I have a few projects where I keep seeing the same problem again and again.  And it’s a real poser because it’s a problem that the literature on knowledge and economic development mostly passes over.  It goes like this:

Universities play an important role in local economies for two reasons.  The first is that they provide a stream of talented graduates which, in theory, acts as a honeytrap for capital.  The second is that the flow of information between institutions and firms – either formally in the form of patents, licenses ,etc, or informally through personal contacts – is meant to ensure that top-level science is informs cutting-edge industry and vice-versa.  Any number of books and articles explain this story in various ways, though the most famous is Annalee Saxenian’s Regional Advantage which tells the story of the Stanford-propelled rise of Silicon Valley.

 If this is a familiar story, it’s because it’s one universities and governments have agreed to accept this as the “story” of economic growth – pour money into universities at one end, and voila! – innovation and growth come out the other.  But the problem is that it takes two to tango: for this to work, you need companies who want the skills students have and companies who want the knowledge being produced in universities.

Certainly, we have long known that receptor capacity is a problem in Canada.  Ours is one of only two OECD countries (Australia being the other) where private-sector R&D spending has fallen since 2006.  We seem to have little idea about what to do about this other than throw money at universities and hope something better turns up (and then occasionally get mad at them when it doesn’t). But this isn’t our problem alone: it happens everywhere. 

The problem is that the way the literature developed, it primarily looked at success stories: Silicon Valley, the North Carolina Research Triangle, Silicon Fen in the UK, etc.  It rarely looks at the failures or even the half-successes.  This isn’t just a problem of the literature being US-centric (though it is certainly that).  Not only is there a dearth of useful research done on how to use universities to kick-start regional development in, say, Central Asia, or Eastern Poland or Northern Manitoba; there isn’t a lot about Eastern Tennessee, either.  And that’s a problem because in the absence of specialized research focusing on the role of universities outside major, rich, urban innovation centres, we risk asking institutions in these economic peripheries to do things that really don’t make a whole lot of difference.

The standard prescription tells universities to go all out on the cutting-edge science and for governments to incentivize that goal as much as possible.  If you build it, they will come, essentially.  The problem is that even if your science is quite useful and is happening in an area of interest to the local economy, if you are too far ahead of the local economy, it is really difficult for any firms in the area to absorb any advice or technology you might be producing.  There are, for instance, some phenomenal scientists in West Africa who are doing some really impressive work in medicine and genomics.  But since the African pharmaceutical industry is mostly about marketing and packaging (the R&D all happens in Europe and North America), there is no “outlet” for this kind of science.  It has no way of spilling over into the local economy.  Same in Canada: if your institution is at the cutting edge of some field of endeavour but local firms in that industry are a decade behind, it’s not going to be easy for them to use either the knowledge you’re generating or the skills your students have absorbed.

From an academic perspective, it might be easy to say “so what” to all of this.  After all, if good science is being done and taught, then the world is still a better place, right?  This is both true and a titanically bad political argument.  Jurisdictions that are most in need of science-based economic growth usually have a lot of competing uses for scarce funds.  If you don’t have a plausible narrative for how your institution actually increases economic opportunity beyond the tired and often false (Money
->Universities->Some Unexplained Miracle->Growth!) you’re going to have a problem. 

Let me emphasize again what a global problem this is.  Outside of China (which is sui generis for all sorts of reasons), there simply aren’t a lot of cases of economically peripheral regions which have pulled themselves out of poverty with a knowledge-first strategy.  We pour money into universities in economically peripheral regions, in part because we expect them to be economic catalysts, and not much comes out.  We’re clearly doing the wrong things.  And yet the standard prescription is to keep doing them, over and over again.

Obviously, I can’t claim to have all the answers here.  But it does seem to me that the key is the word catalyst.  If you want a reaction, you need both catalyst and reactants.  Continuing to pile on catalysts in the absence of reactants is not a winning strategy: matching reactants and catalysts, on the other hand, is (note to all chemists: I know I am butchering this analogy, but you know what I mean so cut me some slack).  The point: we probably spend too much time thinking about the science and whether it should be applied or basic or whatever and we spend too little time thinking about the knowledge absorption capacities of firms, and how to increase them. 

One of the best things that most regional universities do is focus their thinking around how to increase the knowledge capacity of the surrounding community.  Forget patents and licensing and all that nonsense – that stuff is of marginal value.  What if technology transfer offices were all basically MITACS on steroids – thinking about how to nudge local companies forward by embedding first Master’s and then later PhD students into local businesses and increasing the knowledge quotient embedded in their public services.  Then maybe start discussing joint applied research projects.  Heck, even organizing old-style extension programs providing local businesses with up-to-date information on how cutting-edge companies elsewhere in the world are deploying science and technology would probably do some good.

In some cases, even all that won’t be enough.  Sometimes the science will be sufficiently far removed from local capacity that it will be necessary to spend time in other regions and maybe even other countries to attract the kinds of partners that will lead to spillover effects.  In North America that probably means institutions thinking more like regional development agencies; in developing countries it is probably the big international financial institutions which are most able to step in and play matchmaker between talent and capital.

But look, the broader point is this: the existing literature on the positive externalities of research are not geographically neutral.  It is heavily concentrated on cities where there is very high receptor capacity for science and technology.  But outside the metropolis, lower firm and population density leads to lower receptor capacity and therefore lower levels of spillover.  For those who believe that universities can be drivers of regional economic regeneration, this points to the need to re-think how exactly spillovers happen, and whether a fundamental re-imagination of how universities approach their economic development mission is needed.