Colleges Fuel Economic Growth

The research and initiative generated by American universities can help stimulate local economies, probably. The Nelson A. Rockefeller Institute of Government at SUNY Albany recently released a study, “A New Paradigm for Economic Development,” indicating that:

Universities play a key role in the new economy. Universities across the country are taking leading roles in their states’ economic development efforts. The trend seems likely to strengthen as the nation moves into the era of an “innovation economy.”

This apparently happens because American universities do research that keeps America innovative. Universities also use their expertise to help local businesses. Universities educate people for the “information age.” Higher education institutions also “embrace a role in the cultural, social, and educational revitalization of their home communities.”

Oddly, the Rockefeller Institute report didn’t indicate that all of this helping and assisting and embracing actually works. The study did not attempt to discern the actual economic role of colleges and universities in local communities and seemed mostly to rely on the theories proposed, though not proven, in other studies:

[A 1999 study by the Milken Institute] said that the key to fostering high-tech industry, in turn, was fostering robust research universities and institutions— “undisputedly the most important factor in incubating high-tech industries.”

In a 2008 study for the Brookings Institution, Timothy J. Bartik and George Erickcek found that in addition to direct technology transfer, local businesses also benefit from “a wide variety of formal and informal interactions in which professors, researchers and students at the university interact with nearby businesses.

The most important measure of American universities’ role in stimulating the economy appears to have something to do with patent creation. Colleges and universities in the U.S. issued some 2,821 patents in 2008. Interestingly the report also suggests universities are actually generating less research (publishing fewer papers) since the 1990s, a factor that may be explained by the decline in state funding for public universities.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer