Economic Impacts of Engineering Research Centers | A Pilot Study | SRI International

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Economic Impacts of Engineering Research Centers

SRI measured the impacts of industry and academic collaborations aimed at strengthening U.S. competitiveness in engineering research.

At university-based Engineering Research Centers (ERCs), industrial and academic researchers collaborate across disciplines to advance engineering research. ERCs sprang from a 1984 program of the National Science Foundation (NSF) to strengthen U.S. competitiveness. Each ERC has an impact on its surrounding community.

Following an SRI study on the regional economic impact of a Georgia Institute of Technology-based ERC for the Georgia Research Alliance, the NSF wanted to try adapting methods from the regional study to measure national impacts. This offered an opportunity to advance SRI’s methods and estimate the economic impact of the ERC program as a whole.  

SRI employed a case study method, using five cases to test the feasibility of a revised version of the Georgia impact methodology to estimate both the regional and national economic impacts of selected ERCs.

  • For regional impacts, SRI started with estimates of direct, indirect, and induced economic impacts of ERC expenditures generated from a regional input-output model. SRI combined these estimates with approximations of the additional impact on the state due to center-based start-up companies, licensing income from intellectual property produced by the center, and the cost savings enjoyed by local firms that had hired center graduates.
  • To estimate the national economic impact, SRI employed a suitably modified version of the regional approach, drawing from the consumer surplus model to estimate the net public benefits of newly commercialized technologies based in ERC research. As the project proceeded, it became clear that efforts to focus solely on economic impacts that could be quantified relatively easily would greatly underestimate the actual national economic impact of ERCs. The types of impacts included and the kinds of data collected were, therefore, expanded in later case studies.

The profile of regional and national economic impact estimates varied widely, mostly due to vagaries of data from the centers involved and the companies they worked with. The team concluded that even the most conscientious and costly data collection efforts would be unlikely to yield comparable data across centers because the accessibility of key data (especially proprietary data) will differ unpredictably from center to center.

Further, focusing on narrowly conceived, quantifiable economic data alone should be avoided in these kinds of impact studies. Doing so distorts the amount and characteristics of actual impacts, many of which—or perhaps most—cannot feasibly be converted to monetary terms. Such a narrow focus will greatly underestimate the impact of similar centers, masking the much broader and more significant impacts on society.