Feature: MSU Stands Out as an Engine of Economic Growth
When economic times are tough, a land-grant university like MSU stands out as as an engine of economic growth and as a wise investment of public dollars.
In ordinary times, it’s easy to think of Michigan State University as just a pretty campus, just a place where papers are written and graded, just a place where theorems are proved, just a place where students earn their degrees and then move on.
But these are no ordinary times. The United States economy is now in the midst of its most serious economic crisis in three-quarters of a century. In extraordinary times like these, we are reminded that universities are engines of economic activity and economic growth.
Major universities such as MSU now have a global reach. MSU generates economic ripple effects throughout the United States, and to faraway places like London, Dubai, Beijing, and Seoul. But MSU’s biggest economic effects are felt close to home. Indeed, all of the colleges and universities in our state have important economic effects for Michigan. But Michigan State University is unique, because of its size, because of the high quality of its faculty, students, and staff, and because of its historic mission of outreach and engagement.
The magnitude of these economic effects was brought home by a recent study by the research and consulting firm, Anderson Economic Group. They estimate that the net economic impact of the University Research Corridor (MSU, the University of Michigan, and Wayne State University) was $13.3 billion in 2007. (The report is available at www.urcmich.org/economic.)
In the otherwise bleak winter of 2008-09, mid-Michigan scored two major economic triumphs, each of which will ultimately generate thousands of jobs and hundreds of millions of dollars of revenue. Neither of these would have occurred without Michigan State University. The Facility for Rare Isotope Beams is connected directly to MSU (see the President’s Perspective, p. 4). The other, a new IBM research facility, is not actually a part of MSU. But IBM could have chosen to locate the facility anywhere in the world. They chose East Lansing because of the advantages that can only be provided in a university setting. These advantages include close connections to active research initiatives, availability of highly skilled people, and cultural amenities.
Each year, thousands of young people launch their careers on the basis of a degree earned at Michigan State University. As a result of the skills developed at MSU, these graduates will earn far more in the labor market than they would have earned if they had only a high school diploma.
In 2007, for men aged 25-34 who work full time, the average labor-market earning was $35,995 for those with only a high school diploma. Those in the same age group with a bachelor’s degree earned an average of $63,175. Those in the same age category with a Ph.D. earned an average of nearly $110,000.
If we compare the data in the previous paragraph, we see that those with a bachelor’s degree earned 75 percent more than those with only a high school diploma! In 1991, the premium for a college education in this age group was only about 50 percent.
Now more than ever, if a state wants to be prosperous, it needs a highly skilled and highly educated work force. If we look at the 50 states, there is a striking correlation between per-capita income and the percentage of the population with a bachelor’s degree or more. In 2006, the three states with the highest per-capita incomes were Connecticut, Massachusetts, and New Jersey. All of these three states were also in the top five in terms of college attainment.
At the other end of the spectrum, the three states with the lowest per-capita incomes were Arkansas, Mississippi, and West Virginia. These three states were all in the bottom seven in terms of college attainment.
Among the states in the Great Lakes region, Minnesota and Illinois have the highest college attainment. Thus, it should come as no surprise that Minnesota and Illinois rank one and two in the region in terms of per-capita income.
Michigan is in the middle of the pack. In 2006, we ranked 28th among the 50 states in college attainment, and 26th in per-capita income. Of course, it’s better to be in the middle of the pack than at the bottom of the heap, but I would like Michigan to be a lot closer to the top. Michigan State University, along with the other colleges and universities in our state, is playing a vital role by helping to provide Michigan with a highly educated workforce.
Many of Michigan’s people are concerned (and rightly so) about the “brain drain”, whereby some of our brightest young people are educated here in Michigan, but move out of the state. Some have even argued that we ought to stop supporting public universities in Michigan, since not all students stay in the state. In my view, this is wrongheaded. However, it is very true that if we want the best and the brightest to remain in Michigan, we need businesses to want to hire the highly skilled workers who are educated here. In other words, we need a supply of highly skilled workers, but we also need demand for their services.
I believe we need to do four things to further strengthen the foundation for future economic growth. The first two of these are focused on stimulating the growth of businesses in Michigan, and the other two have to do with increasing the supply of highly skilled workers who want to be in Michigan.
? First, we need to do everything we can to create a business-friendly environment in Michigan. My favorite idea is to eliminate the Michigan Business Tax, and to replace those revenues with a graduated income tax. This will remove an impediment to business investment in Michigan. It will also help us to “export” more of our taxes, because state income taxes can be deducted from the federal income tax. It will also align our tax system more closely with the ability to pay taxes, which has become increasingly concentrated at the high end of the income scale.
? Second, we must continue to strengthen our commercial connections around the world. It’s especially important to facilitate trade with our nearest neighbor, Canada. America’s number-one trading partner is Canada, and the number-one gateway to Canada is Michigan. Nationalism and xenophobia often rise during economic slumps, but we must guard against closing our borders. Instead, Michigan will benefit from prompt construction of new bridges over the Detroit River.
? Third, we must create a vibrant culture, with parks, museums, concerts, restaurants, and more. Increasingly, talented young people move to a metropolitan area on the basis of these amenities. If we are to attract and retain young talent, we need Michigan to be a cool and exciting place.
? Last but certainly not least, we need strong public support for MSU and the other public universities. If we have a business-friendly environment, strong trade ties with the rest of the world, and a vibrant culture, we will surely attract young people from other places. But our best bet will always be to have plenty of highly educated home-grown talent. In recent years, Michigan’s economic struggles have led to repeated budgetary crises, and the state government has enacted harsh cuts to higher education. That policy is penny-wise and pound-foolish.
The shrinkage of manufacturing, and especially the auto industry, has pushed Michigan’s economy into a long and difficult transformation. The global financial crisis has multiplied Michigan’s economic challenges. In spite of these very real problems, however, I am very bullish about the long-term prospects of the Michigan economy. The drumbeat of bad news should not be allowed to obscure the many successes that we have already had in Michigan, in high-tech engineering, solar energy, health care, motion pictures, and many other sectors. Michigan State University is leading the way toward the brighter economic future for Michigan.
?Charles L. Ballard is a professor of Economics at MSU. He is also director of the State of the State Survey, which is part of the Institute for Public Policy and Social Research, in MSU’s College of Social Science. Ballard is an expert on public policy issues and the Michigan economy. His latest book, Michigan’s Economic Future, was published by MSU Press in 2006.
AN OVERVIEW OF MSU’S ECONOMIC IMPACT
MSU remains focused on its primary mission of helping the state of Michigan while generating $2 billion a year in contribution to the state economy.
MSU has long been a beacon of academic and scientific achievement. Increasingly in recent years, MSU has also won recognition for its role as a driver of the state’s economy.
Recent announcements from heavyweights International Business Machines Corp. and the U.S. Department of Energy have recognized MSU’s intellectual and institutional assets as a prime resource for the economy of the 21st century. In December, the federal government awarded MSU a $550 million nuclear research facility, the Facility for Rare Isotope Beams (FRIB). It’s especially impressive that MSU won the contract in spite of formidable competition from the Argonne National Laboratory in Illinois. Konrad Gelbke, director of the National Superconducting Cyclotron Laboratory, and his team were instrumental in landing this contract.
In January, IBM announced it will locate a global application development center in East Lansing. The IBM facility will be housed in the former headquarters of the MSU Federal Credit Union. The MSUFCU has grown along with MSU since 1937, and now boasts a membership of 145,000. Its rapid growth made it necessary to build a new, energy-efficient headquarters (also in East Lansing), which opened its doors in 2008.
Building on its land-grant origins, MSU today pursues a global vision for fostering sustainable prosperity. Although MSU has become a top institution for study and research abroad and for enrollment of international students, the university’s first mission always has remained focused on service to the state of Michigan.
Last year, MSU President Lou Anna K. Simon made the case in testimony before the Michigan Senate. “MSU’s land-grant mission compels us to work collaboratively with businesses, individuals, government agencies and others in communities around the state—and now around the globe—to co-create solutions to today’s most pressing problems in order to promote economic growth,” Simon told the Senate Subcommittee on Higher Education. “We are committed to providing assistance across the state at all scales, to all collaborators, including large corporations; medium-sized companies; startups; and individual workers; and across industry sectors, from advancing the latest Michigan high technology to maintaining our state’s traditional high standards of commercial hospitality.”
At the smaller end of the business scale, that can take the form of business and marketing consulting. These services are delivered through the programs of MSU Extension, directed by Thomas Coon, which operates in each of Michigan’s 83 counties. The MSU Product Center for Agriculture and Natural Resources helps to shepherd food and agricultural products to market. The Product Center added a biotech business consulting service, opened in 2003, and it has assisted approximately 100 fledgling businesses.
MSU also works with larger businesses. The university continues to maintain long-term research and internship relationships with such multinational enterprises as Ford Motor Co. and Dow Chemical Co.
Sustainable technologies are a center of excellence at MSU. One of the most important is extraction of energy from non-food organic substances. A recent $50 million federal grant helped establish a location for the Great Lakes Bioenergy Research Center at MSU. University scientists accompanied Michigan Gov. Jennifer Granholm to Sweden to forge business partnerships in the biofuels sector. Meanwhile, a partnership with Mascoma Corp., a Massachusetts biofuels company, is proposing to build a $450 million cellulosic ethanol plant in Michigan’s Upper Peninsula in coming years. This facility is expected to create 500 jobs or more. Any facility of this size would be welcome news for the struggling economy of the Upper Peninsula, where total employment is only about 121,000.
On campus, scientists are making discoveries that could lead to plant varieties tailored specifically for biofuel production, and creating a Web-based genomic database of information on crops that can be used to make ethanol (see cover story, “Grassoline In Your Tank,” Winter 2008). Researchers are working in partnership with Ford Motor Co. to develop advanced diesel engines tuned for biofuel blends.
Engineering professors Dennis Miller and Ramani Narayan have founded Spartan Biofuels LLC, a biofuels processing and development company. The company works in partnership with Ford Motor Co. for testing and development and with Zeeland Farm Services for soybean feedstock.
MSU’s “green chemistry” is providing assistance to Draths Corporation. Draths maintains a nearby laboratory commercializing the manufacture of nylon and other products using renewable resources instead of petroleum. DuPont Applied BioSciences recently extended its research program with MBI, MSU’s biotech business accelerator.
MBI is located at the south end of the 114-acre University Corporate Research Park. MSU Technologies, the university’s technology transfer organization, is evaluating hundreds of patents for their commercialization potential, placing them in a searchable online database. It also rendered critical start-up assistance to a medical device company co-founded by John Schwartz, an associate professor in the Dept. of Fisheries and Wildlife. Schwartz was named 2008 innovator of the year by state biotechnology industry organization, MichBio.
The university also is a key player in the development of the state’s health care and life science sector. MSU is involved in partnerships with dozens of hospitals to train physicians, while bringing federal graduate medical education dollars into those communities. MSU’s College of Human Medicine is expanding into downtown Grand Rapids in a new 180,000-square-foot facility. On the other side of the state, the College of Osteopathic Medicine is expanding at two locations in the Detroit area.
A $7 million gift will expand the facilities of the MSU College of Nursing to help buttress the state’s health care infrastructure. In addition, a new Clinical and Translational Sciences Institute (involving clinical and pre-clinical pharmacology) will become a hub for biomedical research statewide.
MSU has been involved in the creation of two economic development organizations, the Lansing Economic Area Partnership (LEAP) and the Prima Civitas Foundation (PCF). While LEAP focuses on the Lansing region, the PCF concentrates on technology transfer and development around the state. PCF acts as a broker between MSU researchers and financial institutions, venture-capital organizations, and other parties. The university also recently partnered with the city of East Lansing and other members of the Lansing Regional SmartZone to create the East Lansing Technology Innovation Center. This new center will help entrepreneurs launch high-tech ventures.
MSU has long collaborated with the other two top research universities in the state, the University of Michigan and Wayne State University. In 2006 and 2007, this collaboration became known formally as the University Research Corridor (URC). As part of the URC, MSU has helped generate 69,285 jobs, educated more students than any of the nation’s best comparable Research & Development clusters, and produced $13.3 billion in economic impact in 2007, according to study by the Anderson Economic Group.
MSU’s work-force development efforts include training residents for biofuel production jobs through the federal WIRED grant program. This program also assisted MSU’s drive to promote the earning of National Career Readiness Certificates via WorkKeys assessments. Those assessments are demanded for many positions by large employers including Dow Chemical Co. and United Solar Ovonics.
MSU’s Executive MBA and executive leadership programs help corporations develop their managerial talent.
“When we first started working with (consumer product manufacturer) Masco Corp. to create a leadership development program for their operations professionals, they were won over by two things: our faculty’s deep knowledge of the subject area—supply chain management—and the faculty’s willingness to roll up their sleeves and deeply understand their business problems,” says David J. Frayer, director of executive development programs for the Eli Broad Graduate School of Management at MSU.. “But the more we have worked with Masco, Kellogg, Steelcase, Amway or any of the other corporations we have here in Michigan, the more they tap into the advantages that MSU can offer them and the more they are able to appreciate how valuable our intellectual resources are.”
Relationships that start with MSU’s customized programs frequently grow into connections with other areas of research excellence at the university, from packaging and the development of new materials to biofuel advances and the latest ideas on sustainability.
“The mutually beneficial projects—research opportunities, support of doctoral students, long-term funding of dedicated research centers—that result probably would never have happened without the experience these corporate leaders had when they came in through our executive development ‘front door,’” Frayer says. “Outreach is truly a dialogue here at MSU.”
? Mark Fellows is a communications manager in the Div. of University Relations, covering science, environmental and economic development topics. He has a background in business journalism.
Related Web Sites
University Research Corridor: www.urcmich.org/
University Corporate Research Park: www.ucrp.msu.edu/index.html
MSU Technologies: technologies.msu.edu/
MBI International: www.mbi.org/
Great Lakes Bioenergy Research Center at MSU: glbrc.msu.edu/
Office of Biobased Technologies: www.bioeconomy.msu.edu/
MSU Product Center: aec.msu.edu/product/
Broad College of Business: www.bus.msu.edu/
MSU Extension Community & Economic Development: web5.msue.msu.edu/eced/programs.html
Prima Civitas Foundation: www.primacivitas.org/
LEAP Inc.: lansingleap.com/
MSU’S WHARTON CENTER: A COG IN MICHIGAN’S ECONOMIC ENGINE
MSU’s Wharton Center for Performing Arts serves as a cultural anchor for the region’s quality of life and also as a cog in Michigan’s economic engine. “(We are) more than four walls and a stage,” says Michael Brand, the center’s executive director. “It’s an ever-evolving cultural institution that serves a role in helping drive the state’s economy.”
Each season Wharton Center presents a diverse line-up of world renowned artists. They not only retain discretionary spending by Michigan residents in our state’s economy, but mega-musicals like Disney’s The Lion King and Wicked actually attract money from surrounding states. “Each season we try to present at least one mega-musical,” says Brand. “When we present multi-week engagements like Disney’s The Lion King, we can see upwards of 40 percent of our ticket holders originating from beyond the region, including Canada, Ohio and Indiana.”
According to the Broadway League, North American touring Broadway for the 2007-2008 season grossed $956 million from 15.3 million in ticket sales. Pollstar Magazine placed Wharton Center fifth among the top 100 international theatre venues.
“Although current ticket sales are down due to the recession, past sales have helped us establish a national reputation for sales on par with larger market venues, thus attracting the attention of producers who want their shows to be seen in East Lansing,” says Brand. “This is one reason we are attracting mega-hit Broadway shows, even through mid-Michigan is considered a mid-sized market.”
Brand hastens to add that the community’s overwhelming support is vital. The center’s funding derives mainly from corporate sponsorships, private donations, and ticket revenues and rental income. In an average year, nearly 75 corporate sponsors and 2,500 private donors help underwrite initiatives, such as the new MSU Federal Credit Union Institute for Arts & Creativity. More than 350 individuals volunteer their time and talents in various capacities.
? Kent Love, ’93, is director of communications for Wharton Center for Performing Arts and co-chairs the communicator team of MSU’s Cultural Engagement Council.
MSU ATHLETICS HELPS THE ECONOMY
We in intercollegiate athletics help to energize the state economy by bringing people together through participation, spectatorship, and engagement with 25 sports, third most in the Big Ten Conference. With more than 220 varsity sport home events annually, Spartan athletic events bring more than one million fans into Mid-Michigan each year—with more than half of them attending Spartan Football games. Our fans generate significant economic activity in and around the campus, benefiting not only the local economies, but also the entire state by purchasing tickets, parking, concessions, food & drink, accommodations, and other goods and services.
In addition, some 40 million households, or about 100 million viewers, watched MSU’s 13 televised football games in 2008. The seven home football games pumped an estimated $70 million into the mid-Michigan economy.
Our department also supports activities in academic and community outreach that provide value to the campus and community. These activities include the participation of nearly 8,000 youth at summer sports camps, engagement with the MHSAA and various championships events, and connections through academic fundraising and outreach.
We are facing the current economic challenge with new approaches, new ways of thinking, and new rules of engagement for how we do business to become an even more efficient business model, but at the same time keep striving for excellence in all that we do.
