Blog Post #3: Universities and Regional Innovation Clusters
The first two posts of this series discussed “regional innovation clusters” – what they are, why they are beneficial, and what makes one successful. We determined in the previous post, that the three examples of clusters that were highlighted – Colorado CleanTech, Indiana Life Sciences and the Michigan Battery Cluster – all have a strong university presence as a key common denominator.
Universities have a huge impact on the local economy; employees of the university, as well as the university itself, all buy items goods and services from the local community, thus supporting local businesses. Economists refer to this as the multiplier effect. According to the US Bureau of Economic Analysis, the multiplier for research university maybe as high as 2.0. However, a study authored by the Rockefeller Institute of Government, “A New Paradigm for Economic Development,” suggests money spent in the local economic community may be somewhat offset if the university is state-supported. Although it is worth noting that the research conducted at research universities typically is fueled by a significantly higher percentage of federal funds as compared to state funds.
The key point is that research universities, such as IU, have the potential to transform basic and applied research, largely enabled by private and federal funds, into new innovation and jobs. From 2006-2008, only 2% of IU’s research expenditures were directly funded by the state. A recent Milliken report stated that the key to fostering a high-tech industry is to first foster robust research universities and institutions and that research universities are “undisputedly the most important factor in incubating high-tech industries.”
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