'New Paradigm' for Economic Development

March 15, 2010

The United States and its higher education systems are on the verge of a "new paradigm" in defining the roles of colleges and universities in promoting state and regional economic development, says a report being issued today.

"The old paradigm rests largely on the traditional mix of business attraction and retention incentives," such as tax breaks or infrastructure, says the report, by the Rockefeller Institute of Government of the State University of New York. "Research, technology transfer, management assistance, and/or worker training are often thrown in among the incentives -- but sometimes as a kind of afterthought.... Perhaps there is now an opportunity to flip the old model around -- adopting a new, 'knowledge first' paradigm in which higher education systems explicitly take a leading role."

The study was commissioned by Nancy L. Zimpher, SUNY's new chancellor, as part of her efforts to promote economic development in New York State. But the analysis intentionally avoids a New York State focus. The idea is to survey national trends by compiling activities linking higher education and economic development in every state, with the goal of creating a framework to view these efforts. The report acknowledges that the concept of higher education-inspired economic development is hardly new, with many politicians boasting about how this or that research accomplishment spurred the creation of new businesses, or talking about how they would create the next Silicon Valley.

The authors of the report -- David Shaffer, a senior fellow at the Rockefeller Institute, and David Wright, the institute’s director of urban and metropolitan studies -- argue that a pattern emerging over the last decade or so is actually much broader than simply supporting research and technology transfer (although those functions remain key). Further, they suggest that this time period could develop into a third great era for transforming the way higher education influences the economies of states and of the nation as a whole. They consider the first shift to have taken place in the second half of the 19th century, as the Morrill Act spurred the development of the land-grant system, and the second shift to have taken place after World War II, when the GI bill greatly expanded the proportion of adult Americans who had a college education and thus could take jobs require higher levels of skills and training.

The emerging paradigm should be seen as four related efforts, used in various combinations in different states and regions, the report says. Viewing these four areas as part of an overall economic development strategy, rather than separate approaches, may encourage more strategic planning about higher education's role in states. The four areas are:

  • Innovation. This would reflect the traditional role of universities in developing "new technologies, new processes, new products, new ideas." This role, the report says, "sees university faculty and leaders thinking creatively about how to leverage their strengths in knowledge creation to yield tangible economic benefits."
  • Helping employers. This would include "worker training, management counseling, help for start-ups, and other initiatives."
  • Community development. This would include colleges and universities developing and managing property in a variety of roles -- as housing, businesses that serve the college and others, culture and recreation.
  • Education. "Higher education’s most fundamental contribution to economic development lies in its traditional role: creating an educated population. The new economy is making the traditional academic mission ever more important," the report says.

For each of these roles, the report reviews examples of creative approaches in the various states, as well as national data on enrollments, patents and other measures of economic development.

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