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UW-Milwaukee - Center for Economic Development

Policy Research Report Abstract

The False Promise of the Entrepreneurial University: Selling Academic Commercialism as an "Engine" of Economic Development in Milwaukee

Marc V. Levine
Department of History and Center for Economic Development
University of Wisconsin-Milwaukee
Working Paper
September 2009

Abstract

"Entrepreneurial universities," in which academic research is commercialized and technology transferred through patents, licensing, and university-based business startups, are increasingly touted as the key driver of city and regional economic development. This paper reviews the relationship between research universities and local economic development in 55 major U.S. regions, and finds no meaningful correlations between any gauges of entrepreneurial university activity (research expenditures, patents, or licensing) and core measures of city and regional economic well-being. Notwithstanding tendentious accounts of "success stories" such as Silicon Valley or Boston's Route 128, as if they represent the general historical pattern, these data as well as case studies such as Johns Hopkins University and Yale University reveal 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.

While proponents of academic commercialism routinely overstate its economic benefits for cities and regions, they rarely mention the significant costs. These include potential undermining of the system of basic research and open science that has been the cornerstone of scientific discovery in the US, and, ironically, undercutting innovation. Contrary to claims by many university leaders that research commercialization will generate revenues for their institutions, for most universities tech transfer is a money-losing proposition. Tech transfer is a classic example of jackpot or casino economics, with very few big winners, and over half of US universities lose money in academic commercialization. Research funding and commercialization revenues are heavily skewed to the same "top 15" universities that have dominated these statistics for decades, and, as one expert has argued, outside of this top group most universities are getting nothing out of tech transfer "except a lot of economic development rhetoric."

This paper also includes an in-depth case study of efforts to transform the University of Wisconsin-Milwaukee (UWM) into an entrepreneurial university. All of the dubious claims regarding the impact of entrepreneurial universities on local economies and the revenue-generating potential of academic commercialism have been advanced by UWM leaders, with little debate, analysis, or public scrutiny.

"Entrepreneurial" UWM is pursuing two core "economic development" initiatives:

  1. a suburban technology park, oriented around biomedical engineering; and
  2. a School of Freshwater Studies, to propel Milwaukee as the alleged "Silicon Valley of water technology."

The economic logic underpinning both initiatives, however, is deeply flawed. Biomedical engineering is hardly a field in which the Milwaukee region or UWM either start in an advantageous position or have obviously propitious prospects. The suburban Wauwatosa technology park has been vastly oversold as a potential engine of economic development. Urban universities have increasingly become anchor institutions in city economies, yet UWM plans to invest an estimated $150 million outside a city that has been buffeted over the past 30 years by growing joblessness, poverty, and the suburbanization of industry. Ironically, for an initiative deemed crucial to the economic future of Milwaukee, UWM's suburban tech park, by disinvesting in the city, will help undermine the economics of agglomeration that economists and urban planners concur is a central ingredient of economic development.

UWM is already a major research institution in the field of Great Lakes ecology and freshwater science, and the new school will build on this tradition. But the economic development arguments for the SFS as the centerpiece of an emerging Milwaukee water technology "hub" are based on spurious claims and, to borrow a phrase, "irrational exuberance." The key points:

  1. Measured by the location of water company headquarters, plants, or offices; the generation of water technology patents; or jobs in the industry, there is little evidence that Milwaukee is a "hub" or even an "emerging hub" of the industry;
  2. The job creation potential of water technology in Milwaukee has been vastly exaggerated by boosters; in fact, the two leading companies of the local water lobby have created more jobs outside of Milwaukee than in it over the past decade;
  3. UWM's water school will be neither a unique presence nor a "first-mover" in the field of water technology already brimming with university and corporate research facilities; and
  4. As evidenced by the politics of locating a building for the SFS, the risks of excessive industry influence over the new school are significant.

The essay concludes with a call for alternatives to entrepreneurial universities. Although the economic logic of the entrepreneurial university is highly flawed, that does not mean that universities and university research are irrelevant to local economic development and urban vitality. Educating students and generating human capital; nurturing talent and intellectual curiosity; supporting the research commons through open, public science; and helping solve real-world, community problems—these are the ways in which engaged universities, rather than entrepreneurial ones, have historically contributed to community economic well-being.

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