Students from local colleges, frequently move out of state when they graduate:
If Stanford can hatch world-famous companies around Palo Alto, politicians assume, their colleges can, too. But with so many trying to spin universities away from their traditional academic focus into engines of economic development, it is worth considering whether investing in local universities can achieve that goal. This strategy is based on the view that research done by professors can form the basis for local start-up companies and that the graduates of the university can supply the entrepreneurs and employees.
But advocates should remember an old maxim of economic development: Beware of investing in things that can move. As it turns out, graduates and research ideas both tend to move around a lot. Subsidizing teaching is problematic as a development strategy because graduates frequently move out of state.
They looked at such factors as having successful patents at universities or where highly influential science articles had originated. They found little evidence that the ideas helped local businesses any more than businesses in other areas. The one thing the study does find to be consistently associated with high-tech start-ups is the presence of star scientists – not the ideas, which can be copied, but the scientists themselves. This seems to be the one way in which a university can be used as an engine of business growth.
Trying to make some town into the next Silicon Valley by attracting the best scientists is rather like trying to start a new baseball team and turn it into the New York Yankees. If dozens of sports-mad billionaire team owners can’t do that, how easy would it be for the economic development office at the University of Texas, Arlington?
What is worse, it is a safe bet that as these development incentives become a primary motivation for financing higher education, the competition among universities for stars will start looking much more like today’s baseball scene. Ambitious state university systems will find it easier to steal the stars of another team than to develop their own prospects. As a result, salaries will go through the roof – just as in baseball. And while everyone pays more, only a tiny number of cities will ever win the World Series. One will increasingly hear about how the costs of college are rising everywhere and that local economies have little to show for it.