Universities and Colleges as Economic Drivers

1. Higher Education and Economic Competitiveness

1 1 HIGHER EDUCATION AND ECONOMIC COMPETITIVENESS Jason E. LanE aBstraCt Higher education plays an increasingly critical role in the economic competitiveness of local, state, and national economies. The factors driving the World Economic Forum’s Global Competitiveness Index are examined to illustrate how higher education has come to be viewed as a driver of economic growth. Then, by examining institutional economic development reports and national economic competitiveness plans, this chapter lays out the growing global interest and import of economic competitiveness and the ways in which governments are seeking to harness the power of higher education to support their own competitiveness. It concludes with a discussion of how governments, businesses, and higher education institutions could collaborate to develop public agendas to guide, among other things, the economic contributions of colleges and universities. INtroDuCtIoN We are just now perceiving that the university’s invisible product, knowledge , may be the most powerful single element in our culture, affecting the rise and fall of professions and even of social classes, or regions, and even nations. —Clark Kerr, The Uses of the University 2 LaNE Clark Kerr was prescient about the significant role knowledge would come to play globally in terms of economic prosperity and competition . We now live in an age of a knowledge-based economy, in which the creation and transmission of knowledge has come to be a primary impetus for economic development. This has led to a shift in the policies and practices used by many countries to compete economically. In The Competitive Advantage of Nations, Porter (1990a) observed that in most of the world, a nation’s economic prosperity would no longer be tied to abundant natural resources and cheap labor; rather, their “competitive advantage” would be increasingly based on creative and scientific innovations. This new paradigm of economic development positioned colleges and universities as primary engines of economic growth (see Romer, 1990). Today, many nations are involved in the great brain race, a phrase used by Ben Wildavsky (2010) to describe the increasing competition among nations for new knowledge and innovation. Governments increasingly adopt comprehensive competitiveness strategies designed to improve their economic position in the global economy. Recognizing that an advantage of the great economic powers of the last century was their higher education sectors, many governments are now seeking to expand the capacity and quality of their own sectors. This, at times, includes actively recruiting and retaining students, scholars, programs, and institutions from other nations—particularly those perceived to have strong higher education systems. Some of these nations are using the higher education resources of other nations to decrease the competitive advantage gap between them. In this new environment, governments have begun to realize that higher education institutions are important anchoring tools as they help to attract and retain students and alumni. Governments also recognize that such institutions drive innovation and industry development, and have begun to invest in research institutions, research parks, and research programs. Beyond the engagement in educating students, much of the economic development contributions derived from higher education come through partnerships with the government as well as the local community and industry. The reality is that while nations posture over competitive advantages, the economic contributions of colleges and universities occur in their local communities. So, it is also Higher Education and Economic Competitiveness 3 important to understand the connection between higher education institutions and the communities where they are located. The purpose of this book is to cultivate greater understanding among elected officials, business representatives, policymakers, academics, and other concerned parties about the central roles universities and colleges play in national, state, and local economies. Through the varied contributions, it assesses, based on the best available evidence, ideas, and practices from across the United States and around the world, how universities and colleges exert impact on economic growth. Some chapters explore methodologies, metrics, and data sources that may be used to gauge the performance of diverse higher education institutions in improving economic outcomes. Others present typologies of economic development activities and are designed to improve understanding of such initiatives and generate new energy and focus for a national community of scholars and practitioners working to formulate new models for how universities and colleges may lead economic development in their nations, states, and communities while still performing their more traditional and central educational functions. The intent of this book is not to privilege the economic development functions of higher education institutions above...