Sunday, November 22, 2009

Ray Perryman, guest column: Texas needs more tier-one research universities

RAY PERRYMAN Guest column

Sunday, October 18, 2009

Residents often refer to Texas as a “state of mind.” There is little doubt that this large and rugged land that was once an independent country has a personality and character all its own.

In the future, however, it is critical that Texas enhance its current economic base and evolve in a manner that can consistently achieve and sustain global business leadership. The state that carved its early success out of a vast base of natural resources has adapted to new realities, but much remains to be done. To assure future prosperity, the “state of mind” must become the “state of minds” — attracting and developing the very best and brightest for generations to come.

Education is a key factor of success not only for individuals but also for local and state economies. In an increasingly competitive national and international market, nationally recognized, top-quality academic research universities are critical to securing a highly skilled workforce, cultivating entrepreneurship and associated capital investment, attracting activity in high-growth sectors and promoting economic development.

Texas lags behind other populous states in the number of nationally recognized research universities. Texas’ adverse ranking has notable negative consequences for the economy because tier one universities attract billions of dollars in research funding and the most talented high school graduates, as well as generate startup firms in emerging fields and foster major clusters of technology-oriented production.

Texas lags behind other states, such as California and Massachusetts, in key workforce categories such as science and engineering. This hampers the outlook for future performance. Certainly the addition of more nationally recognized research universities would help eliminate this gap.

In a recent study, The Perryman Group quantified the potential incremental effects of a concerted effort to develop additional top-tier research universities on the Texas economy. This analysis illustrates the importance of this critical investment in the “intellectual infrastructure” of our state.

The analysis also comes at a time when a proposed Texas constitutional amendment, Proposition 4, would create a National Research University Fund. The money — not from additional tax dollars— would help fund state universities meeting certain quality requirements for the purpose of becoming nationally recognized research institutions. This initiative is important given Texas’ current position compared to other areas. While there is no single universal definition of a tier one university, membership in the Association of American Universities (AAU) is one common criterion. Among the 60 U.S. universities with AAU memberships, three are located in Texas: The University of Texas at Austin, Texas A&M University and Rice University.

Seven public universities have been classified as “emerging research universities” with the potential of receiving the above funds. They are: Texas Tech University, University of Texas at Arlington, University of Texas at Dallas, University of Texas at El Paso, University of Texas at San Antonio, University of Houston and University of North Texas.

Overall, the advancement of some of these institutions to tier one standing would generate a large potential economic impact for the state, particularly as it relates to a change in per-capita output in emerging sectors.

If four of the seven emerging research universities could attain tier one status by 2035, the impact on the Texas economy could reach up to $603.3 billion in total spending per year, $306.6 billion in output, and 1,289,419 permanent jobs.

Texas will always be a “state of mind.” As a “state of minds,” however, it is characterized by much greater prosperity and competitiveness on a sustainable basis. The importance of Proposition 4 as an initial catalyst to this outcome cannot be overemphasized.

M. Ray Perryman is president and chief executive officer of The Perryman Group. He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.

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