The Impact of Higher Education on Economic Development

By Larry Gigerich, Managing Director of Ginovus

Colleges and universities have a critical role to play in regional, statewide and national economic development efforts. Clearly, higher education and economic development are inextricably linked to one another.

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For a region, state and/or country to be successful in economic development, colleges and universities must be key partners throughout the process.

Evolving Roles

In the past, colleges and universities focused on one main objective - educating students in different subject matters for different roles in society. In many cases, colleges and universities taught students and awarded degrees based upon the programs that had been in place for many years. The programs were driven by what the university wanted to teach and what students were interested in. While there is nothing necessarily wrong with this type of approach, it was usually not very responsive to the needs of private sector employers. As a result, many students would graduate with a degree in a subject matter area that did not translate into a good job in a growing economic sector.

Over the years, colleges and universities have evolved their roles into a broader mission that better support companies and economic development efforts. While the education of students is and should be the primary objective, other roles have become and are more important to better support business and economic development initiatives. During the past twenty years, research & development activities at universities and colleges have become much more important. Educational and governmental entities have plowed more dollars into research related activities. This change has been driven by the evolution of the United States economy, the demands of the business community and the need for universities to find additional funding sources.

Universities and colleges have also recognized the need to help nurture entrepreneurs through technical and financial assistance programs. These efforts have resulted in the survival of many young businesses that otherwise might fail due to a lack of capital, access to research and management expertise. Universities and colleges recognize the need to help these companies survive for a variety of reasons. If these entities can help entrepreneurs survive and succeed, they are making a significant contribution to the geographic area they are serving, can use their success to market the university or college to new students and business partners, and in some cases, secure a financial return for the university.

More recently, many universities and colleges have recognized the need to become intimately involved in regional, state and national economic development initiatives. Part of this increased role in economic development efforts can be traced to economic development organizations doing a better job of reaching out to higher educational entities, and the desire of universities and colleges to help contribute to the “public good” in a region, state or country.

Contributions of Higher Education to Economic Development Efforts in Indiana

Many of Indiana’s public and private universities and colleges have made significant contributions to economic development efforts in Indiana. During the past decade, universities and colleges in the state have become more aggressive in terms of economic development. It is important to note that while higher educational institutions in Indiana have for the most part always been contributors at some level to economic development efforts, the launch of the high technology initiative in 1996, coupled with significant funding from the Lilly Endowment and Central Indiana Corporate Partnership, have turbocharged efforts in our state.

While it is not easy to identify all of the economic development contributions made by public and private colleges in Indiana, I will touch upon some of the more prominent ones to illustrate the different types of activities occurring in the state. These contributions, along with many others, will result in short and long-term positive outcomes for Indiana.

Purdue University has made a concerted effort to focus its energies on developing and commercializing technology, incubating and investing in young companies, partnering with the business community to meet their needs and adopting economic development as a part of the school’s mission to help improve Indiana. Of note, Purdue University’s development of two incubator buildings and a research park in West Lafayette, and the efforts of the university to leverage its engineering and scientific disciplines to help businesses and entrepreneurs succeed; have already generated tremendous results for Indiana.

Indiana University has focused its efforts on developing & commercializing technology, incubating and investing in young companies, partnering with the business community to meet their needs and adding economic development to the schools overall mission. In particular, Indiana University’s development of the School of Informatics, the launch of a technology based business incubator in Indianapolis, and the recent announcement regarding the school’s effort to partner with economic development stakeholders to help implement regional economic development strategies in the different areas of the state where the school has a presence, should result in many positive outcomes for the state.

Rose-Hulman Institute of Technology, long known as a place where many of the best companies in the world would come to recruit engineering talent, has focused its energies on developing and commercializing technology, and incubating and investing in young companies. Of note, Rose-Hulman Institute of Technology’s development of Rose-Hulman Ventures, an innovative incubator and funding vehicle for entrepreneurs, and the launch of a program to bring graduates back to Indiana, has begun to pay tremendous dividends for Indiana.

More recently, schools such as: Ball State University, Butler University, Indiana State University, Ivy Tech, the University of Notre Dame, and the University of Southern Indiana, have become active in efforts to support and nurture economic development efforts throughout Indiana. In some cases, these universities have supported the state’s economy through the development of technology based businesses, contributed in-kind economic development services and helped produce a well educated workforce. There are many of other universities and colleges that are contributing to economic development efforts throughout Indiana. This trend should only grow as time moves forward.

Most Effective Ways for Universities and Colleges to Support Economic Development Efforts

Whether public or private, universities and colleges need to determine the best ways to participate in regional, state and national economic development initiatives. It is important for higher educational entities to look for the ways the can best leverage their assets to help support their mission and the economic development goals of a geographic area or industry sector.

Where should higher educational entities start when it comes to deciding the best ways for them to participate in the economic development process? Colleges and universities should begin the process by completing a comprehensive inventory of all activities that have a material impact on economic development initiatives. This process will allow the institution to identify its key assets which can be leveraged to help grow the regional, state and national economies.

The next step in the process is to take the key assets of the college or university and match them up with regional, state and national economic development initiatives which present an opportunity for the leveraging of people, facilities and capital to support economic development efforts. This “mapping” process allows for a more efficient use of public, private and not-for-profit human and financial capital.

Once the “mapping” process has been completed, it is then important for the higher educational entity to develop a strategic plan, with implementation steps. This plan will help guide the university or college in the most effective ways to contribute to economic development initiatives. Please find below a list of the key items to include in a higher educational economic development strategic plan.

1. Description of Initiative
2. Key University Person(s) Responsible for Implementation
3. Geographic Area to be Served
4. University Fiscal/Budget Impact
5. Short-term & Long-term Success Measurements (Quantitative & Qualitative)
6. Key Implementation Milestones/Steps
7. Timeline for Implementation
8. Key External Resources/Partners Required for Implementation & Success (People & Funding)
9. Key Internal Resources/Partners Required for Implementation & Success (People & Funding)
10. Key Internal & External Challenges to Overcome to Ensure Success (Culture, Funding & People)
11. Best of Breed Models Used Throughout the United States (University, Private & Not-for-profit)
12. Priority Ranking

Conclusion

In summary, there are several ways in which a college or university can make significant contributions to regional, state and national economic development initiatives. A higher educational entity has to first have a desire to do so. Secondly, a college or university must know their strengths and assets that can be leveraged to benefit their organization and geographic area in which they can have an impact. Third, the higher educational entity must have a vision of what they would like to achieve. Finally, the college or university must have an implementable strategic plan. To maximize results for a region, state and country, the higher educational entity must be engaged with government, the private sector, other academic institutions and the not-for-profit community. If everyone is working together to support economic development initiatives, everyone will benefit.

Larry Gigerich serves as Managing Director of Ginovus, an Indianapolis-based economic development advisory services firm. Ginovus is a leading provider of national site selection, community comparative analysis, economic development incentive procurement & management and public policy development & implementation services to private sector, not-for-profit and public sector organizations throughout Canada, Mexico and the United States.

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