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A Texas State of Minds
(THE ECONOMIST - M. Ray Perryman) -- Residents, new and old alike, 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 US and international market, nationally recognized, top-quality academic research universities are critical to securing a highly skilled workforce, creating and dispersing knowledge, 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. They also help improve university attendance more generally. Moreover, in key workforce categories (particularly in science and engineering), Texas lags other states such as California and Massachusetts, thus hampering the outlook for future performance; the addition of more nationally recognized research universities would help eliminate this gap.
In a recent study, The Perryman Group (TPG) quantified the potential incremental effects of a concerted effort to develop additional top-tier research universities on the Texas economy. This analysis, provided as a public service, illustrates the importance of this critical investment in the “intellectual infrastructure” of the state.
A proposed Texas constitutional amendment, Proposition 4, would create a National Research University Fund to 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 US universities with memberships in the AAU, three are located in Texas, of which two are large public universities: 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 including 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.
To illustrate the benefits of securing a greater number of nationally recognized research universities, TPG developed three scenarios related to the number of institutions achieving Tier One status and the corresponding change in per-capita output in emerging sectors. In every case, the economic benefits were substantial.
If four of the seven emerging research universities could attain Tier One status by 2035 (which would put the state on a par with California and Massachusetts on a per-capita basis), the impact on the Texas economy (in constant 2009 dollars) could reach up to $603.3 billion in total spending per year, $306.6 billion in output, and 1,289,419 permanent jobs. Even if only two are successful (which would bring Texas to the national average on a per-capita basis), incremental activity would include an estimated $161.1 billion in total spending each year, $81.8 billion in annual output, and 344,393 permanent jobs.
Proposition 4 permits resources to be available to the seven emerging universities to work toward Tier One recognition without any additional tax dollars being required. Using existing funds to further the goal of achieving nationally recognized (Tier One) status of high-performing universities would lead to enhanced opportunities for individuals, facilitate the economically and socially desirable goal of increasing the education level of the state residents, and generate sizable economic gains.
Texas has a number of positive attributes and is projected to achieve ongoing expansion under current conditions. The incremental benefits of pursuing a concerted strategy to promote high-quality educational institutions, however, are quite substantial and worthy of aggressive pursuit. 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.
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.
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