<p>This study explores the critical role of higher education institutions (HEIs) in fostering regional intellectual capital and examines how student dropout undermines this process. Intellectual capital,&#xa0;comprising human, structural, and relational dimensions,&#xa0;is a key driver of regional development and economic resilience. Through education, research, and community engagement, HEIs are key contributors to this ecosystem. However, high dropout rates disrupt these contributions, resulting in the loss of qualified talent, underutilised institutional resources, and weakened ties with regional stakeholders. To illustrate these dynamics, the study presents the case of the Polytechnic Institute of Bragança (IPB), located in a structurally disadvantaged region of Portugal. Despite contextual challenges, IPB has implemented diverse initiatives, including industry partnerships, community-based projects, and pedagogical innovations, demonstrating its ability to enhance regional intellectual capital. By integrating recent literature and institutional data, this research adopts a qualitative case study approach to provide an evidence-based analysis of the relationship between HEIs, student attrition, and regional development. The findings emphasise the need for targeted strategies to reduce dropout rates and reinforce the positive impact of HEIs in less-developed regions.</p>