The multiplier effect: How university research can generate statewide economic growth
GRAND FORKS, N.D. – In 1913, Edward W. Davis – a newly hired professor at the University of Minnesota School of the Mines – took a rock sample into the Mines Experiment Station “and did a little work on it,” he later wrote.
“It was a hard rock, mottled in appearance, with a few narrow bands of darker material passing through it.
“After breaking the sample into small pieces, I found that most of them could be picked up readily with a hand magnet.”
And from that observation in a U of M minerals lab, an industry and regional lifeline were born. For the rock Davis hammered was taconite. Iron miners had long discarded the low-grade ore.
But using magnets, Davis and other researchers found a way to pull iron out of crushed taconite. Then they baked the iron-rich powder into pellets.
The process turned waste rock into high-grade iron-ore pellets ready for shipment. Not coincidentally, it also saved the Minnesota Iron Range, creating a $1.8 billion-a-year industry that has kept the Range ranging for more than 60 years.
That’s the difference university research can make to a state’s economy, said Jay Kiedrowski, senior fellow in leadership and management at the U of M’s Humphrey School of Public Affairs.
And that’s the process lawmakers in North Dakota, South Dakota and Minnesota should remember when it comes to supporting research.
“One of the strongest ways to promote economic development is to have discoveries made in your state, and then have business people take those discoveries and turn them into products,” said Kiedrowski, formerly executive vice president for Wells Fargo, budget director for the city of Minneapolis and commissioner of finance for Minnesota.
“It’s research that has the economic multiplier effect,” he said, and so gives such a big bang for the taxpayers’ buck.
The question of whether university activity can have statewide economic impact is especially relevant in North Dakota. That’s where the presidents of the University of North Dakota and North Dakota State University are asking the state to invest $100 million in research – to be monitored by the Bank of North Dakota – at the campuses over a two-year period.
The word “research” is the key, Kiedrowski said. And the two presidents are smart to focus on it.
Universities have other statewide impacts, such as training a workforce. So, the presidents could have called for the state to spend money to lower tuition.
But while that would be great for students, “it wouldn’t produce the research that really could move the state forward,” he said.
Another story from Minnesota: In 1952, University of Minnesota physicians conducted the first successful open-heart surgery. In 1957, a heart patient died when a power blackout shut down the patient’s pacemaker, which had been plugged in to the wall.
So, the U of M surgeon asked Earl Bakken, a U of M-trained engineer, to create a wearable, external, battery-operated pacemaker.
The company that resulted – Medtronic – now is one of the largest producers of medical devices in the world.
“That’s another example of how university research can have a dramatic impact,” Kiedrowski said.
North Carolina’s counter-example
Don’t misunderstand. There are no slam dunks in development, and that includes university research.
“Six decades ago, North Carolina banked on its research universities to revive its economy,” begins a 2017 story in the Chronicle of Higher Education.
“The plan worked, but it left much of the state behind.”
As the story recounts, North Carolina focused on creating a research park to serve the state’s three research universities. It worked; and as Research Triangle Park has succeeded, the college towns of Raleigh, Durham and Chapel Hill have thrived.
The trouble is, that prosperity never spread to rural North Carolina, much of which remains depressingly poor.
So, should Williston, N.D., and other western communities worry that Eastern North Dakota’s college towns will prosper at their expense?
No, and here’s why, said Dean Bresciani, NDSU president and a former senior administrator at the University of North Carolina at Chapel Hill.
First, a big difference is tobacco, traditionally the backbone of North Carolina’s farm economy. As the Research Triangle prospered, the tobacco economy collapsed.
And unlike the transition on Minnesota’s Iron Range, no breakthroughs arose to replace that old industry with something new.
Second, UND and NDSU’s proposal would focus on exactly such breakthroughs, Bresciani said.
That’s why the Bank of North Dakota is involved – to play the role of monitor and referee.
UND President Mark Kennedy agreed. “At UND, for example, our No. 1 area in terms of funded research dollars is energy,” he said.
“When we get one more percentage point of extraction out of shale, it’s a $3 billion impact to the economy that primarily benefits the West.”
That’s the kind of work the universities would pursue, and the kind of results they’d be looking for, he said.
Mr. Taconite at the Legislature
Let’s close with one more tale about “Mr. Taconite,” Edward W. Davis of the University of Minnesota. This one’s from the website of the Natural Resources Research Institute in Duluth; and it shows that UND and NDSU’s presidents aren’t the first to lobby lawmakers about the statewide value of research.
The story starts with a quote:
“‘Geologists tell us that nature laid down the taconite here on the Range a billion years ago.
“‘The next day, Ed Davis started trying to sell it to the steel companies.’
“The state legislator who spoke those words in the 1940s was growing weary of University of Minnesota researcher Edward W. Davis,” the NRRI’s website recounts.
“Every two years, he’d show up in St. Paul asking for continued research funding to develop low grade taconite into a viable product for steel production. But without Davis’s dogged persistence, the Iron Range would not, truly could not, have continued to supply U.S. steel producers with iron ore all these decades to come.”
Editor, Prairie Business