Economic engine. Powerhouse. Transformative force.
Today, college after college, urban and rural, from the tiniest liberal-arts institution to the sprawling research university, is pitching itself as a driver of economic revitalization, its region’s greatest competitive asset. Universities’ very presence, the rhetoric seems to suggest, can spur a metamorphosis from decaying factory town to 21st-century knowledge hub.
At a time when the dominant narrative casts the value of college in purely personal terms — an advantage that accrues to the individual graduate — the economic-development pitch comes off as refreshingly retrograde, a throwback. It posits the university as a benefit to the broader community, not just the collegegoer. It’s one last go at the public-good case for higher education.
And no wonder. State budgets have been tight. Hollowed out by the downturn, cities hope to harness every last economic asset. The economic-development argument “answers the question,” says Leslie Boney, vice president for international, community, and economic engagement at the University of North Carolina system, “what have you done for me lately?”
Or does it? The vision of universities as a causal force in the economic renaissance of cities and towns is an attractive one, no doubt.
Colleges can unquestionably make their communities more desirable places to live. They bring cultural amenities, they hire people, they buy stuff. But economic transformation, that’s far more difficult.
After all, Buffalo’s not Boston. Akron and Baltimore and all those blighted manufacturing towns still struggle. Despite business incubators and university research parks, no new Silicon Valleys have flowered.
Of the scores of communities in need of economic reincarnation, how many have been born again?
Think about this for a minute: There are more than 3,000 degree-granting four-year colleges in the United States.
While college clusters exist in places like Boston, these institutions are spread throughout the country. Geographic dispersion makes the idea of higher-education-driven economic development appealingly democratic — towns and cities across America should be able to capitalize on local campuses for an economic boost.
In theory.
In hard fact, says D. Bruce Johnstone, a professor emeritus of higher and comparative education at the University at Buffalo, “I don’t think that every large city, or even every city with a top-100 research university, is going to make it big.”
When you ask Mr. Johnstone, a former chancellor of the State University of New York system, and other experts for examples of places where higher education has been an agent for change in the local economy, they tend to point to just a handful, cities like Austin, Pittsburgh, and Portland, Ore. One that is often mentioned is Research Triangle Park, near Raleigh, N.C.
Some 60 years ago, the chancellor of North Carolina State University, along with a small group of business and civic leaders, approached the governor with a plan to transition the state from an economic backwater dependent largely on low-paying agricultural jobs. Their idea was that N.C. State, along with nearby Duke University and the University of North Carolina at Chapel Hill, would take the lead, using their research strengths to attract high-tech, high-wage companies to a joint research park.
The strategy worked. Today, per capita income in the Raleigh-Durham area, once 11 percent below the national average, is nearly 3 percent above it. More than half its businesses are in new-line industries like electronics and engineering. The region is recognized as a center for biomedical research and as one of the country’s most innovative metropolitan areas.
But rather than suggesting a model for others to follow, Research Triangle Park may be the exception that proves the rule. There’s little evidence that big-push policies are broadly successful in harnessing university know-how. Consensus among university, civic, and private-industry partners can be hard to build, and even more difficult to sustain. And to really move the economic needle, such efforts need to be ambitious and bold.
On the contrary, many of the flourishing knowledge-based communities appear to result from happy accidents, more serendipity than intent. There weren’t grand plans to create Silicon Valley or San Diego’s biotech hub or the high-tech corridor near Washington, D.C.
Take software-dominant Seattle. Its turnaround isn’t the result of a considered strategy. Microsoft did not spring from research spun out of the University of Washington. Indeed, the university has arguably become stronger and more competitive as Seattle’s technology sector has grown, not the other way around.
No, Seattle can credit its thriving economy to two homesick twenty-somethings. The Microsoft founders and Seattle natives Bill Gates and Paul Allen just wanted to go back home.
There are a lot of “next” Silicon Valleys. From the Rust Belt to the rural South, everyone, it seems, hopes to replicate the California tech center. When it comes to knowledge-driven economies, Silicon Valley is pretty much the gold standard.
The prevailing story line is that the Valley owes its existence to Stanford University. Add one university, stir. The reality, though, is more complex.
Enrico Moretti, an economics professor at the University of California at Berkeley and the author of The New Geography of Jobs, argues that colleges are an important ingredient in the new economy. But Stanford and other institutions are not, he says, in and of themselves sufficient to guarantee growth.
Yes, Stanford faculty and alumni made vital breakthroughs that helped seed the modern high-tech boom. Even more critical, however, is that Stanford existed as part of a broader ecosystem of innovation. There were government grants for basic research and private venture capitalists willing to take a risk on untested technologies. There were companies like Hewlett-Packard and Fairchild Semiconductor that knew how to take a fresh idea and run with it. And in the 1950s and 1960s, when many universities were looking inward, Stanford’s leaders deliberately built ties with local companies, starting one of the earliest industrial parks that brought students and the faculty in closer contact with engineers and scientists from the private sector.
“It was engagement,” Mr. Moretti says, “that made Stanford successful.”
Indeed, a study from the University of California at Merced found that the spillover effect of university research in the surrounding economy is larger if there are companies nearby that are poised to take advantage of that research activity, for example, by more frequently citing university patents in their work. Whether universities and local companies shared a labor pool also mattered, the researchers found.
“It makes a difference,” says Alexander Whalley, an associate professor of economics at Merced and one of the paper’s authors, “if the community can absorb the knowledge.”
Those linkages are essential. Although the notion of economic development as a calling for colleges dates back to the founding of America’s land-grant universities, most institutions simply aren’t equipped to turn academic research into economic assets. Consider the track record: University-related start-ups account for no more than 3 percent of total new business starts each year in the United States, according to estimates by the Massachusetts Institute of Technology’s Industrial Performance Center.
Maryann Feldman, a professor of public policy at the University of North Carolina, studies technology-based economic development. Colleges’ strengths aren’t in commercializing knowledge, but in educating students and in basic research, Ms. Feldman says.
To get knowledge out of the ivory tower, she says, “we need people who can do the translation.”
So, you’ve studied Silicon Valley’s playbook. You’ve taken in the maxims about ecosystems and partnerships. You’ve got this, right?
Not so fast.
For one, there’s a benefit to being first, says Adam B. Jaffe, director of Motu Economic and Public Policy Research, a New Zealand think tank. He’s an expert in this stuff.
“It’s the Matthew effect,” Mr. Jaffe says, referring to what sociologists call the notion of accumulated advantage. “Success breeds success, and scale breeds growth.”
In other words, a university with an excellent computer-engineering program could still have a tough time seeding a high-tech cluster. Silicon Valley is well established; it already attracts much of the top talent and companies and capital in the field. Ditto for biotechnology and its hubs in San Diego and Boston.
It almost didn’t turn out that way for Boston. In the 1980s, the city was a giant in computing technology, notes Mr. Jaffe, who spent most of his career there. But the region missed the shift to personal computers and fell behind Silicon Valley.
Boston had something else going for it, though: world-class academic medical centers. Combined with the region’s technological expertise, the city was able to reassert itself as a biotech pioneer instead. More recently, that know-how has attracted some of the world’s pharmaceutical giants, including GlaxoSmithKline and Johnson & Johnson, to Boston, where they’ve bought up local biotech companies or set up their own research labs.
Boston could have “flamed out,” Mr. Jaffe says, but it didn’t.
Other regions haven’t been able to pivot as successfully.
For nearly a century, Rochester, N.Y., thrived as a hub for cutting-edge research in optics and imaging. Home to the Eastman Kodak Company, the Google of its day, it was one of the top producers of patents among American cities; workers there earned solid middle-class wages.
All that came to a halt in the 1990s, when digital photography overtook film. Kodak never recovered, filing for bankruptcy in 2012. Rochester’s economy hasn’t either.
While area universities remain robust research engines, even leaders in the field of optics, they are without a major private-sector partner.
There’s a lesson here: When you’re gambling on the next big thing, it’s hard to predict what’s in the cards.
Judith Rodin was just weeks into her tenure as president of the University of Pennsylvania in 1994 when a graduate student was shot to death outside his apartment, a few blocks from the university. The robbers made off with the few dollars in his wallet.
Ms. Rodin quickly realized that increasing police patrols and installing more security cameras was not enough (though she did that, too). To solve Penn’s crime problem, she believed, the university had to strike at its roots — the poverty and neglect and economic despair of the West Philadelphia community.
“An institution cannot survive and thrive with the neighborhood decaying around it,” says Omar Blaik, who worked for Ms. Rodin before founding U3 Ventures, a company that advises colleges and cities on how to harness higher education for economic development.
Over the next decade, Penn embarked on an ambitious community outreach strategy. The university offered employees incentives to buy homes in the area and gave priority to local hires. It directed its purchasing might to hometown businesses. Rundown properties were rehabbed. Wharton School professors mentored aspiring entrepreneurs.
Just before she stepped down as president, in 2004, Ms. Rodin appeared on a radio call-in show. Many callers thanked her. But others had complaints. Among them, why hadn’t Penn done more?
Penn’s effect on its West Philadelphia neighborhood has been significant. Crime is down; business is up. Families move there so they can send their children to the Penn Alexander School, a university-supported public school that ranks among the best in the city.
But Penn’s impact on Philadelphia as a whole is much less clear. The city’s unemployment rate of 6.7 percent remains above the national average. Of the 12 largest metropolitan areas in the country, it is the only one that lost jobs in 2014.
Ms. Rodin, now president of the Rockefeller Foundation, says Penn wasn’t trying to remake an entire city. Rather, the university sought to work where it could do the most good.
“You need to understand your own resources,” Ms. Rodin says, noting that she faced pushback from a faculty concerned that community engagement was diverting university funds from the core academic mission.
“We took on a neighborhood, and that’s critical.”
If an institution as well-intentioned — not to mention well-endowed — as Penn can only do so much, what, then, of all these other colleges, with their claims of transformation and turnaround?
Peter McHenry, an assistant professor of economics at the College of William & Mary, has studied college economic-impact statements. Many wouldn’t meet the standards universities set for faculty research, he says. His assessment: “Clearly boosterism.”
Some studies double count, including, for example, both college payroll and student tuition in expenditure totals. Others employ outrageously inflated multipliers; one report asserted $26 of economic impact for every $1 in state spending on higher education, or a 2,600 percent rate of return. Analyses can vary wildly by college: Loyola University in Chicago estimated its local impact at $1.42 billion; Northwestern University, with a similar student body and double the number of faculty and staff, and less than five miles away, pegged its at just $145 million.
A recent paper published by the Lincoln Institute of Land Policy looks at efforts by universities, hospitals, and other large nonprofit groups to drive regional economic performance. The authors conclude that many institutions have adopted the language of economic change without fundamentally modifying how they work in communities.
“There was a lot of talk,” says George W. McCarthy, president of the research organization and one of the report’s authors. “But there was a lot less going on out there than the rhetoric would suggest.”
That’s not to say colleges couldn’t play a greater role in shaping local economies, Mr. McCarthy says, just that it’s hard work.
Mark Makela for The Chronicle
John Fry, president of Drexel U., says economic-outreach efforts are too often “feel good” exercises that don’t result in real change.
John A. Fry was one of Ms. Rodin’s lieutenants. Now he’s trying to replicate Penn’s community and economic outreach at nearby Drexel University, where he’s been president for four and a half years. He is surprised, he says, that more college leaders haven’t also made big plays to help rehab their communities.
Too often, Mr. Fry suggests, university outreach efforts are “feel good” exercises that don’t result in substantive change.
For others, emphasizing their institution’s economic impact may be the best, and the last, gambit to persuade parsimonious legislators to more generously support higher education. Nancy L. Zimpher, chancellor of the State University of New York, has touted the university system as economically indispensable in her campaign to increase state aid. In North Carolina, where relations between public universities and Republican leaders have been cool, a rare budgetary bright spot is $3-million set aside annually for university research tied to key industries and the state’s economic priorities.
There’s also a hunger among civic leaders and elected officials for universities to do more. In many places, the factory floor has fallen quiet, the homegrown mom-and-pop has been swallowed up by a multinational conglomerate, leaving colleges as one of the few steady anchors of the local economy.
In New York, for example, Governor Andrew M. Cuomo has made state colleges the centerpiece of an aggressive bid to reinvigorate the economy there, naming university presidents as co-chairs of each of 10 regional economic-development councils across the state.
It makes sense, after all, in this post-industrial knowledge economy, for universities, institutions that are fundamentally about the generating and sharing of knowledge, to play a larger part.
But counting on colleges to be the economic savior? They may not be the answer to communities’ prayers.
Karin Fischer writes about international education, colleges and the economy, and other issues. She’s on Twitter @karinfischer, and her email address is karin.fischer@chronicle.com.
