The Public University's Role in Economic Development

Should public colleges and universities give attention to local economic development? Many already are and a number plan to give greater consideration to the issue in the future as the economy takes its toll on them and their surrounding community. An equally important question is what kind of attention should give to economic development?

Not everybody agrees that this is a good idea. A 2001 Business Week article says it's a bad idea, if it detracts from the ability of the college or university to achieve its basic research and education missions. Even though the article is 18 months old, it raises some interesting issues that state and local officials are wrestling with now. With most state budgets in shambles, many Governors and Legislatures are struggling with these questions.

Christopher Farrell, from Minnesota Public Radio, wrote in the Business Week article "They're (state and local government officials) still convinced wealth, income, and jobs will be increasingly driven by high tech, from communications equipment to genetic engineering to software. So they're intent on devising the right mix of public policies for the New Economy, especially when it comes to public research universities, the crown jewels of a knowledge economy." Farrell says that the universities have better things to do than become incubators for the local economy.

Using the University of Minnesota as an example, Farrell continues to say that economic development may sound like a great idea for universities, but the history of public institutions picking technological winners and losers is poor at best. He cites a 2001 paper, "The University of Minnesota as a Public Good," which concludes that the costs of state universities promoting commercially oriented research is high and the benefits low. Given the significant payback that universities receive for patents and other intellectual property, I would question this statement.

Is Farrell right?

I think he makes a good point that universities should give primary attention to doing an effective job at their research and teaching. This is what they are supposed to do. He is also right that university researchers are not the best people to judge a technology commercialization sweepstakes. This job is best done by private businesses who will exploit the commercial potential of the research, but it is my view that academic and business researchers should interact and work together where appropriate, especially where both perspectives and sets of skills are needed to solve complex problems.

Farrell draws the wrong conclusion though when we says that economic development is not the public university's role. To the contrary, these institutions are actors in a direct and indirect sense in the local economy. How they spend their budget impacts the local economy. The degrees they grant has a bearing on the local labor market and whether people are being trained to do the right things. The health of the local economy affects the surrounding community and what the community can offer the university. These are just a few reasons why colleges and universities--public and private alike--should be concerned about and involved in economic development.

I get the sense that the higher education-economic development connection is being re-thought by many people at this time. It is a complex issue, especially in a very tight financial and economic environment, and also in light of other issues, such as the bioscience conflict of interest issue that I wrote about earlier this week.

We need to be clear-headed about these issues. Bottomline: I believe that economic development is critically important to higher education, and higher education is vitally important to economic development. We need some new thinking on what the relationship should consist of. I will being sharing more thoughts on this issue shortly.