Universities and other higher education institutions can play a key role in human capital development and innovation systems in their cities and regions. Reviews of Higher Education in Regional and City Development are the OECD’s vehicle to mobilise higher education for economic, social and cultural development of cities and regions. The reviews analyse how the higher education system impacts local and regional development and help how this impact can be improved. In addition to human capital and skills development, technology transfer and business innovation, the reviews also considers higher education’s contribution to social, cultural and environmental development and regional capacity building. The review process facilitates partnership building in regions by drawing together higher education institutions and public and private agencies to identify strategic goals and work together towards them.

Numerous national and regional stakeholders and representatives of higher education institutions provided valuable insights during the review visit and in the form of comments. This OECD report is based on data published up to and including 2009. The OECD and the World Bank would like to thank in particular the lead coordinators and other active local counterparts for this review: Martin Zilic, Andrés Viveros, Sergio Lavanchy, Héctor Gaete, Juan Cancino, Javier Vera, Aldo Ballerini, Claudio Lapostol, Marcos Delucchi, Felix Alderstein, Daniela Moraga, Pelayo Covarrubias and the rest of the regional steering committee (see Annex 2). Additional thanks goes to Eliana Chamizo, Ricardo Reich, Mónica Poblete and Juan Sandoval.

Chile is Latin America’s most successful economy and enjoys great natural wealth. Over recent years the country has made progress not only in economic development, but also in educational reforms. Despite this progress, higher education attainment rates and the R&D intensity remain low. The current OECD/World Bank Review of Higher Education in Regional and City Development in the Bío Bío Region confirms that Chile is ready for the second generation of higher education reforms to improve quality of education, to address challenges in equity and to improve employability outcomes and knowledge transfer. For reasons of both equity and competitiveness, education and the improvement of human capital should continue to be a priority for the Chilean government also in the coming years.

Over recent years Chile has enjoyed economic growth and institutional stability and reform. This chapter presents the profile of the Bío Bío Region with its main economic activities and its socio-economic characteristics as compared to other Chilean regions. It examines the expansion of higher education institutions in the region and their role in regional development. It identifies the main strengths and weaknesses of the region and analyses the major challenges in the context of the increasing participation of higher education institutions in the definition and implementation of regional development strategies.

This chapter examines how effectively higher education institutions in the Bío Bío Region contribute to meeting the social and economic needs of the population in terms of opportunities to study and the relevance of qualifications offered. It highlights the linkages between the regional economy and higher education, as well as recent trends in demography and human capital development. It sheds light on the positive outcomes of increasing participation rates and widening access to higher education. Finally, it identifies major challenges facing the regional higher education system including high dropout rates, limited alignment of higher education to the regional labour market and the absence of region-wide governance structures and mechanisms to articulate a long term vision of human capital development in the region. The chapter closes with a series of recommendations on how to improve human capital development in the region.

Innovation and the commercialisation of research are considered increasingly important drivers of long-term economic growth. As such they receive considerable policy attention. This chapter will examine the effectiveness of innovation policy in the Bío Bío Region and role of research conducted by the region’s higher education institutions. The chapter will first consider the strengths of Bío Bío innovation policy and efforts made by the regional government, regional development agencies and higher education institutions. It will then examine where the policies and practices can be improved identifying four key issues: i) review of the public sector role in innovation; ii) continuous improvement of empirical inputs into policy; iii) building of the central focus for regional innovation; and iv) alignment of incentives in the higher education institutions. The chapter concludes with specific recommendations to improve the regional innovation.

Social, cultural and environmental development underpins and stabilises economic growth and improve community health and welfare, social cohesion as well as clean, healthy and sustainable environment. This chapter will review the contribution of the higher education institutions of the Bío Bío Region to its social, cultural, and environmental development. Due to the fact that the region has the highest percentage of a rural population in Chile, the chapter will have a special focus on rural development, where social innovation aiming to foster local initiative is one of the features of sustainable rural economies. The chapter concludes with recommendations.

Interactions between higher education institutions and the region in which they are located are beneficial to both parties. For this interaction to take place capacity – skills and resources – needs to be built in regional agencies as well as higher education institutions. This chapter will examine the capacity and capacity building in the regional agencies of the Bío Bío Region and its higher education institutions. This chapter will highlight the capacity in the institutions and processes in light of the decentralisation process and the efforts made by the regional government, regional development agencies and higher education institutions. It will examine where policies and practices can be improved. This chapter concludes with recommendations on how to improve regional co-operation.