Universities Say They Promote Economic Development, But How?

You would be hard-pressed to find a flagship university website that doesn’t include press releases boasting an “economic impact” in the billions.

Universities, particularly large flagship research institutions, generate these figures by tallying up almost every financial exchange driven by the institution–football game traffic, tuition payments, research grant funding, payroll (flagship universities are often among the largest employers in a state), construction costs, and so on. Then, they usually apply “economic multipliers,” a statistical calculation that accounts for the ripple effects of financial transactions.

This public relations approach to measuring universities’ “economic impact” produces numbers that make for nice press releases to woo politicians. However, when it comes to public perceptions, they can come across as exaggerated and contribute to growing public skepticism of the value of universities in America.

Consider a 2023 Chronicle of Higher Education public opinion poll that concluded that “people view higher education as an important means for individual attainment, but not necessarily for the greater good.” That sentiment is prevalent despite how much universities do to support state and regional economies.

The Association of Public and Land-grant Universities (APLU), where I previously worked on economic development issues, and the University Economic Development Association (UEDA), a professional association of university economic developers, produced a set of definitions and a taxonomy of activities that would be classified as university-based economic development. Sometimes, this work is called “economic and community engagement,” combining university-based economic development and community engagement into a joint, somewhat jargony phrase.

University-based economic development refers to intentional, strategic, and sustained projects that universities undertake within and across three interconnected impact areas. Each focus area is an extension of the three mission pillars of most research universities–teaching, research, and service:

1. Talent and workforce development
2. Innovation through industry research partnerships, technology transfer, and startup incubation
3. Place development, or community development efforts, organized as public service and outreach, community engagement, and Cooperative Extension contributions

Even for university administrators and higher education policy experts, university-based economic development is still an obscure and poorly understood concept. That’s partially why the APLU launched the Innovation and Economic Prosperity (IEP) Universities designation, a program I used to oversee. The IEP designation recognizes institutions that have undergone a strategic planning and self-study process with on- and off-campus stakeholders to codify, measure, and communicate their institution’s university-based economic development portfolio. The designation is built on the framework we will describe here.

As of 2024, ninety-one higher education institutions, primarily APLU members but some non-members, have earned the designation, resulting in changes to strategic plans, organizational charts, funding strategies, and advocacy campaigns. IEP's impact has been clear. Strategic communications is often reported as an area of growth and improvement, even by IEP designees who are arguably leaders in university-based economic development.

Talent and Workforce Development

This aspect of university-based economic development is familiar to the public because most people attend university to learn, gain new skills, and find a good job. When I was at the APLU, university presidents often quipped that their most significant economic development contribution happens during graduation days.

“Talent” contributions to university-based economic development are focused on meeting the number one demand that drives students to college in the first place. To gain the skills, they need to find a good job that offers a family-sustaining wage and a pathway to the middle class. It is most central to "return on investment" considerations at both an individual and societal level.

Talent and workforce development contributions to university-based economic development include but extend beyond typical career center offerings like interview prep or LinkedIn seminars. Talent contributions refer to incorporating best practices for workforce development.

Examples include creating employer-aligned micro-credential workforce offerings, using labor market data to align curricula to match the skills employers seek, piloting degree apprenticeships, expanding work-based learning opportunities for students, embedding industry certifications in degree programs, or taking on other concerted efforts to increase students’ odds of gainful employment.

Innovation, Entrepreneurship, and Technology-based Economic Development

Innovation contributions to university-based economic development involve professors, students, and post-doctoral researchers conducting applied or “use-inspired” research with the specific goal of generating new insights that lead to new cures, technologies, processes, and ideas that create new companies, jobs, and industries.

Use-inspired research complements “basic” or fundamental research, which is purely driven by the intellectual curiosity and passion of students and faculty. Use-inspired research often builds on basic research.

Innovation contributions to economic development also involve patenting university research and licensing it to companies or helping students and faculty launch startups based on their newfound intellectual property. Since the Bayh-Dole Act of 1980, universities, through technology transfer offices, have helped professors or students patent their research and turn them into inventions that result in new jobs and, in some cases, new industries.

The iPhone, the COVID-19 vaccine, and even the Internet have roots in university research. Gatorade was invented at the University of Florida, home of the sports franchise Florida Gators.

Since 2013, the National Academy of Inventors has used U.S. Patent and Trademark Office data to compile a ranking of the 100 top global universities by the most U.S. utility patents granted. However, it’s important to know that very few universities make money off of technology transfer. At most universities, technology transfer is almost entirely an economic development function meant to help the public and researchers get more from government investments in university research.

University research parks help incubate new startups born out of university research or house outside startups seeking collaborations with university researchers. Some universities have such good research parks that they can recruit venture capitalists, marketing experts, executives in residences, and other mentors to support them and spur economic growth.

Innovation contributions can also refer to supporting the state in promoting technology-based economic development, including enticing large employers to the region through industry research partnerships that complement a university’s talent development contributions. A prominent recent example was the site selection process that brought Amazon HQ2 to Northern Virginia. Virginia Tech and George Mason University touted their R&D innovation and talent development partnerships as part of the overall package to entice Amazon. Along with APLU and UEDA, organizations like the Association of University Technology Managers, SSTI, VentureWell, Association of University Research Parks, and the University-Industry Demonstration Partnership convene and support the many and varied university administrators responsible for contributions in the innovation category.

Placemaking & Community Engagement

Perhaps the least well-understood contribution of universities to economic development is “place-making" or "place development,” which refers to a portfolio of projects universities undertake to help faculty and students form reciprocal partnerships with community-based organizations like non-profits, charities, or local governments to address community problems.

Placemaking efforts can be structured as institutional partnerships led by a unit headed by a vice president or grassroots projects generated by faculty and students. Projects in the latter often fall within two categories:

1. Service learning opportunities: Where students get hands-on experience applying what they learn in class through community service and helping a community partner with a need.
2. Community-engaged scholarship: Where faculty members identify research projects with community members and collaborate with them to address them.

In both cases, the goal is to solve problems “with” communities, not “for” communities. In placemaking, universities partner with nonprofits, local government, philanthropies, and other entities to help expand broadband access in areas that don’t have them, understanding and expanding affordable childcare availability, assisting farmers in finding better ways to grow crops, or offering much-needed training and professional development for locally elected or appointed government officials. University contributions to civic engagement are also considered placemaking activities.

Membership associations like Campus Compact, Engaged Scholarship Consortium, Advancing Research Impact in Society, and the Coalition of Urban and Metropolitan Universities convene many faculty and administrators leading placemaking efforts at universities. Land-grant institutions often house placemaking efforts within their Cooperative Extension units, the directors of which are convened by APLU.

Since 2006, with support from the W.K. Kellogg Foundation, APLU has recognized outstanding university contributions to community engagement and placemaking through the C. Peter Magrath Community Engagement Scholarship Award. The American Council on Education's elective Carnegie Foundation Community Engagement Classification also recognizes institutions excelling in placemaking.

What Is Missing?

Those who know university-based economic development well will notice that I have not covered every activity here that could be classified as such.

Remember the APLU designation I described above? Part of the reason why that program was created was to create a cogent framework, process, and, frankly, an incentive for university leaders to inventory their economic development activities. For nearly all institutions, the process represented the first time they had undertaken a comprehensive evaluation to explain–even internally–their impact on the greater good.

Universities face difficulty articulating how much they do and its value to society. In some cases, this may be due to mission creep, poor or inauthentic communication (to go back to the opening example), the sheer complexity of the work, or a combination of all of the above.

When university-based economic development is described as all things to everyone, it becomes diluted. Policymakers and the public are less likely to grasp its breadth and depth. Therefore, this explainer has emphasized the most prevalent aspects of university-based economic development at large research universities in the United States.