Making the Link Between Higher-Ed and Economic Development

Anup Ghosh, founder of Invincea Labs, the kind of company Virginia business leaders would like to see more of emerging from state colleges and universities.Photo credit: Washington Post.

If there’s one thing that big business, colleges, universities, Republicans and Democrats agree upon, it’s that Virginia’s public system of higher education is essential for workforce development, social mobility, economic competitiveness, and building the economy of the future. The unanimity of opinion was on full display today at the 2017 Virginia Summit on Higher Education and Economic Competitiveness in Richmond.

A series of speakers including the Democratic and Republican candidates for governor hammered away at a common theme. Virginia’s economy has slowed, people are leaving the state for the first time since records were first kept in the 1940s, and the Old Dominion has declined in a number of best-state-for-business rankings. To revitalize the economy, Virginia needs to invest in its colleges, community colleges and universities to equip workers with 21st century skills and create innovation ecosystems capable of spinning university research into new businesses and jobs.

If those messages sound familiar, it’s because they largely coincide with the goals announced last week by Growth4Virginia, an initiative of the Virginia Business Higher Education Council, which put on the summit. The council, comprised of college presidents and prominent businessmen, has been working with the Virginia Chamber of Commerce to build public awareness of higher-ed’s contribution to the economy.

Beyond articulating four broad strategies — making Virginia the top state for talent, making Virginia a home for entrepreneurs and innovators, providing affordable access for all Virginians, and preparing Virginians for great jobs and great lives — the conference did not stake out any public policy positions. The event seemed more geared to raising consciousness that something needs to be done.

However, it was not apparent that the consensus strategies, hemmed in as they are by scarce state resources, will accomplish much. Two dissenting themes emerged in the panel discussions. First, Virginia can crank out more graduates, but there is no guarantee that the grads will stay here if they can’t find jobs. Second, Virginia can pour money into university research, but R&D activity won’t generate enterprises and jobs unless other elements of the innovation ecosystem are in place.

Peter Blake, executive director of the State Council of Higher Education for Virginia (SCHEV), set the scene by describing Virginia’s progress toward reaching the goals of the Virginia Plan for Higher Education. The most audacious goal is to make Virginia the “best educated state” in the country by 2030, leaping past Massachusetts, Colorado, Connecticut, Minnesota and Washington. As a practical matter, that means granting 1.5 million undergraduate degrees and workforce credentials between 2015 and 2030. Two years into the initiative, Blake said, Virginia is on track to its goal, having granted 265,000.

Boosting Virginia from the sixth best educated state to No. 1 “will not be a light lift,” Blake said. “It will require sustained attention.”

Neither Blake nor anyone else at the conference gave an estimate of how much it would cost to achieve that goal. But for the most part, Virginia’s business leaders at the conclave accepted the necessity of investing in the higher-ed system.

The Virginia Chamber of Commerce is focused on improving Virginia’s best-state-for-business rankings, and the quality of the workforce is one of the important metrics, said Dennis Treacy, chamber chairman. Particularly essential are the so-called STEM-H (science, technology, engineering, math and health) degrees.

Stephen Moret, president of the Virginia Economic Development Partnership, agreed that the quality of Virginia’s workforce is vital for recruiting out-of-state business. “Human capital is the single greatest driver of prosperity in the economy,” he said. “Incentives still matter, but what matters the most is human capital. If we win on human capital, we win, period.” As for the goal of becoming the best educated state, he said, “I love that goal.”

But he warned that there is a “relatively small correlation between degree production and degree attainment.” In other words, it’s one thing to grant the degrees, it’s another to find jobs for people with those degrees. The reason so many Virginians, half of whom have college degrees, left the state over the past three years is that they can’t find jobs here. Federal budget sequestration has crimped job creation in Northern Virginia, the commonwealth’s economic engine. Moret suggested that it might be prudent to focus resources on graduating students from disciplines for which there is a demonstrated shortage.

Making a similar point, John L. “Dubby” Wynne, former CEO of Landmark Communications in Norfolk, noted that Virginia has a 4.3 million-person workforce and has an acute shortage of employees with information technology skills. Yet Virginia’s higher ed system produces only 4,000 four-year degrees, two-year degrees, and certification credentials in computer science per year.

The other big sticking point was the goal of investing more in Virginia universities’ research capabilities. It is a truism that in a technology-driven economy, research universities are engines of economic growth. Look no further than Stanford, Berkeley and Silicon Valley or Harvard, MIT and Boston. But given the size of its economy and the high regard of its public universities, Virginia punches below its weight.

Virginia’s six research universities generate about $1.4 billion in research annually, said Angel Cabrera, president of George Mason University. That’s less than the University of Michigan alone. Virginia is attracting less than its fair share of federal research dollars. If the commonwealth wants to be a player in research, he said, “you have to make investments to get it.”

Cabrera gave examples of the kind of economic benefits that accrue from R&D activity. Annup Ghosh, founder of Invincea, which describes itself as a next-generation anti-virus company, sold the company earlier this year for $120 million. Ceres Nanosciences, which developed a highly accurate diagnostic test for Lyme disease, has raised millions of dollars in growth capital. Both came out of GMU.

However, GMU is embedded in a dense innovation ecosystem. Ghosh, for instance, had worked at DARPA, the Defense Advanced Research Projects Agency, which funded his research at GMU. He tapped the Center for Innovative Technology for funding, and he found other early-stage funding in Northern Virginia. Thanks to the region’s ties to the defense and intelligence agencies, entrepreneurs also can draw upon world-class technical and executive talent in cyber-security.

Other regions in Virginia don’t have such well-developed innovation ecosystems. With an eye to building innovation assets in Hampton Roads, Wynne conducted a gap analysis comparing Hampton Roads capabilities with best practices. The regional fell woefully short. The NASA Langley research facility and the Thomas Jefferson Lab conduct about $1 billion in research between them, but a scientist seeking to commercialize a technology would find few resources to help him, he said. Wynne said he is working on building a business accelerator and developing a source of seed funding.

Bacon’s bottom line: While strong colleges and universities are essential components of technology-driven economic development, they are not sufficient in and of themselves. It is possible for the commonwealth to invest too much in higher-ed, getting ahead of the demand for graduates and the ability to commercialize R&D. Investment in higher-ed has to be carefully calibrated with demand for particular skills and the slow and painstaking development of innovation ecosystems around research universities. If state leaders are not careful, they could wind up subsidizing at great expense the workforce of other states and building research capabilities that generate little economic spin-off.

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13 responses to “Making the Link Between Higher-Ed and Economic Development

  1. What about education for those people, young and not-so-young, that are right for college or who really want to learn some trade or technical skills?

    The last two mornings, I’ve taken the Silver Line to D.C. from the McLean Station, parking in the private lot across from the station. Many of the construction workers working on the many buildings being constructed park there as well as white collar commuters. There are a very number of cars with Maryland license plates. And when I returned from D.C. today about 3 pm, many workers were heading to their Maryland cars. Where are the skilled workers from Virginia? Tysons is not an easy commute from Maryland.

    I don’t think Virginia makes much of an effort to offer vocational and technical education to its residents. These construction jobs, even the many non-union ones, pay very well. And Tysons will be under redevelopment for the next 40 years.

    What are we spending education tax dollars on?

  2. I’m a skeptic on the connection between higher education attainment levels and the quality and performance of the colleges in the same state.

    I would tend to believe that the overall education attainment level of a state is more a reflection of it’s employed jobforce and economy than it is of the quality of the Higher Ed.

    People don’t necessarily stay in the same state they got their education.

    My bet is that in a place like Northern Virginia -you’re going to find a huge diversity in where people attended college – and a lot of them, not in Virginia.

    Virginia could up it’s game and improve its college system even higher than 6th place (which is nothing to sneeze at anyhow). but even if Virginia cranks out more and more high attainment grads.. they’re not necessarily going to stay in Virginia if it does not have the jobs.. they’re going to go where the jobs are.

    Conversely a region could be an economic powerhouse but sucks at College grad numbers and attainment… so people graduate in another state and go to where the jobs are.

    And I agree with TMT -the 21st century economy is less about standard 4yr college than it is about specific skills and knowledge – that you won’t get at a standard generic college track and I bet Mr. Moret would mouth similar thoughts.

  3. An infographic courtesy of Stephen Moret:

    The more highly educated an individual is, the more likely he or she is to move to another state to land a job.

  4. Another way of looking at the data, also courtesy of Moret — propensity to move by age and level of educational achievement:

    Bottom line: Educated people are highly mobile. If Virginia degree earners can’t find jobs locally, they have the opportunity and means to find jobs outside the state.

  5. Looks like Mr. Moret is well versed in the demographics and trends!

    trying to drill down on who GROWTH4Virginia is …


    VBHEC was founded in 1994 by Virginia business leaders on the principle that the prosperity of Virginia and the well-being of its citizens is fundamentally tied to access to a strong system of public colleges and universities. A nonprofit, nonpartisan partnership between Virginia’s business community and higher education leadership, VBHEC’s mission is to enhance the performance of Virginia’s public colleges, universities, and community colleges and their funding by state government so they can produce the greatest possible positive impact on Virginia’s economy. ”

    There is a long list of names without their affiliations which you see names like Thomas F. Farrel, Haze, Trible, etc

    Here is an example of how Community Colleges are much more attuned – and nimble to the economy than the standard 4yr guys:

    ” Germanna course of the week: Facebook and Instagram for Business”

    It’s a one-dayer and costs $49 dollars which is a bargain in terms of value delivered – not only on the content but networking … this is also where you’ll run into entrepreneurs.. budding ones and old dogs..

    Germanna and it’s counterparts is also where you’ll find a wide variety of uber-practical workforce courses from Criminal Justice for law enforcement to nursing and other occupational certificates.

    And I would further assert – this is what would-be employers thinking about locating in Virginia are looking for.

    Higher Ed is still a core need but the 21st economy is very different from the 20th century economy in terms of the kind of knowledge that is needed and curriculum is something that evolves on a faster tempo – i.e. instagram today is not what instagram a year from now will be.. and the course content needs to stay with whatever instagram is and it’s variants are as the economy moves… and that also means the use of adjunct instructors will also be dynamic.. four year institutions move at a very different pace.. than community colleges…

    “business” in the 21st century .. is very different than it was in the 20th century – and it’s a bit of a question why Community Colleges have become what they are .. when they are really just another variant of higher ed and in theory – traditional higher Ed .. COULD have evolved in response to the changing economy – but for whatever reason – have not and Community Colleges -which are a relatively new thing in education have adapted to the economy much faster… better..

    so why is that?

  6. As usual Steven Moret’s work is on target and practical, thus useful.

    His work points to facts that buttress the idea that today’s system, now in force for decades, is today failing Virginia’s students, Virginia’s growth, and Virginia’s prosperity, health and well being.


    Virginia is not educating enough empowered graduates who by reason of the quality of their education are effective individuals ready and armed for success in the real world, students with the drive and skills, the internal determination and confidence, to go out on their own and realize their dreams in the state of Virginia.

    Hence, the best and the brightest, as well as the hardest and most productive workers, whether craftsman, construction worker, technician, scientists, or talented and highly educated liberal Arts major, are leaving Virginia. And those that stay are presumed to not be getting the work they deserve and/or that society needs, work that builds families, businesses and health, within vibrant and growing communities.

    In addition, Jim Bacon’s above article provides strong further evidence of this fact that now is growing plainly obvious almost everywhere we look.

    For example, in educational institutions, the rich get richer while the poor get poorer. The powerful get more powerful. The least powerful cannot rise within the system that is stacked against their growth and advancement. Teachers are penalized, stymied, and humiliated.

    Meanwhile growing numbers of administrators and an ever smaller cabal of senior tenured professors who do not teach but rule over, build and feed instead upon, private fiefdoms where growing cadres of low paid but highly educated researchers and instructors labor like indentured servants in service of their masters, but without any realistic hope for advancement.

    What to do?

    Virginia needs to escape its tired old rhetoric, the kind of tired old rhetoric displayed in Jim Bacon’s above article.

    These worn out words and ideas expressed in Jim’s article have now been reduced to cliches. They mean nothing. In practical effect they change nothing. Business as usual, these platitudes constitute little more than a perennial public relations campaign cynically designed to protect special interest within a corrupt system. Namely to raise public moneys to feed that system, and those who run that system that has gone way off tract, lost it sense of mission, and now lives only to feed itself and those who run it and milk it for personal advantage – namely bureaucratic Administrators, and the small cadre of senior tenured research professors and their crony capitalists allies and ideologues, all of whom live off the system for private advantage.

    What needs be done is effective change that benefits those who pay the bills.

    Virginia’s system of higher education needs to dramatically shift its paradigm as to how it thinks, how it talks and how it acts about how higher education can best generate economic growth in the state.

    Public money spent on the system should not be spent on empowering educators to spend vast sums of public monies on themselves, their own private interests, dreams and ambitions. This is wrong! It is directly contrary to higher education’s mission in the state. Instead the state needs to legitimize its current corrupt system by demanding that higher education reorient itself back to its only legitimate primary purpose.

    What is that sole legitimate primary purpose of public education?

    It is that public education in the state direct the vast majority of public monies and tuition, and the vast majority of the time and attention of its best professors, toward the hard and demanding task of giving EACH AND EVERY STUDENT within the education, the best, the most practical, and the most effective education, possible for that particular student.

    Students are educated one at a time by empowered and highly effective teachers devoted to almost exclusively to teaching individual students, teaching them, or given them the attitudes, and confidence they need to go out and succeed in the world, in accordance with their own belief, and in accordance with their own ambitions, not those of their professors. The state needs every professors to be JOHNNY APPLESEED, each casting out over the fields of Virginia dozens upon dozens of capable, self motivated students annually.

    • Definition of insanity is doing the same thing again, expecting a different outcome? Look at the names attached to Growth4Virginia:
      G. Gilmer Minor, III, Chairman
      Linwood H. Rose, Vice Chairman
      Nancy Howell Agee
      John Broderick
      Angel Cabrera
      Glenn DuBois
      Thomas F. Farrell, II
      Clifford B. Fleet
      W. Heywood Fralin
      Thomas R. Frantz
      Victoria Harker
      John T. Hazel, Jr.
      C. Burke King
      Howard P. Kern
      Paul D. Koonce
      George K. Martin
      Eddie N. Moore
      James B. Murray, Jr.
      J. H. Binford Peay, III
      Michael Rao
      W. Taylor Reveley, III
      Timothy D. Sands
      Charles W. Steger
      Todd A. Stottlemyer
      Teresa A. Sullivan
      Dennis H. Treacy
      The Honorable Paul S. Trible
      John O. Wynne
      Donald J. Finley, President

      Why would anyone expect innovation from this group? Every one of them has an interest in protecting the status quo or has already had ample opportunity to introduce measures that would address problems of access and affordability, and has failed. Same old, same old, with a new name and website.

      • G Gilmore Minor III – Age 76
        Linwood H Rose – Age 66
        Nancy Howell Agee – Age 65
        John Broderick – Age 59
        Angel Cabrera – professional golfer from Argentina and perhaps the only innovative person on the list.

        John T Hazel, Jr – Age 86

        I don’t know what you’re talking about Lift. If I were forming a technology start-up these would be the kinds of people I’d want on the board (sarcasm flag = on).

  7. I think people are voting with their feet – for Community Colleges – to include ONLINE…

    Online has it’s issues – no question – but it’s a different way of getting education with it’s own unique problems that need to be addressed in order for it to be “better”… the biggest problem is not online.. it’s the people who don’t have the personal discipline to pursue knowledge on their own and need a more structured environment with a classroom and a teacher. Make no mistake – there are people who only need access to the knowledge to advance themselves.. so in some respects.. Online is a good option for mature people .. and those who lack that maturity need more “support” which does not come free.

    I keep asking.. in the 21st century with the internet and any/all information one could possibly hope for – at their finger tips.. all they need is a computer and an internet connection and their own wherewithal to gain the education they need – then what is the purpose of a classroom and a teacher ? both of which cost a lot of money and there is a continuing drumbeat for “mo money” from those who seem to want more than a computer and the internet.

    so again.. what is purpose of spending more and more money for a traditional bricks and mortar.. education when a much cheaper version is virtually free to all? It’s mind-boggling…

  8. There may be a link between economic development and higher education. The big question in terms of government funding of higher education is: Is there a link between higher education in Virginia colleges and economic development in Virginia?

    • You ask the right question and the answer is “no”. Virginia’s best colleges are in locations that will never become major urban centers. While Virginia does have public colleges in its urban areas they are not tier 1 colleges. In order to get any real lift from higher education you need tier 1 universities in urban locations.

      So, what to do?

      Sell UVA and William & Mary. Let them buy out the Commonwealth of Virginia’s interest and go private. It’s what they want to do anyway. Then, take the money raised in the sale and bolster George Mason, ODU and VCU. In particular I’d leverage Virginia Tech’s strong engineering capabilities for these urban center schools – potentially folding their engineering schools into Virginia Tech as a state engineering university system.

  9. Yes, our big universities are not in the right locations for economic growth. They need to be in metro areas.

    Why can’t research universities provide on-campus space or nearby empty building space and appropriate access to equipment, grad students, etc. in exchange for ownership in any startups? The holdings can be sold when companies go public or when the inside investors want full control of their companies. Would this work?

  10. geeze guys.. I bet I can name 50 really good Universities that are not in big urban areas.. and I bet I can name quite a few prosperous economic areas that do not have top tier Universities.

    I think people pick Universities to attend – not cities to live in …

    after they graduate – they look for jobs…

    maybe there is some level of chicken/egg… but look at Amazon… is one of their requirements top tier Universities for their location?

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