The Role of Universities in Regional Economic Development: An Indiana Experience

Dr. Beverley J. Pitts
October 20, 2006

Respectable Mayor of Ningbo, Secretary General of Ningbo City, Director General Hua, distinguished guests, participants, and colleagues from overseas:

Although it is my second trip to China, it is my first visit to this beautiful and vibrant city of Ningbo. I have felt very much at home in the last two days, not only because of the hospitality the conference organizer has extended to us, but also because the University of Indianapolis has a Sino-American program in Ningbo.

We have been a partner university with Ningbo Institute of Technology, Zhehiang University for many years. My university has become part of your educational system and I am extremely proud to say that our collaboration with the NIT has been successful. We also wish to become a model program for international collaboration projects in China.

My colleague, Dr. Phylis Lan Lin, who is Presidential International Ambassador, has assisted me in reviewing Chinese literature. I have realized that the Chinese government and the institutions of higher education have had numerous conferences and research projects on regional economic development.

I have also learned several successful stories about the triangle of collaborations among industry, government, and universities in enhancing the regional economic and social development in Beijing, Shanghai, Ningbo, and even in the greater Northwest regions. Certainly there are many things we can learn from you. Today, I would humbly like to share with you our American experience. I would like to elaborate on the role of universities in regional economic and social development.

I want to mention something first about the difference between public and private universities in the United States. There are approximately 3,000 universities in our country, and there is a great variety among them. The number of students enrolled ranges from just a few hundred to more than 40,000. Public universities are funded by the state, and the state determines their missions. Well-known public universities include the University of Michigan and Indiana University and Purdue University in our state.

Private universities, however, are operated without any governmental control. They are financed mainly by a combination of tuition money paid by students and of charitable donations from foundations, businesses, and individuals. My university, the University of Indianapolis, is an example of a private university. You may know of other, larger private universities, such as Harvard University, Stanford University, or the University of Notre Dame.

In the United States, students choose the college they wish to attend based on possible career paths, which universities they can afford financially, and what part of the country in which they wish to study. Both public and private universities compete with each other to attract students. In effect, in our market economy, all universities compete for all students, and that affects the way we think about competition and business. Most colleges and universities offer degrees in many different areas of study. American universities are less specialized than those here in China. For example, we do not have sports colleges, or colleges specifically for studying social work or government.

The University of Indianapolis, for example, is a comprehensive university offering more than 70 undergraduate and 22 graduate programs—including doctoral programs in physical therapy, occupational therapy, and clinical psychology. We have one of only three physical therapy programs in the state of Indiana, and we created the state’s first doctoral program in this field. That program is now ranked among the best in the nation. Our occupational therapy program, ranked 34th nationally, also is considered among the elite in the field and is the only doctoral program in the state.

What I want to stress today is that American universities, large and small, public and private, see as part of their mission a responsibility to be engaged in the development of the economy of their local community and beyond. Usually in America, when we talk of universities and economic development we tend to think of the large, public research universities and the faculty research that has led to business successes.

There are many well-known examples. Years ago two biochemists and a graduate student at the Indiana University dental school determined that stannous fluoride protected people against tooth decay. Their discovery led to wider research. With financial support from the large corporation Procter and Gamble, twelve hundred schoolchildren in the area’s public schools became the first study group for a toothpaste that tasted good and combined a stannous flouride with an abrasive cleanser. In 1956, Crest toothpaste, featuring the compound patented by these three Indiana University researchers, hit the national market.

Both the company and the university benefited. Money from the success of Crest toothpaste helped build the future Oral Health Research Institute in Indianapolis. In the United States, the Crest school program is one of the longest-running programs of its kind, and it has grown to include nearly 100 million people since it was launched in 1962.

A few years ago, the Proctor and Gamble corporation began working with officials here in China to improve oral health through a school-based education program. And as I understand it, this program already has reached more than one million schoolchildren in China.

Americans have always been entrepreneurs, and its universities have continued that tradition. It has been 26 years since an act of the American Congress, the Bayh-Dole Act, began encouraging American universities to patent inventions made by their faculty members, and it has been very successful. A recent article in the international edition of the Chronicle of Higher Education even refers to what it called an “American higher-education export—the commercialization of university inventions,” which is beginning to take hold in Europe, as well.

We commonly refer to this process, the process by which academic inventions become commercialized, as “technology transfer.” The Chronicle of Higher Education said last month that “Eager for new sources of revenue, and salivating over the promise of biotechnology in particular, universities are doing their utmost to move what is on the lab bench into the marketplace.

The article said that "Each year hundreds of new products patented by universities do reach the marketplace, collectively earning millions of dollars for academic institutions in licensing revenues. Florida State University has made over $200-million from its patent on Taxol. The University of Florida has earned over $80-million on Gatorade, and a patent on something as innocuous as a variety of strawberry brings the University of California around $3-million every year.”

Major research universities in the U.S. are all very engaged in technology transfer. In addition to that, as an even more aggressive means to assist in economic development, many large research universities have developed business incubators, which allow universities to assist their faculty, alumni, or local entrepreneurs in starting up new businesses.

They provide space, laboratories, and sometimes start-up funding to new businesses in exchange for some of the revenue that will come as the business develops. It is often a risk, but it is a way in which both the university and the city, region, or state can benefit from new business enterprises.

The role of private universities in regional economic development, especially the smaller universities having more limited funds, is sometimes overlooked. But these universities also make important contributions to the economies of their communities. I will offer you some examples of this, using especially my own university.

First, and perhaps foremost, private universities are providing the city and region with highly trained graduates even though their operating budgets are not supported by the government. We all know that the most important part of economic development is a trained workforce.

Having the workforce educated through the private university system is a big savings to any state. For example, private universities confer one-third of the college degrees in Indiana and 35 percent of all the state’s math, science, and engineering degrees. In specialty areas such as physical therapy, that number is even higher. As a medium-size university, the University of Indianapolis prepares 65% of all the physical therapists who receive doctorates in Indiana, and in May we will award Indiana’s first doctorates in occupational therapy.

The private universities, due to their smaller size, generally are able to respond rapidly to community need. Because we are smaller, it is easier for us to respond quickly, and the University of Indianapolis has some special advantages in addition.

Our university has a rich and well-established history as an outreach-based university. Our focus has always been first and foremost on Indianapolis and Central Indiana.

For example, there is a nursing shortage in Indiana; in fact, this shortage is nationwide. There also is a need for nurses who can move into managerial positions within our city’s extensive health care network. In response to a request from the city’s Clarian Health Network, the University of Indianapolis developed a nursing administration degree that combines a master’s of science degree in nursing with an MBA. We offer this very tailored program on site at Clarian Health Network hospitals, along with other nursing degree programs.

In addition to specialized educational programs, universities in the U.S., both public and private, are often engaged directly with the economic development organizations in their cities and towns. As an example, the University of Indianapolis is directly involved in an economic development initiative on the south side of Indianapolis. We are founding members of the new Gateway Business Alliance that is revitalizing a nearby business corridor, particularly a section known as the “Miracle Mile” that was once one of the city’s major business districts. We will invest both money and the expertise of our faculty in upgrading the businesses around our campus, because again it is in our best interest that there is a healthy, thriving business environment around our campus.

Another example is in city and community financial partnerships that are mutually beneficial. For instance, our university also has invested well over $1 million buildings in the historic Fountain Square neighborhood on the southeast edge of the city’s downtown, a few miles from our campus. At one of those sites, we have a partnership with HealthNet. Our faculty in nursing, physical therapy, and occupational therapy are involved in the delivery of health care at the center, which also is an important clinical site for our students.

At another site in Fountain Square, we are partners in the Wheeler Arts Center, another renovated warehouse. Today, many artists have apartments and studios there, and the University of Indianapolis leases classroom, office, studio, and theatre space for the benefit of students, faculty, and community. Our art, theatre and music departments offer classes and performances at this arts center—including after-school arts programs for public school students.

Universities also help regional and economic development by partnerships that allow faculty to work directly with businesses. At nearly all U.S. universities, members of the faculty are given a sabbatical, or leave of absence every five to seven years to study or work in their disciplinary areas. Although historically, the sabbatical was a time for research and discipline-based renewall for faculty, today that experience often is directly linked to economic development.

Dr. Leslie Gardner, one of our professors who teaches both math and business, has been active in the development of our coursework in supply chain management, which is a fast-growing field in Central Indiana. This is because of the city’s network of roads and warehouses, and the presence of companies such as Federal Express that must move products from one place to another as efficiently as possible.

Dr. Gardner was on leave last year to work with a large company in Indianapolis, Dow AgroScience. While she was there, she helped them develop the mathematical system for efficient worldwide distribution of their products. She benefited because she was able to apply her work to a real business situation and Dow AgroScience benefited because they had several months of work to solve a real problem for them from one of the experts in the field.

Internships are perhaps the most promising way of linking the economic needs for a trained workforce and students who are nearly ready to move into the work world. Every university in the U.S. has some kind of growing internship program, and it has been especially important in Indiana.

A problem for Indiana is that too many of our brightest students are leaving the state to find jobs elsewhere. To help prevent that, we place students in internships all over the city. An internship is an opportunity for a student to work in a business or organization, on either a paid or unpaid basis, to gain practical experience in the field while providing help to that business or organization.

As we all know, an education takes place both in the classroom and in the form of experiences that allow students to apply their knowledge in the real world. Indiana’s colleges and universities are providing those opportunities for our young people, and the University of Indianapolis is fortunate to be located in Indiana’s capital city, where many businesses are available for students to find internships.

As you can tell, in the U.S. there is an expectation on the part of the government, the business community, and the public that universities assist in the economic development of their regions and communities. And because the universities are in a competitive business themselves, it is beneficial to the universities that their communities be economically strong.

We have far to go, and the global economy we are all a part of offers new challenges, but as university leaders, it is important that we all recognize the important role universities can play in creating a strong economy.

I have been most honored to have this opportunity to share with you some of the ways that universities in the United States, and the University of Indianapolis in particular, is contributing to the economic development of their communities. I look forward to learning more from you at this important conference. Thank you.