![[Table of Contents]](/icons/up.gif){kind=icon}
[Chapter 3] On the Road to Economic Development - December 1996
In order to address the ways in which higher education institutions are involved with economic development, it is important to consider varying definitions of economic development. Rolzinski (1986) defines it as the creation of new wealth through the use of money, markets, manpower, materials, and management -- the five "M's" of economic development theory. According to SRI International (1986), economic development is a process of innovation that increases the capacity of individuals and organizations to produce goods and services and thereby create wealth. Others have defined it as the process by which less advanced regional economies are accelerated toward parity with more prosperous areas (Cote and Cote, 1993). The common element in each of these definitions is the acknowledgment that economic development focuses on the creation and/or expansion of wealth. For this program guide, economic development is defined as an increase in the well-being of area residents, manifested by positive changes in the level and distribution of area employment and per capita income (Wolman and Spitzley, 1996).
This definition of economic development, with its focus on the increased well-being of residents of a particular area, readily lends itself to consideration by higher education institutions. Responsibility for economic development has long been a function of local and state governments. However, as American society and the world move increasingly toward an information-based rather than a manufacturing-oriented economy, knowledge production emerges as a major requirement. Human capital development becomes a most critical element in the economic development equation. In fact, the recognition of the strategic importance of human capital changes the way state and local policymakers must think about a region's colleges and universities (Luke, Ventriss, Reed, & Reed, 1988). Higher education institutions have an important contribution to make to the economic vitality of their communities, regions, and states; in many regions of the country they have become the cornerstones of state and local economic development.
Colleges and universities have traditionally had three major goals. They teach, conduct research, and provide service to the community. Institutions are able to draw upon these historical roles as they become more involved with economic development. Higher education institutions can contribute to economic development in a variety of ways (SRI International, 1986; American Association of State Colleges and Universities, 1988; MacGillivray & Richmond, 1996). They are able to (1) apply their teaching capabilities to human capital development, (2) use their research expertise for technological development, (3) provide service to the larger community via policy development, and (4) serve entrepreneurs by providing business development expertise.
According to Smith (1986), economic development will rise or fall on the success of the human capital strategy. This is because 75 to 80 percent of the people who will make up the workforce in the Year 2000 are already in the workplace. Many of them do not have the skills and knowledge needed to work productively in the highly technological workplace of the 21st Century. There is a tremendous need for adult retraining and continuous learning opportunities. There also is a need for basic adult education for the thousands of Americans who are functionally illiterate. The fastest growing segment of the higher education population is adult learners who have already been in the workforce (Luke, et al., 1988). The human capital strategy for economic development requires that institutions provide such students with skills as well as with training on how to learn.
Among the various human capital development strategies advanced by postsecondary institutions are:
The human capital development function for economic development is being fulfilled by many different types of higher education institutions -- community colleges, proprietary schools, four-year colleges, and universities.
Many postsecondary institutions also are contributing to the development of new technologies. At the core of the technology development function is the conduct of basic and applied research. In conducting research, universities generate new technologies, new products, and new services. These developments, when made available to business and industry, help to spark the economy.
Technology is transferred from higher education institutions to business and industry in many different ways. In its most basic form, scientific discoveries made in university laboratories are transferred to the commercial marketplace. The more common source of transfer is in the form of technical assistance, where higher education faculty and staff help business and industry to solve technological and management problems. Higher education has an excellent opportunity to contribute to the economic development of national, state, and local economies by playing an expanded role in transfer of technology (Swanson, 1986; SRI International,1986). Key technology development roles include:
Whereas the technology transfer role draws heavily upon research conducted by scientific departments, there is a role in economic development for virtually every discipline within a college or university. With the global economy's strong emphasis on information and knowledge production, there are great demands for quick, accurate, and accessible data.
Local and state governments are increasingly calling upon higher education institutions to contribute to economic development in their communities and regions. As governments formulate economic development plans and policies, they need current and accurate information about critical economic variables such as infrastructure capacities, industry trends, and employment patterns (Luke, et al., 1988). Colleges and universities, with their business, economics, and planning faculties and students, are increasingly called upon to provide demographic and economic information to governmental and quasi-governmental bodies.
Some of the economic analysis and policy development roles assumed by higher education institutions (SRI International, 1986; Luke et al., 1988) are:
In addition to providing economic analysis and policy development support to governmental bodies, colleges and universities contribute to economic development by supporting the formation and development of businesses.
Small businesses are responsible for the creation of a significant percentage of all new jobs in America and they account for a sizable portion of the overall workforce. Colleges and universities provide considerable support to prospective, new, and developing businesses in their local areas. The support takes several different forms (MacGillivray & Richmond, 1996). It includes:
The business development role, like the other three roles fulfilled by colleges and universities, serves a vital function in economic development.
Black colleges and universities have had the same historic mission as other higher education institutions teaching, research, and service. Smith (1984) points out that the teaching function has been universally emphasized by HBCUs. However, the inability early on to offer advanced graduate study seriously hampered these institutions in their efforts to perform research and service functions optimally. Despite these limitations, HBCUs have a strong tradition of developing human capital and contributing to business development.
Tuskegee Institute, in Tuskegee, Alabama, has been recognized as sponsoring the first teaching-by-demonstration activities to bring agricultural training to black adults in rural areas. The demonstrations, or movable schools, were an effective teaching tool for rural facilities (Wall & Noland, 1990). This served as a model for human capital development in rural areas. Although some HBCUs still serve large rural populations, many of the current day institutions serve urban residents. In a study of the continuing education programs at nine HBCUs (one rural, four small cities, and four large urban), all of them were involved in human capital development as a means of contributing to economic development (MacGillivray & Richmond, 1996). The activities included:
HBCUs, like other institutions, make significant contributions to economic development by fulfilling the human capital development function. They serve a lesser role in developing and transferring technology. An area of major involvement is business development.
Business Development As a group, HBCUs have been less involved in business-industry initiatives than have white colleges and universities (Cote & Cote, 1993). Richmond and Goldstein (1996) found, however, that some HBCUs play a significant role in business development in their communities. For example, half of the nine institutions included in this study operated Small Business Development Centers through their academic business departments. Types of business development involvement include:
Some HBCUs are actively involved in the business development role. Although there is limited involvement by HBCUs in technology development and policy development, many of the institutions have strong academic programs that offer the potential for contributions in these areas.
Review of the literature reveals that HBCUs, and higher education institutions in general, are increasingly involved in a variety of economic development activities. The business development function is most often found to be served through colleges or schools of business. However, the human development and technology development functions are found in various departments throughout institutions. Business, industry, and government representatives seeking economic development support are unable to identify any single point of contact on a campus. Continuing education departments, which typically serve adult students who fall outside academic departments, may be the most logical source for coordinating all the economic development activities of an institution.
As continuous lifelong learning is embraced by all segments of the economy, continuing education programs may serve an expanded role in economic development. The definition of continuing education has evolved during the last decade of the 20th Century from being viewed as organized learning experiences for individuals who are beyond the usual college age and who are not regularly enrolled students (Hatfield,1989) to including all ages beyond compulsory education. Similarly, the scope of services and the service delivery modes have broadened so that individuals may be served wherever, whenever, and however they choose. Within this expanded and broadened definition of continuing education, some colleges and universities have adapted their offerings to focus on economic development.
The University of Arizona is one such example. It made a commitment to take a more aggressive role in its state's economic development. In addition to strengthening its ties with industry and business, the University reorganized and expanded its continuing education program (Witten, 1988).
Another example is the case of eight higher education institutions that responded to a 1991 request from the American Association of State Colleges and Universities (AASCU) to participate in an eight-step model process designed to involve continuing education programs in economic development. From the first two steps of the process, the leaders of the schools learned that their colleges and universities were well-kept secrets in their service areas. Community leaders indicated they did not know who to contact on campus to access particular services. A further problem area unveiled was the lack of faculty reward systems for involvement with economic development activities (Ferro, 1993).
The AASCU initiative highlighted the need for colleges and universities to (1) make economic development an integral part of the school's mission and purpose, (2) charge a high-level administrator with responsibility for the function,(3) provide financial support for the involvement, and (4) reward faculty for involvement. Whether institutions are involved with economic development initiatives through continuing education programs or through other institutional departments, there are key elements that contribute to their success.
Key Elements of Successful Initiatives Results of a 1985 survey of over 450 public colleges and universities conducted for the AASCU unveiled ten factors considered to be essential for successful higher education involvement in economic development (SRI, 1986). They are: entrepreneurial leadership, clear mission, well-defined and understood community and industry needs, institutional capacity, strategic location, strong working relationship with the public and private sectors, availability of special resources, an institutional culture that recognizes the importance of economic development, a policy climate that supports involvement, and special organizational arrangements. MacGillivray and Richmond's research (1996) corroborated the importance of many of these factors. There are institutional, community, and human factors that affect effective involvement.
The institution's mission must support or complement economic development. Institutions with strongly defined service missions may actually include economic development or community development as part of their mission statement. Closely related to the mission factor is that of institutional capacity. Institutions are best able to share that at which they excel. The quality and expertise of program offerings determine the role an institution can play in economic development.
Availability and accessibility of offerings to the target populations affect program success. Institutions may use satellite locations and distance learning technology to expand their geographical sphere of influence.
MacGillivray and Richmond (1996) noted that the availability of special resources from external funding sources was instrumental in helping institutions expand their economic development activities. With or without special funding, institutions often rely upon special internal organizational arrangements across departmental lines to coordinate economic development activities. These arrangements are facilitated by an institutional climate that supports economic development and encourages faculty participation in community activities.
For institutions to effectively extend their services to their communities and regions, they must know the needs of their service areas. Institutions that make significant contributions to the economic development of regions engage in regular and systematic assessments of community, business, and industry needs. They also routinely assess their own capabilities.
SRI (1986) noted that ties with public economic development agencies as well as with private sector businesses are key for institutional involvement with economic development. Such ties develop as a result of outreach efforts.
Human Factors Institutions that have been effective in forging strong ties with public and private sectors have generally had the benefit of leaders with energetic, visionary, innovative, and strategic leadership styles. These leaders of the institution or of programs are aggressive in developing relationships with their communities and with local industry.
These institutional, community, and human factors were found to be largely present for colleges and universities involved in economic development. However, there are serious institutional, fiscal, and human factors that may curtail involvement.
The AASCU survey conducted by SRI also identified several major barriers to higher education involvement with economic development. The barriers pertain to resources, faculty perceptions, organizational factors, and incompatibility between institution and community needs.
Institutions may not have the fiscal or faculty resources to become involved in economic development activities. For example, a small liberal arts college may not have the funding support or the faculty expertise to engage in business development efforts. Similarly, underfunded institutions may have the faculty expertise available, but may not be able to provide faculty with release time for community service activities because they carry heavy teaching loads.
If an institution's system of faculty compensation does not include economic development activities in the consideration of promotions, salaries, and tenure, then there is little extrinsic motivation for faculty to devote time and attention to such involvements. And even if the intrinsic motivation is present, faculty must focus energies on those activities that are most likely to influence continued employment and professional progress.
Faculty Perceptions Institutions sometimes have difficulty in clearly determining their goals and objectives and articulating them to faculty and staff. In such cases, mixed signals may be sent regarding the institutional commitment to, and interest in, economic development efforts.
In still other instances, the leadership of the institution may have an interest in pursuing involvement with economic development initiatives, but is unable to find or garner sufficient interest on the part of faculty. Faculty may view such involvements as falling outside the purview of academia or as interfering with teaching and/or research responsibilities.
On the other hand, faculty may have an interest in becoming more involved with the community and industry but are constrained by institutional policies that impose limits on consulting time, require clearances for involvements with private companies, or otherwise deter involvement.
For an institution to become actively involved in economic development activities, its administrators and faculty must have established relationships of mutual trust with business and industry. Where such ties do not exist, the institution cannot assume a major role in contributing to the development of the local economy.
Most communities and municipalities have established governmental agencies charged with responsibility for systematically coordinating and facilitating economic development. For institutions to contribute meaningfully, they must have relationships with these agencies and, therefore, be able to determine how their efforts might coincide with other ongoing activities.
Academic institutions are noted for devoting considerable time to discussing, researching, and analyzing issues. This approach may be incompatible with that of business and industry where answers and actions are often needed quickly.
Perhaps the most obvious reason for institutions not to be involved with economic development activities is that such activities fall outside their missions. Most public institutions include service as a part of their mission, but that service may take many different forms. Economic development may not be of primary interest.
Even if the institutional mission is broad enough to encompass economic development activities, an institution may perceive involvement with industry or business or particularly with certain types of businesses or industries as representing a conflict of interest for its faculty and staff. This could serve as a major barrier to involvement.
All institutions may be subject to the above barriers identified by SRI. In addition to these obstacles, HBCUs may face other, more insidious, barriers to involvement with economic development.
Supporting community economic development efforts requires reaching out on the part of higher education institutions. Due to the special circumstances in which they find themselves, HBCUs may experience more difficulty than traditionally white institutions in effectively reaching out to the larger communities in their regions. For example, HBCUs are faced with concerns related to judicial rulings; they are limited in their curricular offerings due to historic underfunding; they are excluded from many informal social networks; and they are subjected to perceived or real effects of racial bias.
Although virtually all higher education institutions have ongoing concerns about funding, many HBCUs might experience special financial difficulties. In addition, some HBCUs may be threatened by possible misapplication of recent Federal court decisions. The Supreme Court held in United States v. Fordice that a state's obligation to dismantle a formerly segregated system cannot be satisfied by mere adoption of race-neutral policies by historically black institutions (Ware, 1994). In some quarters, this decision has been interpreted to mean that the special mission of HBCUs to serve large numbers of African American students might be severely diluted. Thus, the potential exists for misinterpretation and misapplication of the Fordice decision by lower courts and even by educational administrators.
However, the position of the United States Department of Education (and its Office for Civil Rights), is that the Fordice case supports the strengthening and enhancement of HBCUs to overcome the effects of past discrimination. In addition, "[t]he Department will strictly scrutinize State proposals to close or merge [HBCUs] and any other actions that might impose undue burdens on students, faculty, or administrators, or diminish the unique roles of those institutions." (Federal Register, 1994).
Despite this strong statement of support from the Federal government, many HBCUs express grave concerns regarding their ability to provide the current degree of educational access, opportunities, and services to African American students in the future. In such a climate, it is often difficult to direct resources and energies to building new programs and bridges to the larger community.
Anderson (1986) sounded a call for HBCUs to expand their curricular offerings to areas that prepare students for careers in the broader society. He argued that providing education and training in the sciences and high technology would do more to improve the economic status of black people than any remedies targeting discrimination. Human capital development, technology development, and policy development roles all require that institutions have programs that are germane to the needs of the regions. Smith (1984) pointed out that graduate instruction at the master's level and beyond is limited to a relatively small number of HBCUs. Although nine of the ten institutions included in this study offer advanced degrees, the graduate offerings of HBCUs, in general, continue to be much narrower than those of TWIs.
Edwin Nichols (1995), an African American industrial psychologist, discussed HBCUs' dedication to teaching as a factor further inhibiting involvement with economic development. There is a great focus on teaching at most HBCUs. Typically, there are insufficient resources to devote to teaching in the regular academic programs and to developing evening and/or weekend programs that would extend the institution's resources to the community. Faculty members, who may already be teaching three or four credit courses per term, are reluctant to take on the added responsibility of evening or weekend classes.
In addition to the curricular limitations, Nichols noted that exclusionary practices and racial biases also serve as obstacles to HBCU involvement with economic development. Many business and governmental decisions are made by persons who interact with each other not only professionally, but also socially (e.g., golfing, dinners, etc.). Administrators at HBCUs are often not a part of the social/political circles that would facilitate their institution's involvement in activities of the larger community. Although organizations such as Chambers of Commerce are open to all citizens, informal networks may not be as readily accessible.
Some African American administrators and faculty perceive a reluctance on the part of business and industry officials to utilize the services of HBCUs (MacGillivray & Richmond, 1996). This perception renders it difficult to cultivate relationships with the private sectors within their economic environments. If continuing education staff conclude that local business and industry representatives are biased toward them, the staff are not likely to make overtures to those potential clients. Consequently, businesses and industries remain uninformed about institutional resources and economic development of the area is impeded.
Unique barriers faced by HBCUs, along with those mentioned earlier, affect the type and the extent of activities that colleges and universities undertake to contribute to the economic well-being of their surrounding communities. Despite the barriers, however, many HBCUs have developed continuing education programs that play vital roles in providing training and educational opportunities for individuals, school districts, businesses, and government.
Increasing numbers of colleges and universities are contributing to the economic development of their communities, regions, and states. The involvements are generally of four types: human capital development, technological development and transfer, economic analysis and policy development, and business development. HBCUs tend to contribute to economic development by the human capital and business development routes.
At most institutions, the greater involvement with economic development seems to be through schools or colleges of business. Continuing education departments, as the units that typically extend institutional resources to communities, are increasingly becoming involved with economic development initiatives.
Whether efforts are coordinated through continuing education or other units of an institution, the literature suggests that the following key elements need to be present:
Several factors might prevent institutions from having the above elements in place. They may not have the fiscal or faculty resources, faculty interest, organizational arrangements/ties, or missions that are compatible with economic development. Many HBCUs face additional barriers to becoming involved with economic development. They are concerned with judicial rulings that affect their survival; they are limited in their curricular offerings due to historic underfunding; their administrators and faculty are often excluded from informal social networks; and they are affected by the real and perceived effects of racial bias.