Investing in higher education: like roads and bridges, universities are basic infrastructure.

• Author: Miles, Mark
• Position: VIEWPOINT

"YOU HAVE TO SPEND money to make money."

It's a basic business axiom--you can't reap a dividend without making an investment. Gov. Mitch Daniels and our General Assembly should keep this adage in mind as they craft the state's next biennial budget during the 2007 legislative session.

Economic development remains near the top of the legislative agenda, and the administration's goal for Indiana's economy is simple: improving our state's per-capita income to meet the national median by 2020. Currently, our workers earn just 90 cents for every dollar earned by the typical American. But for Hoosiers to make more money, we'll first have to do some spending--making strategic investments in economic growth.

There's a growing mass of evidence that higher education is a top priority in high-performing regions. A recent study by the Cleveland Federal Reserve Bank ("State Growth Empirics," available at www.clevelandfed.org/research) explores the connection between intellectual capital and rising wages, and demonstrates that educational attainment and innovation (measured by patent creation) are the best predictors of a strong economy.

This analysis has been borne out in examples across the nation. In Massachusetts, more than 1,000 companies with 350,000 employees have been founded by MIT graduates or built on MIT research. More than 50,000 North Carolinians work at the Research Triangle Park supported by Duke University, the University of North Carolina and North Carolina State. In Seattle, an amazing 70 percent of headquartered companies have some relationship with the University of Washington.

What does this mean for Indiana?

We rank a dismal 44th in educational attainment, and ninth among 12 key competitor states in academic R&D funding per capita (behind such neighbors as Michigan, Illinois, Wisconsin, Iowa and others), according to research conducted by the Battelle Memorial Institute.

To build a high-wage economy, we should invest in cutting-edge research capabilities at our universities, the kind of programs that attract top talent and produce intellectual capital that can be commercialized into new business opportunities with high-paying jobs.

This session, the General Assembly will have several opportunities to support such an approach.

Indiana University has proposed a comprehensive...