1. A Framework For How Higher Education Influences Economic Growth Rick Mattoon Senior Economist and Economic Advisor Federal Reserve Bank of Chicago SHEEO Professional Development Conference August 15, 2007 Boston, MA

2. Project structure 2 year project examining the role of higher education in the economy. Special emphasis on Midwest 2 conferences (both cosponsored by MHEC). First, (November 2, 2005) focused on evolving role of higher education, public funding issues, access. Second conference (Oct 30, 2006) focused on higher education and its role in economic development Major issue at first conference—the changing social compact for funding higher education. The private vs. public good debate http://www.chicagofed.org/news_and_conferences/conferences_and _events/2006_higher_education_agenda.cfm http://www.chicagofed.org/news_and_conferences/conferences_and _events/2006_higher_education_agenda.cfm http://www.chicagofed.org/news_and_conferences/conferences_and _events/2005_future_of_higher_education_agenda.cfm http://www.chicagofed.org/news_and_conferences/conferences_and _events/2005_future_of_higher_education_agenda.cfm

3. Motivation for project Shift to a knowledge economy  What institutions produce knowledge and human capital?  What condition are they in?  What are the transmission mechanisms for sharing knowledge?  The “third stream”. A return to the land grant mission?

4. What did we find For Higher Education to influence regional and local economic growth it must be strategic and attune to the local economy “Big Bang” technology transfer might be overstated Need to answer two questions:  What type of economic transformation is the region trying to promote?  What is the role of higher education in facilitating this change?

5. Richard Lester’s typology for university led economic growth

6. Why universities? Immobile assets in a world of increasingly mobile assets (problem—if the most important product of the university is graduates, mobility undermines this contribution) Emphasis on innovation defined as “the capabilities of local firms to take up new technological and market knowledge and to apply it effectively” Its not just creating knowledge, the take-up rate matters

7. Lessons from case studies North Carolina Akron and Rochester Entrepreneurship Community Colleges North Dakota

8. Bottom line To quote a great scholar (Larry Isaak), “it takes leadership”