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I.J.

Petrick, Faculty Administrative Fellow, Office of Economic & Workforce Development, PSU

The University Role in Regional


Economic Development – Examples from
the Field
Purpose
There are multiple ways that universities influence, seed, and/or lead regional economic development.
This paper highlights the growing importance of partnerships – broadly defined and between diverse
participants – to create and leverage unique assets. These partnerships reduce competition for
resources and instead focus efforts on defining jointly held goals which can then be pursued with single
minded purpose to reflect the varying strengths of partners and to enable each to play a unique role in
the overall strategy.

Rethinking the Underpinnings of Regional Economic Development


As we have transitioned from an agrarian economy, driven by natural resources, to an industrial
economy which is rooted in mechanization, economies of scale, and efficiency, the role of the university
– particularly land grant universities – has changed. Technical education and business acumen replaced
agricultural sciences as the prime driver of economic development. More recently, we are moving from
this industrial economy through the information economy to what is now being called the innovation
economy.

To fully appreciate the changing role of the University in regional economic development, two
traditional notions must be revisited. First is the notion that the economic potential of a region lies in a
cluster of interrelated firms and associated institutions linked through a common industrial sector. A
recent study by McKinsey and the World Economic Forum1 captures this historic cluster-like approach
and its impact on innovation. Two of the three drivers of innovation historically in their study – what
McKinsey has labeled heroic bets and irresistible deals – featured heavy government investment and
subsidies combined with key local advantages that spawn new sectors or attract new companies to the
region. While this has certainly been the case in the past, Michael Porter2 notes that the region’s
competitive advantage lies not in a set of interrelated firms, per se, but in the quality of the
microeconomic business environment.

McKinsey’s third type of innovation driver – knowledge oases – is described as a location with a critical
mass of talent, often anchored by a large research university or government lab. These knowledge

1
Andonian, Andre, Loos, Christopher, and Luiz Pires (2009) Building an Innovation Nation. McKinsey & Company.
http://whatmatters.mckinseydigital.com/innovation/building-an-innovation-nation.
2
Porter, Michael (2000) “Location, Competition, and Economic Development: Local Clusters in a Global Economy,”
Economic Development Quarterly, 14(1): 15-34.

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I.J. Petrick, Faculty Administrative Fellow, Office of Economic & Workforce Development, PSU

oases create hubs that can capitalize on breakthrough technologies that transition to the private sector.
Increasingly, these oases attract even more skilled knowledge workers. It is this talented “creative
class”3 that often differentiates a region’s ability to succeed in this global and increasingly innovation
driven economy.

Herein lies the second notion about the University role in regional economic development that needs
questioning – the university as a technology engine. While universities have played a role in developing
basic technologies, the transition of these technologies to the private sector requires financing and
resources often beyond the scope of the University. Instead technology transfer offices must seek
funding to support patent filings, and often have no or only limited seed monies available to go from
proof of concept to prototype. Bercovitz and Feldman4 have noted that “while universities are often
regarded as holding important assets that could be leveraged, the presence of a local university may be
necessary, but not sufficient, to guarantee that knowledge-based economic development takes place”
(p.175).

The University as an Anchor – Helping a Region


Become a Destination of Choice
From a regional perspective, the innovation economy demands talented workers, who in turn, seek out
places where their talents can be most readily deployed. In this emerging climate, the university can be
an anchor in the innovation based economy, conferring unique resources to the region. To accomplish
this, however, the university itself must rethink its role in the larger economic development and
competitive picture. This requires a transition in purpose and design from the agrarian based and
mechanically driven technology transfer activities of traditional land grant university outreach efforts.
Throwing technology over the proverbial wall no longer is enough.

In point of fact, the university role needs to shift to an institutional economic engagement model where
economic development activities begin with a two-way dialog between the university and regional
community and industry leaders. Through this dialog, the region can develop a common sense of
purpose and goals that each participant, in turn, can embrace. Acting in partnership, the various
participants can create momentum, leverage the region’s resources, and launch sustainable economic
development programs. The University can become a catalyst for this dialog.

The remainder of this paper showcases several university approaches to regional economic
development. Where possible, success metrics are included. However, as this is an emergent
phenomenon, many of the examples are still in their infancy.

3
Florida, Richard (2004) The Rise of the Creative Class and Florida, Richard (2006) The Flight of the Creative Class.
4
Bercovitz, Janet and Maryann Feldman (2006) “Entrepreneurial Universities and Technology Transfer: A
Conceptual Framework for Understanding Knowledge-Based Economic Development,” Journal of Technology
Transfer, 31: 175-188.

7 April 2009 2
I.J. Petrick, Faculty Administrative Fellow, Office of Economic & Workforce Development, PSU

Indiana Innovation Alliance – “Advancing Indiana”


This effort brings together Indiana University, Purdue University and Rose Hulman University to
strengthen and support Indiana’s health care and life sciences activities. With a focus on research with
applications in business, the partnership brings together a wide spectrum of businesses, government
and university capabilities to share research facilities and to draw talent to the region. The Indiana
Innovation Alliance was created to mobilize community thinking and action to help create an innovation
economy. The Alliance also leverages the community college system, including training at Ivy Tech. The
Alliance features:

 A customer-centric view of the role of the various universities


 Indiana University’s Center of Centers approach that presents a common front to the
community
 Purdue University Research Park anchor as a talent hub complemented by Indiana
University’s medical school and research capabilities
 Rose Hulman experiential learning partnerships with community businesses (technology
transfer through relationships between students & community businesses), supported by
Project Managers who can work between the companies and the faculty/student teams
 Key funding from Lilly Foundation to seed initiatives
 Emerging Indiana State Legislative support
 The potential for an equity position in lieu of direct investment in university developed
technology
 Individual campuses within the partnership have aligned their curriculum and resources to
fit with the regional realities and demand
 Strong community led agenda, developed through a series of “listening sessions” to
determine key regional priorities.

MIT as an Engine of Entrepreneurship


MIT has long been heralded as a unique resource in Massachusetts, and a source of key scientific and
technical leaders worldwide. A recent Kaufman Foundation study5 highlights MIT’s regional role in
entrepreneurship. MIT alumni have founded 25,800 active companies that employ 3.3. million people
with an annual revenue approaching $2 trillion. The study attributes this growing influence on MIT’s
growing emphasis on entrepreneurship through its MIT Entrepreneurship Center, including educational
programs on entrepreneurship, an alumni mentoring network, and a student business plan competition.
In Massachusetts alone MIT alumni companies are estimated at approximately 6,900, collectively with
sales worldwide of $164 billion, representing 26% of sales for all Massachusetts companies.
Interestingly, only about 10% of the students arriving at MIT are from the state, but 31% of all MIT
alumni companies are located in the state. MIT’s ability to draw students to the region, train them, and
then create a sustainable innovation ecosystem (along with Boston’s already flourishing entrepreneurial
activities) best demonstrates the role that a university can play as a talent hub.

5
Roberts, Edward B. and Charles Eesley (2009) Entrepreneurial Impact: The Role of MIT, http://www.kauffman.org

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I.J. Petrick, Faculty Administrative Fellow, Office of Economic & Workforce Development, PSU

Dartmouth College as an Innovation Hub


Though much smaller than the more well known MIT and Harvard, Dartmouth has achieved the
reputation as an innovation hub, primarily driven by its colleges of engineering and medicine, and their
Tuck School of Business. Dartmouth is also providing talent for the larger Boston area economic
development/innovation initiatives. Dartmouth’s success as an innovation hub lies in part with its
alumni who play an active role in both mentoring and funding for start-ups. The Dartmouth model
stresses an entrepreneurial network approach that links start-ups with experts and mentors. Specific
features of the program include:

 Access to venture capital through Borealis Ventures (alumni founder)


 A regional technology center that was created by public/private partnerships in 2006 with a
32,500 square foot incubator for tech and life sciences
 A regional entrepreneurial network (the Dartmouth Entrepreneurial Network) that helps
student entrepreneurs and which is now being launched in other business hub markets
including Boston, Los Angeles and Seattle.

Institute for Advanced Learning and Research (IALR), Virginia Tech


This Institute is an independent state institution managed by Virginia Tech. The IALR is a distributed
research and innovation model that brokers and coordinates programs with several colleges,
universities and K-12 partners. The IALR is anchored by a physical building that houses state-of-the art
facilities for robotics, motorsports, horticulture and forestry, and polymers. These areas are tightly
linked to the region’s existing industry and assets. When fully operational in 2012-13, this physical
infrastructure will support 25 faculty and engage an additional 60 Virginia Tech graduate students. Since
its inception, IALR received $30 million for facilities with an additional $35 million to create research
programs, personnel and equipment infrastructure. The IALR has received competitive grants and
industry contracts in excess of $3 million, including NSF sponsorship. The region has been able to
leverage IALR to attract three firms who together are creating 800 new jobs for the region. In addition,
IALR generates spinout revenues to the region through conferences and workshops. In total IALR has
brought approximately $80 million into the region. Key features include:

 A distributed research model that brings university talent and facilities to a geographically
dispersed location
 A linked research, training and services mission to build capabilities that support the
region’s unique needs and that leverage the region’s assets
 A workforce development perspective that combines undergraduate and graduate training
as well as practical training in technology to support the targeted economic sectors
 A comprehensive workforce development approach that embraces K-12 as well as adult
learners and retraining
 A governance model that reflects an independent entity, with leadership and decision-
making input from key stakeholders at the region, state and federal levels.

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I.J. Petrick, Faculty Administrative Fellow, Office of Economic & Workforce Development, PSU

The Archway Project – University of Georgia


The Archway Project grew out of a 2005 two-day retreat involving faculty from a variety of UGA
departments. The Archway Project targeted the Moultrie/Colquitt County Region area as the pilot, and
uses extension professionals to link the community and industry to faculty throughout the UGA in a sort
of “matchmaking service.” The Project brings together university, community and state leaders and
agencies to focus resources. The pilot project has been expanded to include the
Sandersville/Washington County Region, and continues to focus its activities on meeting current
regional needs rather than developing new technology initiatives or start-ups. Archway Project Regions
receive 1-2 university-supported experts who are embedded into the community to focus on local issues
and needs (equivalent of about $150K per partnership region). Key features include:

 Strong community involvement to determine needs, gaps and challenges


 Wide-ranging support activities around existing regional issues, including housing, workforce
skills, and other issues
 Emphasis on current regional needs and existing companies
 Strong support from the UGA Board of Regents and partnerships with other USG schools.

University of Connecticut as an Entrepreneurial Resource


UConn uses several different mechanisms to support local regional economic development, primarily by
acting as a matchmaker to link regional businesses with students, faculty and other university resources
and assets. They emphasize business oriented outreach programs including the Innovation Accelerator
Program and the Intellectual Property Law Clinic where teams of (mainly) MBA students work on
business development issues or intellectual property issues for local companies. Engineering analysis
and design for local companies is done through UConn’s Senior Design program. The Technology
Incubation Program offers space, business service support and expertise on campus for local businesses
to engage in cutting edge technology development and transfer of university related IP to commercial
application. Key features include:

 Experiential learning programs that link students at the undergraduate and graduate levels
to local/regional companies to solve market, technical and engineering problems;
 On-campus technology incubation space, including a new facility in Farmington that is
collocated with UConn’s stem cell core labs;
 Free access for local businesses to UConn’s electronic databases such as Factiva, LexisNexis,
Hoover’s, and more, chock full of critical business research information, accessible through
UConn’s libraries;
 Business-oriented outreach programs, such as the Institute of Materials Science Associates
Program or the Bioservices program, which are designed to engage with and support
regional businesses.

University of Illinois Changing the Dynamics of Place


The University of Illinois Urbana-Champaign (UIUC) partnership with the surrounding communities of
Urbana and Champaign emphasizes the characteristics of place that attract creative class talent. In this
partnership, city planners have worked closely with members of the university to vision and implement

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I.J. Petrick, Faculty Administrative Fellow, Office of Economic & Workforce Development, PSU

short- and long-term development strategies. Through their shared commitment to raising the quality
of life amenities, public-private investment has improved housing and revitalized local businesses. The
initial $8 million investment, partially funded by UIUC, for infrastructure enhancements has spurred
private sector investment. Key features of this redevelopment partnership include:

 Public-private partnerships between UIUC, Urbana and Champaign which include shared
governance and shared action plans to develop and extend the University District
 Shared investment between government, the University, and local developers
 A shared commitment to place making and raising the quality of life for both city residents
and for University faculty, staff and students.

Wright Center for Photovoltaics Innovation and Commercialization


The Center for Photovoltaics Innovation and Commercialization (PVIC) is a partnership effort by the
University of Toledo (the lead university), the Ohio State University and Bowling Green State University.
The Center was created in January 2007 with $18.6 million from the Ohio Department of Development
and matching contributions of $30 million from federal agencies, the universities and industrial partners.
The University of Toledo is credited with the transformation of Toledo away from a glass center,
primarily focused on lower margin auto glass to a world-class hub of research around renewable solar
energy. The PVIC continues to garner public and industry support and to hire additional researchers and
experts, building a talent hub that will drive business development for decades to come. Already the
UT’s Clean Alternative Energy Incubator has graduated companies that are creating a $7.8 million impact
since 2006.

Washington State & its Thriving Technology and Small Business Economies
The state of Washington is unique in the U.S., being the only one with a trade surplus with China, and as
the manufacturing home to the U.S.’s biggest net exporter, Boeing. Yet over 55% of all Washington jobs
are in the small businesses sector. This creates an interesting challenge for Washington universities and
other economic development professionals – how to provide compelling services to both the very big
and mature firms as well as how to provide support for nascent activities. The multi-faceted approach
that the State and its various universities and other services take requires a significant amount of
coordination and collaboration, including public-private partnerships, and joint planning.

For example, Washington State University is comprised of four campuses that serve 39 counties. The
University is working to better link the small business sector with key resources at WSU, at other
universities and in the public sector. The WSU Economic Development Partners map6 is one step to
creating a one-stop information source for all economic development resources. Other ways to
encourage collaboration and provide access to Washington State University’s talent and research base
include their Skunk Works activity which was begun in 2007 as a virtual project space which is being
piloted by the WSU Center for Teaching, Learning and Technology. WSU’s intent is to reach out to those
constituents most distant from its physical locations and link them to key resources and problem

6
http://wsuwest.wsu.edu/map/

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I.J. Petrick, Faculty Administrative Fellow, Office of Economic & Workforce Development, PSU

solvers. Other WSU resources aimed at entrepreneurship and innovation include the Washington Small
Business Development Centers, the Washington Center for Real Estate Research, the Economic
Development Administration and the Innovation Assessment Center.

The University of Washington has strong capabilities in software development, integrate circuit design
and cancer treatment. In addition, its Michael G. Foster School of Business is world renown for its
executive education programs and its Center for Innovation and Entrepreneurship. UW’s Business and
Economic Development Center links students, faculty and staff from UW’s Business school to the
business and non-profit communities, forming a rich set of partnerships that reach across company
sizes.

International Examples
The role of universities in leading regional economic development is not only a U.S. interest. See for
example, Supporting the contribution of higher education institutions to regional development - reviews
and reports
http://www.oecd.org/document/35/0,3343,en_2649_35961291_35602979_1_1_1_1,00.html

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