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Study shows higher ed floats Hub economy
By David J. Craig
The city of Boston, which boasts one of the largest concentrations of
colleges and universities in the world, has always been associated with
brainpower.
Until the release of a study this month, however, the economic impact
of the Hub’s institutions of higher learning has never been comprehensively
assessed. The new study finds that greater Boston’s eight research
universities — Boston University, Boston College, Brandeis, Harvard,
Massachusetts Institute of Technology, Northeastern, Tufts, and UMass-Boston
— pack a serious economic punch, having injected about $7.4 billion
into the regional economy in 2000 alone. That’s roughly equivalent
to the windfall a city enjoys from hosting the Olympic games.
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| BU Chancellor John Silber (left) speaks with Paul Guzzi, president and CEO of the Greater Boston Chamber of Commerce, at a March 11 event marking the release of a study that measures the regional economic impact of eight Boston-area research universities. The study found that the universities injected $7.4 billion into the regional economy in 2000. Photo by Kalman Zabarsky |
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The eight universities, in addition to being among the region’s
largest employers and consumers of local goods and services, generate
the “intellectual capital” essential to Boston’s “knowledge-based
economy,” the study states, and in 2000 produced a combined 31,900
graduates, many of whom joined the local labor force. Support for higher
education by local industry and government will prove crucial for the
rejuvenation of the area’s sluggish economy, according to the 102-page
report, which was conducted for the universities by the New York economic
research firm Appleseed.
“These universities enrich the quality of life in our community,
yet we sometimes overlook the unique ways in which they also contribute
to the economic vitality of our region,” said Paul Guzzi, president
and CEO of the Greater Boston Chamber of Commerce, at a March 11 Chamber
event marking the study’s release. “Our research universities
advance new technologies that create new industries, they provide jobs,
purchase goods and services, train our workforce, and attract hundreds
of thousands of visitors to our region from throughout the world. Higher
education is, in fact, one of the five leading industries in our region.
One could easily make the case that higher education is the foundation
of the region’s economy.”
The study, entitled “Engines of Economic Growth,” found that
between 2000 and 2002, a time during which employment in the region fell
nearly 3 percent, the universities had a stabilizing effect on Boston’s
economy by adding 2,000 jobs, bringing their combined number of employees
to 50,750. The universities in 2000 supported an additional 37,000 local
jobs through their expenditures, which totaled $3.9 billion. Students
alone spent $850 million locally on food, entertainment, and transportation.
In addition, the study reports, the universities attract $1.5 billion
annually in research contracts and grants — 81 percent from the
federal government, and less than half a percent from state or local coffers
— and that hospitals and research centers affiliated with the eight
institutions receive $1 billion in grants and contracts annually. “These
investments spawn new ideas and new technologies that are licensed to
area start-ups and to other companies, which in turn become job creators,”
said Tufts President Lawrence Bacow at the event.
Construction at the universities should average $850 million a year for
the next four years, moreover, supporting 5,100 full-time construction
jobs each year.
Perhaps the most innovative way the universities spur growth, however,
is by supporting start-up companies. In 1974 BU created its Community
Technology Fund, which helps University researchers identify commercially
viable intellectual property, secures patents, and links the researchers
with private investors and entrepreneurs with the expertise to build businesses
around their new technologies. To date, BU has helped create about 25
such spin-offs; an additional 10 fledgling ventures are in its business
incubator.
“When Boston University started the Community Technology Fund, some
lawyers said that it was improper for a nonprofit institution to be engaged
in activities of this sort, but now it’s commonplace,” Silber
told the gathering of about 250 legislators and business and community
leaders. “Everybody understands that it makes perfectly good sense
for nonprofit institutions to also have ancillary activities that may
generate capital for the economy.”
According to the Appleseed report, in 2000 the eight universities “assisted
in the start-up of 41 new ventures dedicated to commercializing technology
developed within the universities. These ventures, in turn, attract private
equity financing, further stimulating” economic growth. In addition,
the study found, 280 technology licenses granted by the universities to
private enterprises generated $44.5 million in income for the region in
2000. Of the 50 Boston-area start-up companies raising the most venture
capital in the past year, 25 were affiliated with one of the eight universities
profiled in the study.
Silber also pointed out that area universities often collaborate “in
ways that go unnoticed” on business ventures that fuel the economy.
As an example, he referred to an ongoing effort led by BU and involving
MIT, Harvard, and UMass to bring a national biodefense laboratory to Boston
Medical Center. The city could not compete for federal grants to build
the facility “if it were not for the fact that these four universities
have shared ideas and contributed in a variety of ways to the feasibility
of the plan,” Silber said. “The economic consequences of the
plan are enormous: over a 20-year period it would pump about $2 billion
into this region.”
To read the entire Appleseed report, visit www.masscolleges.org.
21
March 2003
Boston University
Office of University Relations