News Release - Growing Role for Higher Education in Driving Economic Development

NEWS

For Immediate Release –

March 15, 2010

Media contact: David Shaffer – 518-443-5284 (office) or 518-320-6442 (cell) / shafferd@rockinst.org

New Study Documents Growing Role for Higher Education in Driving Economic Development Efforts in the States

Finds Universities and Higher Ed Systems are Leading Innovation Efforts, Offering Assistance to Businesses and Taking a Role in Community Revitalization

Albany, N.Y. — Universities and higher education systems across the country are taking leading roles in their states’ economic development efforts — and a report released today by the Rockefeller Institute of Government says this trend seems likely to strengthen as the nation moves into the era of an “innovation economy.”

The study found that higher education’s increasingly important role builds on, but goes well beyond, the research strengths of universities — incorporating efforts as wide-ranging as job training, business consulting, housing rehabilitation and even securing seed money for new businesses.

Based at the University at Albany, the Institute is the public policy research arm of the State University of New York (SUNY). Its studies have focused on the development and implementation of policy in multiple states.

The report, A New Paradigm for Economic Development, was researched and written by David Shaffer, a senior fellow at the Institute, and David Wright, the Institute’s director of urban and metropolitan studies. It was conducted at the request of SUNY Chancellor Nancy L. Zimpher, who has made “economic revitalization” a centerpiece of the strategic planning process she is conducting for the 64-campus system.

The Institute’s research found that the importance of innovation in the economy is giving rise to a new model for state economic development programs — one in which the development and distribution of knowledge is at least as important as more traditional incentive programs. The report acknowledges the long record of SUNY campuses in economic development, so it focused on finding additional lessons from other states.

Higher education institutions and systems that are successful in this arena, the report said, appear to rely on a combination of four key factors:

Much of the public discussion of universities’ economic development role has focused on research prowess, the report said. The Institute found, however, that although economic development through innovation starts with research and new knowledge, it is at least as important to also strengthen the ability of enterprises to take advantage of new products, services and processes.

Higher education most commonly assists that “take-up” ability through workforce development, the report said — but many other forms of consultation and business assistance have also emerged around the country.

The researchers assembled key data on higher education and research programs in all 50 states, reviewed the literature in the field of universities’ economic development impact, took a closer look at programs and projects in about a dozen states, and conducted a number of field visits.

Much of what the Institute found flows from some of the oldest traditions in American higher education — going back to the Morrill Act of 1862 that funded land-grant institutions, and the subsequent, widespread adoption of the renowned “Wisconsin Idea” holding that universities have an obligation to engage and serve their states and communities.

The report has background and details on initiatives around the country, including:

“Across the country,” the report says, “there is promising evidence of new investment, new companies, new jobs being created through higher education efforts.”

“Many institutions are going through a learning experience, as they test out what seems to work best,” it says. “The characteristics shared by the most active institutions in the field can be identified now, however. They have the leadership to make economic revitalization a priority, the culture to mesh that objective with their academic mission, the legal flexibility to mix and match assets and brainpower with the private sector, and the resources to make it all work.”

The report noted that legal flexibility was required to enable many of the leading-edge initiatives, which often involve sharing the use of university property with private high-tech firms – notably at North Carolina State and Georgia Tech. “The rules on real estate, purchasing, pre-approvals and the like that are appropriate for, say, a state park can prove a serious encumbrance when applied to a university that is trying to work with business to produce jobs,” the report said.

The kinds of initiatives documented in the report also often require that states consciously allocate some of their economic development spending to growth efforts that are centered on creating and transferring knowledge — as contrasted with more traditional incentive programs.

With respect to finding the resources necessary, news accounts regularly report that universities and university systems are making cutbacks as a result of declining revenues and increasing costs. But the report notes that states continue to spend large sums on economic development programs — and in fact, the kinds of initiatives documented in the report are leading a number of states to consciously allocate some of their economic development spending to growth efforts that are centered on creating and transferring knowledge — as contrasted with more traditional incentive programs.

That approach, the report finds, leads to “a new paradigm for economic development” — “a model in which knowledge is the lead incentive that states offer businesses they want to attract or grow — while it is the other incentives that are the extras.”

“Without doubt, the traditional packaging of infrastructure, utilities, tax breaks and so on is sure to play a continuing role,” the report concludes.

“But how will states know which businesses will prove to be the best long-term bets for those incentive programs? In the economy of the future, the businesses that will have staying power, and growth potential, will be those most dependent on knowledge — on research, new ideas, new technologies, new processes, upgraded skills for their workers.”

For a full copy of the report, visit the Institute's Web page.

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About the Rockefeller Institute of Government

The Nelson A. Rockefeller Institute of Government, at the University at Albany, is the public policy research arm of the State University of New York. The Institute conducts fiscal and programmatic research on American state and local governments. Journalists can find useful information on the Newsroom page of the Web site, www.rockinst.org.

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