Universities and Economic Development

Part
01
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Part
01

Case Studies: University Research and Economic Development

Three universities have contributed to the economic growth in rural areas in the United States. Tuskegee University, Pennsylvania State University, and Ohio State University Extension all created projects with the specific intent of boosting the local economy. All 3 projects resulted in collaborations that resulted in positive impacts. Findings of these case studies can be found below.


Tuskegee University: Small Farmer-Walmart Project


This project took place in 2011 in rural Alabama to try to provide small farmers with entrepreneurial opportunities to sell produce to Walmart. Since only 4 types of produce were desired by Walmart, most of the farmers in the study started with a small quantity to be sold. Over time, the businesses grew. From 2013 to 2015, 252 seasonal positions were created by this endeavor created by Tuskegee University and $399,600 was made by those additional employees.

Pennsylvania State University

Penn State wanted to help stimulate the economy of the rural areas surrounding their campus. They began a project to conduct university research to help local businesses be more competitive, expand a modern pool of employees, and encourage breakthroughs and business growth. Various partnerships were formed with researchers and engineering students to try to assist businesses with the resolution of issues.

For instance, the university matched students with companies that had problems they couldn't solve in-house and the students used university's technology resources and laboratory to try to help. The companies gained invaluable insights and the student researchers gained experience in solving real-world problems. In addition, "a longstanding example of Penn State's involvement in economic development in the Commonwealth is PENNTAP, the Pennsylvania Technical Assistance Program, founded in 1965. Last year PENNTAP responded to more than 800 technical cases at more than 500 Pennsylvania firms with a resulting economic impact in cost savings and sales increases of $6.7 million."

The university also aimed at improving the quality of the workforce in the county by "organizing an event on campus designed to get high school students interested in college-level science and engineering. It successfully increased the university attainment levels in nearby counties by several percentage points." The researches and events helped improve the lives of citizens in Pennsylvania. Over the course of 5 years, the project showed positive results. The Washington Monthly "ranked Penn State University third among all American universities and colleges for fostering social mobility, public
service, and economic growth."

In addition, "Penn State’s research expenditures topped a record $848 million; an investment that resulted in jobs, innovation and growth." According to an economic impact analysis by Tripp Umbach, research funds "have created or sustained more than 7,700 high-paying jobs in the academic medical sector."

Ohio State University Extension

In 2012, in collaboration with Wyandot County Office of Economic
Development (WCOED), the university developed a plan to examine local industries and advise the best ways to promote economic growth. Using IMPLAN software, they were able to analyze details of the county and suggest the most effective changes. They then facilitated a workshop to share their findings with local businesses. Based on the projections of the IMPLAN software, the county should see an increase of 35 full time positions and $6 million in capital investment.

Conclusion
Tuskegee University, Penn State, and Ohio State University Extension each collaborated with local entrepreneurs and businesses to
try to stimulate the economy of rural areas. All were successful in contributing to research or developments that helped strengthen the local economy.
Part
02
of two
Part
02

Case Studies: Universities and the Local Economy

While there is no pre-existing information to fully answer your question, we've used the available data to pull together key findings: A very recent study published by Syracuse University provided excellent quantitative data on the institution's economic impact in the surrounding 5-county area and specifically isolated the benefits of an educated workforce. In addition, we found two more case studies which, while not providing the same level of quantitative detail, nevertheless illustrate how local institutions were able to revive economically stagnating rural areas via an educated workforce.
Below you'll find an outline of our research methodology to better understand why information you've requested is publicly unavailable, as well as a deep dive into our findings.
OVERVIEW AND CAVEAT
Finding case-studies on the benefit to the economy of a rural or small municipality of having a local college or university is not difficult. After all, many universities boast of the economic benefits that they bring to an area. However, these reports nearly always focus exclusively on the immediate benefit that the institution brings in direct and indirect employment tied to the university, the university's spending, and the cash brought into the local community by students from outside. These of course are outside of the scope of the question.
It turns out that there is a very good reason for this. A 2014 paper published in Sociological Spectrum makes the point that higher education creates more opportunities for mobility. Consequently, a college town without a thriving economy built on local businesses may actually experience a drain of its most educated and highly skilled workers as those individuals migrate to cities with better economic opportunities. In fact, rural colleges often find themselves struggling to survive along with their local communities as more people migrate to large cities in search of work. For example, despite building a new college campus in Broken Bow, Nebraska, both the city and the college continue to stagnate, with enrollment dropping from 608 students in 2011 to 420 students in 2016.
This is not to say that the central thesis behind the question is incorrect. A study by the Brookings Institute shows that those individuals with higher education contribute more to local spending: "After making these calculations, the average bachelor’s degree holder will spend an estimated $278,000 more on local goods and services than the average high school graduate over a lifetime." The above is simply to point out that there are other factors in play that determine whether a local university's graduates will significantly boost the local economy. As a result, most colleges and universities find it easier (and more advantageous) to quantify direct spending into the community.
With that background and caveat in mind, we found three case studies that specifically cite the existence of a local university or college as having benefited the economy of a non-metropolitan area specifically due to improving the local workforce.
Of the few case studies that fit the criteria for this question, a white paper published by Syracuse University in late 2017 provided the most quantitative data. The study shows that thousands of SU students subsequently settled in the 5-county SU Service Region, generating $154.1 million in additional annual income for that area, supporting the equivalent of 1,725 jobs. Moreover, the study claims that the university's "exceptional environment that fosters innovation and entrepreneurship" created university start-up companies which added nearly $992,000 (the equivalent of 11 jobs) to the local economy and further posits that "spin-off companies" with "a much weaker connection to the university" ultimately created (over an unstated number of years) $2.3 billion in economic impact for the region. All this impact is completely separate from the direct economic benefit that the university brought to the region.
Despite an extensive search of public sources, Syracuse University is the only university proper for which we could find a complete case study with proper quantitative data. However, we found two additional case studies that illustrate the benefits a local college can bring to a region due to the education of the populace.
In the late 1990s, Walla Walla, Washington's economy struggled as farming jobs dried up and lumber mills closed, largely due to automation. Walla Walla Community College started an enology and viticulture program, training students in the art of winemaking. This eventually grew the number of local wineries from 16 to 170, which in turn spurred other industries and local tourism. The college also developed its nursing and technical programs. As a result, by 2011, new graduates earned an average of $41,548, twice that of non-graduates. The incredible growth and quality of Walla Walla's wineries and the subsequent growth in the local economy received a recent write-up in the New York Times, which described Walla Walla as "Napa in bluejeans."
Chanute, Kansas, is a town of just 9,000. After Spirit AeroSystems to open a new facility in Chanute, the local Neosho Community College retooled its program to train workers for the new business. This resulted in Orizon Aerostructures announcing in 2016 that it too would open a new manufacturing facility in the small town, employing another 150 people. “Without Neosho County Community College and their leadership, I don’t think we would have gotten the business to come,” said Matthew Godinez, of the Chanute Regional Development Authority. “They go where the economy needs them to go.”
CONCLUSION
While the case study of Syracuse University provides an excellent quantitative analysis of the benefits of an educated workforce to a non-metropolitan area, in many ways, the examples of Walla Walla and Chanute are more instructive. As noted in the overview, having a local university and/or college in a rural area is only of benefit in the presence of a healthy local economy. The programs of these two colleges were of great benefit specifically because they tooled themselves to preparing a workforce that works with local economic factors.

Sources
Sources