Arizona State University's Economic Impact on Arizona

The Arizona State University community serves to leverage each dollar of State appropriations into $6.97 of sales for the State of Arizona.

Arizona State University:

• Educates workforce for the knowledge-driven economy
• Educates entrepreneurs
• Educates policymakers
• Strengthens community institutions
• Generates business opportunities
• Spawns innovation
• Creates new enterprises
• Attracts talent
• Attracts new businesses

Arizona State University (ASU) is a robust economic engine for Arizona. This paper describes ASU’s economic impact on the State, the various ways in which ASU delivers economic value to Arizona, and specific policy areas around which ASU will engage elected officials.

ASU’s Economic Impact on Arizona
Arizona State University is a major, multi-campus teaching and research university. ASU comprises four campuses-- in Tempe, northwest Phoenix, Mesa, and downtown Phoenix. With more than 10,000 employees, ASU is one of the State’s largest employers. University enrollment currently exceeds 57,000, with another 22,500 attending summer sessions. ASU is one of the four largest universities in the country and awards more bachelors degrees each year than all the other Arizona institutions combined.

According to a December, 1999 ASU College of Business report, “the total impact of Arizona State University on spending in the State is estimated to be $2.3 billion. The University community serves to leverage each dollar of State appropriations into $6.97 of sales for the State of Arizona. The total employment impact of ASU, including University employees and all other jobs indirectly induced, is 39,900 jobs. A job is created in the State for every $8,120 of State appropriations.”

How ASU Delivers Economic Value to Arizona
Beyond the considerable direct expenditures ASU makes on Arizona goods and services and the jobs these expenditures create, the University adds value to the economy in a number of important ways.

Educates workforce for the knowledge-driven economy
Arizona’s economy is evolving from one that is resource-based and service-intensive, to one that is based on knowledge. The businesses most likely to produce the greatest wealth for Arizona’s economy will increasingly utilize complex, technology-based systems and products. Accordingly, they need employees with “knowledge skills” to ensure their competitiveness. ASU’s growing focus on applied, interdisciplinary scholarship and science and technology produces graduates who can fill these jobs. Arizona’s employers count on ASU to provide an appropriately skilled workforce for the knowledge-driven economy.

Educates entrepreneurs
ASU, through its College of Business, educates entrepreneurs who have contributed to a notably vibrant small business climate. Cognetics Inc. ranked Greater Phoenix #1 for the fifth straight year in their "Annual Index of U.S. Entrepreneurial Hot Spots.” This ranking is based on the region’s superb record of producing a high number of new businesses, as well as businesses that are fast-growing. Like the overall Arizona economy, however, the majority of these firms are not technology-centric. ASU will launch an initiative based on a renowned San Diego program that will increase the quality and breadth of technology-based entrepreneurship.

Educates policymakers
ASU’s Morrison Institute researches, informs and advises public policy makers on choices and potential actions that will help the State to prosper. ASU’s Seidman Institute collects and disseminates information about critical local economic trends and conditions that helps Arizona policy leaders navigate in a complex, information-driven world. With the State’s looming fiscal crisis, ASU’s economic research and policy analyses will be more important than ever to enacting sound economic development policy.

Strengthens community institutions
ASU is engaged and embedded in Arizona’s fabric of social, cultural, artistic, intellectual, educational, economic development, and financial institutions. For example, ASU is working with the K-12 system, the business community, parents and others to improve Arizona’s uneven high school graduation rate. Reducing the dropout rate will in turn lead to a stronger Arizona workforce.

Generates business opportunities
ASU’s technology licensing, research partnerships and knowledge transfer mechanisms strengthen Arizona businesses. ASU provides product development, process enhancement and marketing assistance to Arizona businesses, which leads to increased profits. ASU is building a world-class technology transfer and economic development team to further develop these partnerships, with a focus on working with Arizona’s small and medium-sized technology companies.

Spawns innovation
In the past decade, nearly all major technological advances have been grounded in basic scientific research. Each year, an estimated 60 to 75 percent of economic growth is driven by these advances. Intellectual curiosity leads ASU scientists, engineers, and other university researchers to discovery. Significant scientific breakthroughs, when transferred to intellectual property, can have broad commercial applications and substantial impact on Arizona’s economy.

Creates new enterprises
As established corporations have become increasingly risk averse and reluctant to license extremely early-stage technologies, a better path to commercialization is often new enterprise formation. With Proposition 301 funding, ASU has built a program to support faculty entrepreneurs. ASU is educating inventors about entrepreneurship, providing financial support for technology development, and linking inventors to resources in the business community that can facilitate new venture formation and development.

Attracts talent
ASU continues to win major research grants in fields ranging from planetary sciences, to bioengineering, to psychology. This enhanced research portfolio has increased ASU’s capacity to attract and retain highly-educated, highly-paid workers. The many cultural amenities and other “quality of life” activities provided by ASU also attract these workers, who subsequently draw knowledge-driven businesses. Recent pioneering economic development work by Richard Florida has shown that top knowledge workers, who can live and work almost anywhere, are most likely to choose regions with well-developed cultural amenities.

Attracts new businesses
In addition to ASU acting as a magnet for creative and technology-savvy workers, the University contributes to business attraction in other ways. For example, when making site selection decisions, business prospects typically consider the extent to which local universities partner with industry, produce superior graduates, and are involved in the community.

How ASU Could Enhance Arizona’s Economic Development Strategies
The Napolitano administration and the Legislature are faced with unprecedented fiscal challenges. ASU is prepared to work diligently to help elected officials and business leaders overcome these obstacles and strengthen Arizona’s economy.

The State Constitution
In order to be a full partner in university technology commercialization, Arizona State University needs to be able to hold equity in companies that are based on university-owned technologies. Holding equity will facilitate better licensing agreements for start-up companies and universities. Equity-based licensing encourages entrepreneurs to channel scarce cash resources into their businesses. In the case of a successful IPO or acquisition, equity-based licensing would allow ASU to generate a higher return on its investment than would traditional licensing agreements.

Physical and Social Infrastructure for Early-Stage Technology Companies
Technology-based economic development, so important to Arizona’s economic diversification and revenue stabilization, requires a more competitive infrastructure to support the myriad needs of technology-focused companies. These needs include formal and informal communication networks, technology management programs, wet and dry lab space, telecommunications infrastructure and appropriate office space. ASU will continue working in cooperation with public and private groups across the State to ensure these infrastructure needs are met.

Financial Infrastructure for Early-Stage Technology Companies
While venture capital is a critical ingredient to a thriving technology sector, it is by no means the only financing mechanism for many early-stage technology companies. ASU will work to develop policies and accelerate program initiatives to facilitate additional federal small business grant awards (SBIR/STTR), pre-seed funding, angel investment, and small business loan programs.

State Support for Universities
ASU’s ability to deliver on its vast economic promise depends on institutional vitality. The University has launched an unprecedented shift in its culture to encourage faculty, staff and students to think and act with a newfound entrepreneurial spirit. In light of the current financial situation, ASU has limited its budget request to modest investments in teaching and research. The University will continue to be realistic in this manner and seek new ways to articulate the economic return on the State’s investment in ASU.

Other Appendices

1. Appendix 1: Arizona State University’s Economic Impact on Arizona
2. Appendix 2: Creating Competitive Advantage and Economic Growth in Arizona: Strategic Investments in Bio, Info and Nano Technologies
3. Appendix 3: Arizona Biodesign Institute: Vision Sketch