Editorials, detail

"Research as an engine for Ohio's economic development"

by Luis M. Proenza, President
The University of Akron

to Northern Ohio Live - January 18, 2000

Thank you, Dick, for your generous introduction. It has been a pleasure to work with you over the past year, and I commend you for your leadership in bringing Northeast Ohio to appreciate and value the power of a regional economy.

This morning, I want to step back from the topic of e-commerce and look at the environment that enabled e-commerce to come about in the first place.

I think it is important for us to understand that larger and broader environment. It is important for the very simple reason that while e-commerce is the issue of the day, other technologies are being born as we speak, and it behooves us to understand what drives the formation of new industries in the first place. For surely, something else will come to replace or change e-commerce. And critical to this understanding is to understand that today, as Zell Miller, the former governor of Georgia, has noted, higher education is the infrastructure of the new economy.

In June of last year, some of you may have read an opinion piece of mine in which I argued that Ohio must strategically and actively invest to advance its economy.

That opinion is based on my twenty years of experience in economic development and technology transfer and is borne out by our own history here in Ohio.

Let me tell you how:

At The University of Akron, research has provided the intellectual property that served to fuel and diversify the industrial base of Akron, transforming it from the rubber capital into the polymer capital of the world, and helping to reinvent our region through its discoveries in polymer research.

And because of that research, The University of Akron today has the second-largest intellectual property portfolio among public universities in Ohio, and relative to its inputs, the most productive by far . . .

I am not sure that any of you knew that, or that many of you know that the University has so much excellence in so many other areas . . . well beyond polymer science and polymer engineering . . .

. . . where we rank second in the nation.

Perhaps you did not know this simply because The University of Akron has not been previously inclined to tell you.

However, I would argue that Ohio has tended to undervalue all of its universities.

. . . But now, more than ever, you need to know and you need to understand how universities contribute to the state's economic well-being, because universities located in metropolitan settings, like The University of Akron and Case Western Reserve University, are today fulfilling even more critical needs for their communities.

Here is how Tim Ferguson put it in a recent issue of Forbes magazine:

"In Cleveland's heyday (during the Industrial Revolution), proximity to water or rail mattered a lot. Today proximity to a university campus matters a lot."

Why this is so, can best be appreciated by noting that Donald Alstadt, the chairman and C.E.O. of the Lord Corporation, for many years maintained an office at each of 10 or 15 universities so that he could be the first to "mine" new knowledge and technology; . . . So that his company could gain a competitive edge.

And that is because in today's knowledge-based economy, intellectual capital is business capital. And staying close to the source of knowledge creation is not just a good idea; it is a business necessity.


That is why during this past year many of you have heard me say that the university is an engine for economic development . . .

The University is an engine for economic development through research and the production of new knowledge.

Indeed, economists agree that creation of new technological knowledge through research is our most direct economic avenue for acquiring added value.

When that new knowledge is quantified in a market environment, it creates fuller employment, capital formation, growing profits, and surpluses for reinvestment.

In other words, it is from research that new companies are born; that new jobs are created;

It is from research that the economy expands and new wealth is created.

In the analogy of the "birds and the bees," research begets new companies!

And that is why during this past year many of you also have heard me say that in a knowledge economy, education is infrastructure.

And perhaps you still puzzle at that strange sounding word, infrastructure, so let me explain.

If you open your watch, you find the "stuff" that keeps time. The gears and sprockets - or the microchips -- of a watch make up the infrastructure of a time-keeping system.

Infrastructure, in other words, refers to those things that enable a particular system to accomplish its purpose.

In a transportation system, for example, infrastructure includes the roads, vehicles, fueling stations, repair garages and all of those other things that keep things moving.

Thus, when I say that in a knowledge economy education is infrastructure, I mean for you to understand that education has become the basis for everything we do to make our society work and for progress to take place.

Education is infrastructure, because through the engagement of students, it creates knowledgeable individuals that can apply analytical and problem solving skills to shape our industries and our societies.

Education is infrastructure, because through research, it creates the ideas and technologies that shape the industries of the future.

Education is infrastructure because it enables both personal and economic progress.

And lest you think that this is nothing more than academic rhetoric, let me cite just a few historical examples to prove my point:

It was research that enabled the agricultural end industrial revolutions at the turn of the last century. And during World War II, research that was initially vital to the Allied war effort laid the groundwork for technological leaps in medicine, aviation, energy, electronics -- developments which today affect virtually every realm of our human endeavors.

And with the development of transistors, the era of microelectronics began and sowed the first seeds of the Silicon Valley; and from such modest beginnings, we are now immersed in the information age.

The research we did related to the Space Race not only resulted in Americans walking on the moon, . . . but also gave rise to the Space Industry, and enabled new technologies in satellite communications, computer science, robotics and miniaturization.

As recently as 1970, a single discovery in molecular biology initiated the new industry of biotechnology, an industry from which we are now seeing dramatic advances in medical science and the introduction of effective new technologies such as the production of human insulin by factories of microorganisms.

And as I indicated earlier, polymer research at The University of Akron and Case Western Reserve University served to fuel and diversify the industrial base of Northeast Ohio.

These are just a few examples of research as an engine for economic development. Each effectively demonstrates that new knowledge builds new capacities just as surely as materials build new structures . . .

. . . And each demonstrates that our nation's investments in education and research have built very real assets that have yielded very real returns on those investments.

Indeed, the social return on research and education investments has been estimated to be consistently at between 30 and 50 percent per year.

But let's get back to Ohio.

A few weeks ago, while meeting with a group of polymer industry executives, I was suddenly struck by a certain irony in my experience.

The irony was this: Twenty years ago I was telling Georgia to emulate Ohio (because Ohio had then just put in place some innovative approaches to spur its economic development), and now I find myself telling Ohio to emulate Georgia!

Let me explain the essence of this irony, because it has two important components which we should all appreciate and understand.

First, it seems that we in Ohio have not fully grasped the investment value of education.

Any cursory review of legislative language will tell you that this is so, because Ohio's appropriations for higher education are characterized as "subsidies" and not "investments."

And that is a difference not only in semantics, it is a difference of fact. Because the fact is that the state recoups nearly $2 dollars for each dollar appropriated for higher education, and recouping twice the expense, by any account or measure, is a superb return on investment.

So here is the irony: Since subsidy is not a "good thing" in today's competitive marketplace, why would our state choose to think pejoratively when in doing so, Ohio not only conveys its ignorance of the facts, but, what is worse, it perpetuates an approach that will doom Ohio to economic mediocrity.

Second, over the last twenty years, Ohio and other states in the Midwest have lagged in innovation and lost market share in Research and Development.

As I have noted elsewhere, The University of Akron is the only university in all of Ohio, public or private, to have a basic science and engineering graduate program ranked among the top five nationally.

And it is a program that serves an industrial cluster which accounts for nearly one quarter of Ohio's manufacturing output.

Neither Ohio State, nor the University of Cincinnati, nor any other Ohio university can lay claim to such a highly rated research program that serves such a large component of the state's economy - not one!

And, in partnership with Case Western Reserve University, we make Northeast Ohio number one in polymer research - worldwide!

This singular national ranking speaks volumes about the strength of our university's polymer program, but it also sends a powerful message about how much Ohio must do to gain leadership in other areas.

Even in the $20-plus billion polymer sector, Ohio's investment to sustain competitiveness seems paltry. For example, Ohio currently provides just $1.4 million to the Edison Polymer Innovation Corporation, but the state easily spends $100 million to support the coal industry.


Meanwhile, other Midwestern states are showing signs of competitive awakening.

This year, Indiana created a 21st Century Research and Technology Fund and is prepared to spend $50 million per year in areas of strategic opportunity. Two years ago, Illinois established funding mechanisms to enhance university-based R&D.

Ohio could learn from many of these approaches, or from many of the other ideas that were discussed at the pubic policy forum we held at The University of Akron in October.

If Ohio is to become the leader in science and technology that Governor Taft has called for, our state must once again invest in its future.

It must invest in higher education, and it must signal strategic intent. And it must do so boldly! Now! Before another twenty years creates yet other ironies of neglect.

It must do so because success in the new economy belongs to those regions that create and nurture the human resources of intellectual capital . . . the people that create new knowledge and new technologies and quickly translate research discoveries into marketable products and services.

That is why The University of Akron is investing $200 million dollars in your future . . . Why we are creating a new landscape for learning . . . why we will continue to be committed to the economic well-being of Akron and Ohio.

To succeed, universities, area business, industry, and government must work in partnership to support clusters of brainpower. And, we must work hand-in-hand with our elementary and secondary school systems to create a strong and consistent flow of brainpower.

Let me close by asking that if you remember nothing else from my remarks, that you remember these simple facts:

We have a burgeoning research industry in our universities (The University of Akron and Case Western Reserve University). It makes a "profit" by leveraging new dollars into Ohio. Its "products" impact the way we do business in Ohio, and improve the quality of our lives. It is an engine for economic development.

Our University mascot is a kangaroo that we affectionately call Zippy; but in the metaphors of financial markets, you need to know that -

This kangaroo is bullish on Ohio!

And puts quite a punch, quite a zip, into the Ohio economy.


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