Universities Are Not Economic Saviors, So Let’s Stop Pretending That They Are

To hear some policymakers talk, one would think colleges and universities exist mainly to enhance economic growth rather than to educate. Politicians and higher education officials increasingly champion partnerships between universities and private firms; the hope is that they will spur commercial innovation and economic expansion.

That is certainly the prevailing philosophy in North Carolina. It was recently put into practice when in April the University of North Carolina system’s Board of Governors approved East Carolina University’s request to build a “millennial campus,” a public-private research commercialization park modeled after NC State University’s Centennial Campus. 

At that meeting, board members waxed effusively about the proposed millennial campus. Harry Smith, a 1992 ECU graduate, said, “We are in [an economic] fight in eastern North Carolina and what we have to do is have vision and continue to do everything we can to invest and help ECU compete.” 

But not only is such “vision” based on a misguided interpretation of ECU’s role as a research university, it is also based on a concept with an abysmal track record. With some notable exceptions—such as North Carolina’s Research Triangle Park—centrally planned efforts to connect universities with industry have fizzled. Large-scale projects designed to spawn patents, attract entrepreneurs, and boost business investment and job growth have had minimal success or failed altogether

Unfortunately, too many policymakers only see the few glittering successes and not the more numerous failures. The reasons for the rare success story are many and complex; there is no “one size fits all” template when it comes to stimulating an economically lackluster region. Yet promoters of these public-private partnerships are adamant that success is all but guaranteed, as was one ECU official who proclaimed at the April meeting, “We know this is a proven model.” 

Data and case studies belie such confidence in university research hubs as economic drivers. In his 2009 report titled The False Promise of the Entrepreneurial University, Marc V. Levine, founding director of the University of Wisconsin-Milwaukee’s Center for Economic Development, noted that “even world-class research universities are neither necessary nor sufficient in promoting local economic development. University research parks are particularly oversold as engines of local economic growth.”

Levine highlighted Baltimore, a city with an economy fast approaching dysfunctional “Detroit status,” despite being home to Johns Hopkins University, which the author calls the “unambiguous powerhouse of U.S. academic research and development funding in science and engineering.” Indeed, between 1985 and 2006, Baltimore registered more than $23 billion in research expenditures, $20 billion of which came from Johns Hopkins. 

During those years, Baltimore surpassed all other metropolitan areas in terms of academic research and development, beating out Boston, New York, Los Angeles, and Raleigh. Nevertheless, the region as a whole did not benefit from its proximity to Johns Hopkins and failed to produce the spin-off firms that many had hoped for. 

Another case study, particularly relevant to ECU’s millennial campus, is the University of South Carolina’s Innovista, a research park designed to mimic NC State’s Centennial Campus. Roughly $100 million has been funneled from the Palmetto State’s coffers to a planned research cluster in Columbia aimed at exploiting patents, creating new businesses, and luring tech firms. After a decade, though, private sector participation has not materialized and the project is seen by many observers as a waste.

The lackluster performance of Innovista demonstrates a point made by Jay Schalin in his 2010 report titled State Investment in Universities: Rethinking the Impact on Economic Growth: “High-tech clusters are difficult if not impossible to create by government policies alone, tending to occur somewhat naturally because of favorable conditions in a particular area.” 

The Greenville area, which will be home to ECU’s research park (formally titled the East Carolina Research and Innovation Campus), does not appear to possess such “favorable conditions.” In fact, many residents are packing up and leaving. Board of Governors member Henry Hinton raised that issue when he advocated for the millennial campus in April: speaking to ECU officials, he said, “You’re in a region of the state that needs this badly. In the last census, all the contiguous counties to Pitt County lost population.” 

Compounding such emigration is the fact that only 30 percent of ECU’s Class of 2014 stayed in Greenville or nearby counties. Presumably, local residents and recent ECU graduates are flocking to areas with better job prospects. Or better locales: throughout the Greenville area, one sees numerous dilapidated buildings and empty store-fronts. It does not come across as an attractive destination for young scientists, engineers, or entrepreneurs. 

And even some positive developments in the region are not quite what they seem. For instance, Greenville is home to pharmaceutical companies such as Patheon and Metrics, which have had recent hiring surges. But some of those job increases have occurred not because of natural market forces, but because of multi-million-dollar incentive packages offered by the state government. If Greenville had a truly desirable business climate, such artificial economic stimulation would be unnecessary. 

Still, many state officials are banking on their own version of artificial economic stimulation—ECU’s millennial campus—to turn Greenville’s problems around. But they should consider the case of Global Transpark (GTP), located 30 miles away in Kinston. 

The Civitas Institute’s Brian Balfour calls GTP “North Carolina’s money pit.” In its 21-year existence, GTP, a public-private economic development project, has received roughly $150 million in government subsidies and bailouts, with virtually nothing to show for it. Initially, supporters said the project would entice businesses and create thousands of jobs; today, only 486 private sector workers are employed there and GTP operates at a loss, with significant long-term debt to boot. 

In addition to questions about the viability of public-private partnerships in the Greenville region, there are serious concerns about whether ECU has the acumen to manage a millennial campus. That’s because of recent blunders related to its medical school, the Brody School of Medicine (BSOM). 

BSOM has squandered “tens of millions of dollars,” suffered from inept management, and expanded beyond its original mission, which was to “increase the supply of primary care physicians” in the state. ECU’s medical school will likely receive a $16 million taxpayer bailout over the next two years, and if its problems aren’t addressed and officials aren’t held accountable, it will need bailouts in the future, too. 

How much money ECU’s research campus will require—and where it will come from—remains to be seen. The university has only begun the process of negotiating with private firms and outside entities—a process that will be ongoing and continue over many years and decades. Today, the plan is for four sites of university-owned land, totaling 328 acres, to be revitalized and made attractive for development.  

One site is already in use—ECU’s health science campus. Another, called the “warehouse district,” is intended to accommodate workforce development partnerships with Patheon, Metrics, the advanced manufacturing company Hospira, and IBM (partnerships that existed before the millennial status was approved). A third site is located in uptown Greenville and the fourth, which will be set aside for a “live, work, play community” similar to Raleigh’s North Hills, is near ECU’s athletics complex. 

It’s difficult to see how ECU’s millennial campus will fare better than USC’s Innovista. Columbia, South Carolina, after all, has a lot of “favorable conditions” working for its benefit, being a bustling state capital with a flagship university. Yet, despite such an encouraging environment, so far Innovista has failed. And Greenville has much less to offer employers and employees.  

One problem underlying the proliferation of research parks in the UNC system is that the Board of Governors has the power to approve them rather than the legislature. While board approval does not create funding obligations on the part of the state, it does increase the likelihood of future subsidization. Over the years, the system’s eight millennial campuses have received hundreds of millions of taxpayer dollars. For example, the ostentatious Hunt Library on NC State’s Centennial Campus cost the public about $100 million. 

The approval of ECU’s millennial campus reveals major flaws in the approval process, as well as the university-cum-economic savior model itself. The school is trying to be something it is not and cannot be, lured by a façade of fancy buildings that stimulate nothing. The reality is that research commercialization hubs are appropriate for only a few universities with very promising conditions. ECU is not likely to be one of them.  

Perhaps instead of using its undeveloped property in such an extravagant manner, ECU should sell the land off and create a scholarship fund or endowed professorships. Or use the proceeds to stabilize the Brody School. Whatever the case, the university should focus on efficiently delivering high quality education, not rescuing its local economy.

(Editor’s note: Leaders from East Carolina University, the NCEast Alliance, and the Greenville-Pitt County Chamber of Commerce have sent letters to the Pope Center criticizing the author’s contentions. While the Pope Center appreciates the enthusiasm that those leaders have for their region and its future economic well-being, it stands by the author’s views and the facts presented above.)