PCRD

Effects of the University on the Local Economy

Arizona State's doing some interesting work in starting a conversation about the effects of the university on the local economy. They are thinking more broadly than the traditional impact measures. You can learn more here.

Elightening Students' View of Higher Education

Please watch this amazing video from students at Kansas State University.

Universities as Hubs of Creativity

Below are some of Richard Florida's thoughts about the role of the university in the Creative Economy. This is excerpted from his Creative Compact.

Universities are the hubs of the Creative Economy. America's strong university system is the source of much of our best scientific, social, and creative leadership. To this point, though, our modern conception of what universities could or should be has been somewhat limited. The tendency to see universities primarily as the laboratories of new research and technology has grown particularly acute in the last 20 years. They do indeed serve our society as technological and scientific laboratories  and amazingly productive ones. But they are much more than that.

Universities also do a remarkable job of fostering the other 2 T's of economic growth: talent and tolerance. On the one hand, they are undeniably our strongest talent magnets, attracting (as we've seen in previous chapters) the best and brightest to our shores. They are the Ellis Islands of the creative age. A huge percentage of the high-tech entrepreneurs that power places like Silicon Valley, Austin, Texas, and the Research Triangle came here originally to attend graduate school. Not surprisingly, almost all of our leading creative regions have one or more great universities.

Higher education institutions are also the community entities that, perhaps more than any other, have opened up city after city and college town after college town to the world. In this respect, they are bastions and breeders of tolerance. A university, with its tendency towards openness to ideas, people, and practices not always considered mainstream, is a natural source of diversity  ethnic, socioeconomic, and cultural.

Universities and colleges also serve as key building blocks around which older cities like Cleveland and Pittsburgh can rebuild. Whenever I am asked how to save Detroit's economy, my answer is the same: Ann Arbor - the future of the Detroit region in the creative age lies more with the technology, talent, and tolerance engine that is Ann Arbor than in stadiums and a refurbished Renaissance center.

Universities Learning from Each Other

A number of universities around the U.S. are asking important questions about their role in helping communities realize their economic and quality of life goals. "Centers" like PCRD represent one strategy to harness the vast economic development resources and focus them on local and regional communities and also to provide a point of entry for civic leaders and others to access those resources.

It is always a great idea when the people from these centers can learn from each other. On Friday, leadership from PCRD and leadership from the University of Kentucky Appalachian Center (and UK faculty) will spend time together doing just that.

The aim of the Appalachian Center is to build robust partnerships with its diverse constituents to address the issues, challenges, and opportunities of importance in Appalachia. They place great value on participatory and collaborative processes and are committed to involving community-based partners and faculty in the design and implementation of their programs. The use an interdisciplinary approach to call on a wide range of expertise from across the campus and the region to generate the best possible benefit for the people in Appalachia.

PCRD was asked to develop a PowerPoint for the meeting and it is available here. 

The University IS a Crossroads in Regional Economic Development

The European-based Organisation for Economic Co-operation and Development (OECD) does some great work examining the role of the university in rural development. Here is a report that makes some interesting findings and recommendations. It contends that a university's contribution to the regional/statewide economy goes far beyond its impacts related to specific elements of their activities - technology commercialization, K-12 STEM engagement, policy development, etc.

The most significant value comes in the interplay between these activities and the region-wide networks that result. Universities represent the civic spaces through which global, national and local actors can connect in seeking to realize their goals. Regions and states that take full advantage of this potential are best positioned to grow their economy. Many regional economies consider themselves to be AT a crossroads perhaps they should be looking to their universities AS a crossroads - a major strategic hub in the globally-networked economy.

North Central Indiana Complete Initiative

For well over a decade now, Indiana has recognized we have a major problem related to educational attainment. We are seriously lacking in the number of college-educated adults who call themselves Hoosiers. We've tried lots of strategies and some are working better than others. Many of the things we've tried are long-term efforts and we won't know for another decade whether or efforts will pay off. Imagine if a strategy emerged that was cheap, fast, and significantly effective. We may now be embarking on such an effort.

This elegantly simple idea was first tried at the University of New Mexico and the results were nothing short of ground-breaking. UNM realized they had a significant number of former students who got started on a degree, did well, but for one reason or another dropped out. Here is the story of one of their former students:

The story of Arellana Cordero is all too common: An honors student in high school, Ms. Cordero entered the University of New Mexico in 1993 with high expectations of becoming a college graduate. Five years later, with only 15 credits remaining to receive her baccalaureate degree, she abandoned her goal and dropped out.

Cordero's problem was not low grades or a lack of money. Rather, she left because, after five years, her college career had gone astray. She lived at home, felt disconnected from the university and had begun to doubt she would ever receive a degree, however close it might be. So when outside pressures of a job and marriage began to tug at her life, she walked away from college.

Through UNM's program, Cordero was prompted to get back in school to complete here degree. She did and is now working on a graduate degree. UNM has tons of stories like that. You can read a great article about the program here.

So, what's this got to do with Indiana? Well, the WIRED effort in North Central Indiana is importing this idea to their region - only this time they are taking the mission of "transforming the North Central Indiana economy" to heart by enlisting four educational institutions in the project. Purdue University, Indiana University Kokomo, and Ivy Tech Community College of both Lafayette and Kokomo will work together to launch the North Central Indiana Complete Initiative. WIRED funds will be used to provide up to fifty $1,000 scholarships per institution (for a total of 200) as incentive to get these walkaways back in school to complete their degrees.

What could this mean the the regional economy? Well, consider the fact that the average wage for non-college degreed Hoosiers is about $27,000 per year and the average for their college-educated counterparts is $58,000 annually, this could do quite a bit for the regional economy. If this pilot works, the State, I'm sure, will take a serious look at how to take this effort beyond the pilot.   

Use Economic Incentives to Build Knowledge Infrastructure

Here's another interesting recommendation from the Kauffman report mentioned in this post - In many cases, the most important incentives at states’ disposal are not tax breaks or ‎other firm-specific incentives, but public investments that not only support a state’s ‎knowledge infrastructure but also provide key inputs for targeted firms and/or industries. ‎Perhaps the best example of this approach was Texas’ $300 million investment in the ‎engineering program at the University of Texas used to help induce Texas Instruments to ‎build their next generation chip fabrication facility in Texas. Not only did the state ‎benefit by capturing a $3 billion high-tech investment, but TI benefited by gaining access ‎to a world-class electrical engineering department. Moreover, this infrastructural ‎investment benefited other high-tech firms in the region as well. This is because ‎knowledge is what economists call “non-rival,” meaning more than one party can use it at ‎once. In this case, the investment helps many firms in the region be more successful, ‎generating a much bigger return to the state than if they simply gave Texas Instruments ‎‎$300 million and hoped good things would happen.‎

Kauffman Points to Indiana's New-Economy Assets

The Kauffman Foundation's, The 2007 State New Economy Index (available here) ranks states using 26 criteria organized in five categories: (1) Knowledge Jobs, (2) Globalization, (3) Economic Dynamism, (4) Transformation to the Digital Economy, and (5) Technological Innovation Capacity. In the overall ranking, Indiana comes in at 31 (Massachusetts is #1 and West Virginia at #50). Things could be worse, but they could certainly be better.

Digging a little deeper, there are a few of criteria in which Indiana ranks #1 and in the top percentile. We certainly need to work on the areas where we are near the bottom of the list but we should also play to our strengths by leveraging our existing assets (those areas where we are already on top).

Value-Added Manufacturing. Indiana ranks #1 in this criteria. According to the report, this is important because value-added is the difference in value between inputs into the production process (e.g., ‎materials, energy) and the value of final products or services sold. Within manufacturing, ‎high value-added sectors tend to be those that are capital intensive and producing ‎technologically complex products. Within sectors, firms with higher value-added levels tend to invest more in new machines and equipment (including IT software), and worker ‎skills. These firms, all else being equal, are better equipped to meet competitive ‎challenges, both at home and abroad. Moreover, because their workers are more ‎productive, generating greater value for each hour worked, they in turn typically earn ‎higher wages than other workers.

Package Exports. Indiana ranks 6th. Many firms are becoming more international as they pursue new markets and establish ‎offices and supply networks around the world. International trade in services – including ‎goods transportation, royalties, financial, and business and technical services – has ‎increased significantly in the last decade. In fact, U.S. affiliates’ combined intra-firm ‎payments and receipts for international shipping have tripled since 1997, from $840 ‎million to $2.5 billion in 2005 (in 2000 dollars).71 The number of package exports is one ‎indicator that measures the extent to which a state’s firms have expanded‎ global linkages, capitalizing on this trend.‎

E-Government. Indiana ranks #3 in this criteria. The report points out that state governments that fully embrace the potential of networked information technologies ‎will not only increase the quality and cut the costs of government services, but also help ‎to foster broader use of information technologies among residents and businesses. State ‎governments have made considerable progress in using the Internet to allow individuals ‎to interact with government – from paying taxes to renewing drivers’ licenses. But the ‎next phase of e-government – breaking down bureaucratic barriers to create a ‎functionally oriented, citizen-centered government Web presence designed to give ‎citizens a self-service government – has only just begun.‎

The report concludes that the keys to success in the New Economy now and into the future appear clear: supporting ‎a knowledge infrastructure – world-class education and training; spurring innovation – ‎indirectly through universities and directly by helping companies; and encouraging ‎entrepreneurship.‎ Success in the New Economy requires that a whole array of institutions – universities, ‎school boards, firms, local governments, economic development agencies – work in new, ‎and often uncomfortable ways. At the end of the day, this is a challenge of leadership. ‎States with leaders who challenge their institutions and businesses and who follow ‎through with bold new policies focused on innovation, learning, and constant adaptation ‎‎– will be the ones that succeed and prosper.‎

Indiana's Knowledge Corridor

Here's a pretty remarkable statistic - nearly half of Indiana's well-educated population lives along a corridor that stretches across eight counties anchored by Tippecanoe County to the north and Monroe County to the south. This is the subject of a PCRD publication called Indiana's Knowledge Corridor (available here) written by Purdue Economist Brigitte Waldorf. The report has some specific recommendations for leveraging this asset:

The growth and increasing concentration of the highly educated population in the knowledge corridor provides an opportunity for unprecedented economic growth and a boost to Indiana’s ability to compete in the global knowledge economy. To facilitate further growth, the report recommends assigning special status to the knowledge corridor as a coherent regional entity, aggressive marketing of the corridor’s locational advantages, and support for improved transportation infrastructure.

OK, what now? How do leaders in Boone, Hamilton, Hancock, Hendricks, Johnson, Marion, Monroe, and Tippecanoe Counties come together to figure out how to leverage this asset? How can we get the "Indiana Knowledge Corridor" to become the next Research Triangle or Silicon Valley?

Accelerating Regional Economic Growth by Reducing Healthcare and Energy Costs

Ask manufacturing CFO's about the financial concerns that keep them up at night and they will tell you that the costs of energy and healthcare top the list. A recent Bank of America report (available here) outlines these and other findings related to corporate leaders' perceptions of the manufacturing industry. North Central Indiana, through its WIRED initiative has set its sites on becoming a region where these two costs of doing business are significantly less than they are in other regions. They will accomplish this by linking area small and medium-sized advanced manufacturing firms with innovations from Purdue University. Here's how.

Healthcare Cost - The inability of employers to control healthcare costs is well-documented and motivates the exporting of jobs and the reduction or elimination of employer healthcare insurance programs. To address this issue, Purdue University is developing and delivering a program for small and medium-sized advanced manufacturing firms to control and/or reduce expenses related to healthcare costs and, in turn, increase manufacturers’ competitiveness. The program involves training and technical assistance related to a broad range of factors affecting the cost of healthcare including:

• Employee Health Improvement Programs
• Employee Incentives
• On-site clinics
• Prescription Management
• Disease Management
• Dental/Vision correlation to health
• Price Transparency
• Consumer-Driven Plans
• Wellness Incentives
• Profit Sharing and how it relates to insurance claims
• Supplemental insurance programs

A pilot program has been launched that includes 14 small to mid-size advanced manufacturing firms all within the same industry cluster. By focusing these efforts within a single cluster, the opportunities will emerge to identify and meet additional common needs and take advantage of common opportunities.

The program represents a great example of university-industry innovation transfer. Purdue resources engaged in this effort include the Technical Assistance Program, the Manufacturing Extension Partnership, School of Nursing, School of Pharmacy and Pharmaceutical Studies, and the Regenstrief Center for Healthcare Engineering at Discovery Park.

Energy Costs - Although this initiative has not been green-lighted yet, the concept is spot on and if successful, would be ground-breaking. Here's how this one would work. Like the healthcare cost effort, this initiative would again involve the transfer of university-developed innovations to area industry. This time the innovations involve technologies, technical assistance, and training related to increasing energy efficiency through a systematic approach to energy management.  This initiative will involve a pilot group of 28 energy-intensive firms (again in the same industry cluster) that will receive on-site training, in-plant mentoring by industry experts, and off-site workshops instructed by U.S. Department of Energy-qualified instructors.  Each employee who attends the off-site workshop will receive an Energy Efficiency Practitioner certification from Purdue University. Purdue resources in this effort include the Technical Assistance Program and the Energy Center at Discovery Park.

Here's the kicker on this energy project - the anticipated metrics. Over the eighteen months of this proposed initiative, it's estimated that on average, each company will identify $25,000 in potential energy savings by the end of the initiative.  Additionally, those same companies will report energy savings in excess of $1,000,000 by December 2009 as well as an additional $2,000,000 in economic impact that they had not foreseen. If something like this works, industry will be waiting in line to do business in North Central Indiana. Less money spent on emergy means greater productivity, more jobs to keep pace, and regional economic growth.

Both of these initiatives illustrate great examples of innovation-based economic development that will lead to high-performance workers, high-perfomance firms, and a high-performance regional economy.