Can Higher Education Save Regional Economies

1
Can Higher Education Save Regional Economies?

• Rick Mattoon
• Senior Economist and Economic Advisor
• Federal Reserve Bank of Chicago
• CABE
• November 29, 2007
• Chicago, Il

2
Project structure

• 2 year project examining the role of higher
  education in the economy. Special emphasis on
  Midwest
• 2 conferences (both cosponsored by MHEC). First,
  (November 2, 2005) focused on evolving role of
  higher education, public funding issues, access.
  Second conference (Oct 30, 2006) focused on
  higher education and its role in economic
  development
• Major issue at first conferencethe changing
  social compact for funding higher education. The
  private vs. public good debate
• http//www.chicagofed.org/news_and_conferences/co
  nferences_and_events/2006_higher_education_agenda.
  cfm
• http//www.chicagofed.org/news_and_conferences/con
  ferences_and_events/2005_future_of_higher_educatio
  n_agenda.cfm

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Motivation for project

• Shift to a knowledge economy
• What institutions produce knowledge and human
  capital?
• What condition are they in?
• What are the transmission mechanisms for sharing
  knowledge?
• The third stream. A return to the land grant
  mission?
• Not a settled questionRichard Veddergains from
  higher spending on colleges and universities
  dont benefit the state
• How do you measure what makes a university or
  college good
• OECD teaching project for 2010

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Why universities?

• Immobile assets in a world of increasingly mobile
  assets (problemif the most important product of
  the university is graduates, mobility undermines
  this contribution)
• Significant economic powerTotal University
  endowments are over 350 billion, employ more
  than 2 million and hold more than 100 billion in
  real estate.
• Issuedistribution of endowmentsHarvard alone
  has over 33 billiontop ten universities account
  for 35 of total, top 20 account for 45.
• Emphasis on innovation defined as the
  capabilities of local firms to take up new
  technological and market knowledge and to apply
  it effectively
• Its not just creating knowledge, the take-up rate
  matters

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What did we find

• For Higher Education to influence regional and
  local economic growth it must be strategic and
  attune to the local economy
• Big Bang technology transfer might be
  overstated
• Need to answer two questions
• What type of economic transformation is the
  region trying to promote?
• What is the role of higher education in
  facilitating this change?

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Richard Lesters typology for university led
economic growth
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Lessons from case studies

• North Carolina
• Akron and Rochester
• Entrepreneurship
• Community Colleges
• North Dakota

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Bottom line

• Should higher education pursue economic
  development? Is there a cost?
• Need for better metrics to measure college
  outreach
• Students retained in state
• Partnerships with local firms
• Earnings gains of graduates
• Scholastic performancepre and post school
• Is the campus open to visitors?