Higher Education and Economic Development Complement One Another

Last Updated: October 11, 2023

Higher education and economic development at the local level are almost always very compatible. Instead local leaders may think faculty salaries and foolish spending in campus town are the only economic benefits of the local college. Sometimes city officials and residents are oblivious to the importance of college and university business spin-offs and talent as economic generators. We will consider both aspects of the contributions of colleges and universities to the local economy.

When you consider our definition of economic development--attracting an activity that brings new money into your community--a residential higher education institution is perhaps the quintessential economic development activity.

I met a friend on the street the other day, and we were talking about this. He opined that the importance of higher education to economic development is declining. His reasoning was that the re-shoring effort to bring manufacturing back to the U.S. is real and will be increasing in impact in the next several years. This is true, but it does not negate the fact that those places that already have a college or university in their midst should consider that institution as an important economic asset.

Our experience is that town residents and officials consistently underestimate the number and diversity of jobs that the university or college provides directly, and that job base deserves not to be taken for granted.

Beyond the direct number of jobs provided by higher education, residential campuses always bring purchasing power into the community. Wise communities try for a local procurement agreement.

Further, science, engineering, medical, and technology schools and departments attract faculty members who can create new businesses, and the liberal arts schools and departments can get in on the act by bringing culture and the visual and performing arts into the community. These quality of life factors can be incredibly important to attracting and supporting the best talent for income-generating new businesses.

Community colleges also support economic development in a big way by developing a skilled workforce, and perhaps even by supplying much-needed remedial education when the local school system falls short. With insight and close cooperation between the campuses and economic development and business leaders, that labor force can be custom trained to meet the needs of local businesses and start-ups.

If your city hosts a research university, on this page we will develop a sketch of how town and gown controversies and culture clashes should be set aside to allow a university and its intellectual capital to bring you new inventions and patents that lead to community jobs.

Instead of lengthening this particular page well beyond what you our readers will tolerate, we're preparing a separate page about the role of higher education in collaborating with corporations and labs in creating technology-driven jobs.  Until we finish, you can stay abreast of these collaborations, which some are calling innovation districts, by monitoring the developing Global Institute of Innovation Districts website. That site also contains links to a number of papers that have been describing the innovation district concept since about 2014.

The other big advantage of a local higher education institution is that you can capture some youthful energy for your volunteer projects and perhaps make your town interesting enough to convince some talented young people to stay and form businesses.

It's like tourism in economic impact, except that the "tourists" stay a lot longer, spend more, and delve more deeply into the community. And the government doesn't have to spend its own money to attract these tourists!

What You Need to Know about the Relationship between Higher Education and Economic Development

If you're a community leader, or a neighborhood leader near a college, university, or technical school, make it your business to understand the strengths, weaknesses, challenges, and opportunities that are facing your local higher education institution.

I know, they're a bunch of stuffy intellectuals over there, they speak their own language, they're deliriously liberal, and the institution itself moves at a snail's pace. They all have red Persian rugs in their living rooms, and way too many books.

Oh, get over it. If you refuse to get over it, I could suggest many more difficult ways for you to try to attract the same number of jobs into your community, if you'd like. These other methods might work in 10 or 20 years.

Remember that your local college or university provides jobs not only for elites such as faculty members, but also for janitors, cafeteria workers, people to change the light bulbs, and clerical workers. When higher education and economic development entities brainstorm together, apprenticeships, jobs programs, facility sharing, and talent sharing could benefit all.

And as a footnote, remember that higher education provides you with exposure to international culture, concerts, lectures, plays, graffiti art, night life, and college bars that you wouldn't have otherwise.

How Towns Need to Help Universities

If your local institution's unique or unusual strength didn’t immediately spring to mind a moment ago when we mentioned strengths, make it your business to find out where your higher ed institution excels. The "town" part of the town and gown equation can make a big difference in whether a college or university succeeds.

If your technical college is well known for graphics arts, are you taking advantage of that in your community economic development promotions? But in the other direction, had you thought of a graphics art contest, exhibition, or fair where commercial artists from beyond your own city would compete or show? If you didn't know that your local institution is a graphic arts mecca, how would you have figured out you could have a graphic arts exhibition over a summer weekend?

I hope you can see that this exhibition would benefit the students but also bring tourists into your city. Looking for those win-wins is the essence of cooperation between economic development and higher education.

Imagine you are in a small city surrounded by rural area, but you have a great engineering school. After only a small amount of dialogue between the higher education and economic development communities, you'd know that you'd best start to promote entrepreneurship and work to see that your town culture is supportive. Some savvy old-time businesspersons could sure help those techie start-ups that don't know anything about finding a good accountant.

In this instance, higher education and economic development really need to work together, if the potential for spin-offs from a technical faculty are ever to prosper.

What if Your Town Doesn't Provide What Higher Education Needs?

First, you have to ask what the campus community wants in town that it does not find. You may be able to guess, but you might not estimate the discomfort correctly. You may think it is the lack of non-stop flights to London, when really it is the fact there are no jobs for the faculty spouses, or vice versa.

For example, in smaller towns, the lack of a bookstore, local theatre or other arts venues, and convenient parking for visitors often are problems to the university community. In the smallest of college towns, the lack of a motel or inn near the college may make it all too easy for prospective students to skip the campus visit. And it's tough for the college to make a good impression on visiting scholars, lecturers, artists, and prospective faculty.

A university in a large urban area sometimes experiences the opposite problems. Visitors may be repulsed by fear of crime, complexity, ugliness, dirt, tasteless advertising, difficult wayfinding, and sleazy hotels. Solve those problems, and you could have a higher education winner on your hands.

But in virtually every case, the quality of the surrounding city makes a difference in how well institutions are perceived, how successful they are , and how high their faculty retention rate is.

So invest major effort in building a partnership between higher education and economic development, and everyone will win. Often the higher education elite will find the economic development leaders to be money-grubbing, and business leaders find the university professors insufferable, but you have to cooperate on making a great environment for higher education, one of your biggest exports, no doubt.

The community can enlist the higher ed community in resolving community amenity gaps, by the way. If your college faculty grouses about the lack of an independent bookstore, ask them to identify a budding entrepreneur among the faculty, increasing number of part-time faculty, or faculty spouses. Then support that entrepreneur with any economic development incentives you have at your disposal.

If an urban university has a real or perceived crime problem, the community can suggest that the university upgrade its emergency call box system, in return for some extra police patrols for a time.

Or the community can and should suggest they might do a better job of providing public services if the university makes a commitment to providing interns to the local government.

Retaining out-of-town graduates in your town as potential entrepreneurs also is another economic benefit of your local college or university. For this type of higher education and economic development synergy, now you're going to have to impress students with your quality of life. But young adult energy in town will help attract more quality students.

The higher education and economic development communities should share another commonality, by the way. Both should be very concerned about elementary and secondary education. If kids can't read, it's a problem in both realms. This is a great topic for early meetings between the two camps.

The point is simple. Get a higher education and economic development partnership developed, and nurture that relationship the same way all relationships are built. Get to know each other, understand one another's foibles, and enjoy each other's company.

The best story I heard about this is when a professor invited some of his international students to gather with the townspeople, whose menfolk liked to hunt. The locals and the internationals prepared the game according to their respective cuisines, and partied the night away.

The other best story (well, OK, I have two) is when local business leaders invited the higher education leadership to an evening cocktail party with a terrific detailed presentation of local history, sort of reversing the intellectual roles.

If Your College Doesn't Make the Grade

Higher education is a very specialized and also competitive field. If your local college or university does not seem to be making as much of a "profit" for the local economy as you expect it should be making, discrete inquiries to locales where similar institutions are located may yield important information.

Check the annual U.S. News and World Report college issue to learn the national leaders in the curricula in which your local institution claims to specialize. Your library will have other resources that allow you to obtain an independent opinion.

Admittedly much of what makes a college or university thrive is beyond local control. The quality of the faculty and the athletic teams tend to drive student interest in attendance. Smart administration also makes a world of difference in whether the institution attracts and retains good talent, and frankly in whether money is made or debt is accumulated.

So do what you can to make sure the town is complementing the strongest points about the university or college. But if your economy is college-dependent, and you find out your one institution isn't doing so hot, it's time to start making contingency plans. Just like every other employer you have, there are bad operators and good operators. And sometimes you just can't salvage the mistakes or short-sightedness of a college, particularly a private one.

Former campuses have become office complexes, residential developments, prisons, or entire redevelopments. Occasionally a four-year campus becomes a technical college, or a K-12 educational complex. If the news is bad when you start learning more about your local institution, figure out how to survive without it.

A Role for Universities in Nearby Low-Income Communities

One especially valuable role that universities sometimes are in a position to play is that of catalyst, convener, resource for, or the actual developer in addressing blighted or declining neighborhoods near the campus. Check out this excellent book of case studies about higher education leadership in community poverty matters in surrounding neighborhoods if this is of interest. (We are not acquainted with the authors and are not receiving a commission; it's just a good book.) Otherwise look into Cleveland State and University of Detroit Mercy projects with neighborhoods.

It's a delicate balance between university assistance and resentment-building university domination. A sensitive and resident-centered partnership between higher education and economic development, though, could mean allowing a low-income community to start becoming a wealth-building community.

Overall the advantages of building bridges between higher education and the rest of the community are many and obvious.  Only the human factor is limiting, but both sides need to put aside timidity and learn to appreciate each other's strengths.

Check Out Some Other Pages Related to This topic

Economic Development Incubator

Economic Base

Commercial District Revitalization

Maker Space

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2. Community Challenges, Common Topics & Concepts
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3. Economic Development > Higher Education and Economic Development

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