New public management and knowledge economy have become watchwords in the governance of higher education. The university’s role has rapidly changed toward regional development. The aim of this article is critically to highlight the basic rationale of this reorganization and to examine what this can mean in a Swedish context. This rationale is described as the system of various forms of collaboration between industry, commerce, the universities and research institutes, and the political system. In Sweden, higher education is assumed to generate economic growth in different regional communities. How successful the university’s contribution can be is, however, an empirical question rather than an ideological one. A paradox lies in this reorganization—the more the university adapts to regional needs, the more difficult it is to generate knowledge in a global context. If the criteria for knowledge is regional development, then the nature of truth is replaced by something completely different.