas Sattelberger (T-System's former CEO) who said that MBA graduates behave like John Wayne when they become managers in a company.

I decided to analyze the data that is availabe on business schools and their impact on economic growth. It's really easy to find out the number of business schools per country: you just have to go to wikipedia and you'll find a detailed list of these instituions per country. In order to keep things simple I focused my analysis on European countries. 

It's pretty obvious that big countries like Germany, France or Italy have more business schools than Luxembourg or Cyprus. Therefore I divided the populationof each country by the number of business schools. 

On Eurostat's website I found the real GDPgrowth rate of each European country. Then I related the number of business schools per contry to their respective real GDP growth rates by fitting a linear regression model. In the below figure you'll see the regression line (in red), the different data points, the number of business schools per country (scaled) on the X-axis and the GDP growth rates (scaled) on the Y-axis.

 

The slope of the regression line is slightly negative (-6.775e-05), which would mean the less business schools a country has the lower its GDP growth rates will be. Nevertheless the analys also yields a P-Value of 0.46 for the slope – which means that it is statistaclly not significant.

So what does this mean? Well, nobody can say that business schools have any impact on economic growth. In any case it's marginal and less important than the impact of other higher education institutions (like real universities).

Last but not least: Spain, Portugal and Cyprus are among the countries with the highest business schools per inhabitants ratio, whereas Germany and Luxembourg have really low ratios. This is why Spain, Portugal and Cyprus will have to finance Germany's bail-out.... oh, wait...