THE ROLE OF EDUCATION IN INNOVATION

Wayne State University President Jay Noren’s address to the National Summit, June 16, 2009

Powerpoint accompanying testimony

INTRODUCTION:

I’ll begin with two assertions:

1. Globally competitive innovation requires an educational enterprise that leads the world.
2. Education is essential but not sufficient for innovation.

Given those two assertions, I will address what I think are the essential three educational elements to innovation:

1. Human capital
2. Basic research and development
3. Applied research, tech transfer and business incubation partnerships

Understanding these three elements, I think, necessitates a look at them yesterday, today and most importantly tomorrow.

Briefly, “Yesterday”

In all three essential elements, from the late 19th almost through the 20th century we have led the world, in education, research, and entrepreneurship. But in the last decade or two we have become complacent and we can no longer claim to lead the world in these elements of education and innovation.

Where are we Today?

What does that mean? What is the status of education and innovation today?

First, Human Capital:

We must confront the stark reality that our human capital productivity has lagged the rest of the world alarmingly including the state of our K-12 universal access system, our investment in higher education and our competitiveness in graduate education and research.

The National Academy of Sciences recently reported that:

• Among the 30 participating countries that are a part of the Organization for Economic Cooperation and Development (OECD)—the world’s wealthiest and most technologically advanced nations—we rank 21st (out of 30) in science literacy performance by 15-year-olds
• The U.S. fares even worse in math literacy, ranking 25th of 30

Concerns are similar in higher education.

The number of U.S. students who indicate they plan to study engineering in college has been steadily decreasing since the early 1990s. Only about 6 percent of our undergraduates study engineering, compared to 12 percent in most of Europe, 20 percent in Singapore and more than 40 percent in China.

If we hold our present course, the United States ultimately will not be capable of producing the skilled scientific and technical workforce necessary to meet increasing competition from Asia and Western Europe in the global marketplace.

Second, Basic Research and Development

Our national investment in research and development has also lagged dramatically during the last two to three decades in federal research and appropriations and in direct funding of higher education.

Federal research funding:

From FY 2003 to 2008, the National Institutes of Health experienced an unprecedented five consecutive years of flat or below-inflation budget and adjusted for inflation it’s a 7.3% decrease.

According to a commentary in one of the world’s premier medical journals, The New England Journal of Medicine, “the nation’s biomedical research enterprise has never experienced a recession of this magnitude or duration.”

NIH is the largest federal research agency at $29 billion (5 times larger than the second largest, National Science Foundation). And the impact of these investments is critical as evidenced by the fact that during the 70 year history of these agencies (NIH 1939, NSF 1950) research funded by them has resulted in 285 American Nobel prizes (107 NIH, 178 NSF).

Second factor, state and federal direct higher education appropriations: State and federal appropriations have plummeted nationally both for direct university funding and for financial aid for students.

From 2002 to 2007, the national mean level of overall state appropriations to higher education per student, adjusted for inflation, fell by 7.7 percent (State Higher Education Executive Officers (SHEEO) 2007 report).

Because of the dramatic decrease in state support, tuition has increased from 20 percent of total revenue in 1980 to 40 percent today without increased financial aid sufficient to counter the cost to students, creating a major barrier to educational access.

Third, Technology Transfer and Business Incubators:

On technology transfer and business incubation we also have lagged.

Today the United States has become a net importer of high-technology products. In the past 20 years, our share of global high-technology exports fell from 30 percent to 17 percent, and our trade balance in high-technology manufactured goods shifted from plus $33 billion in 1990 to a negative $24 billion in 2004—a shift of almost $60 billion in the wrong direction.

How then do we reinvigorate our leadership for tomorrow?

The road map for the future is actually quite clear. In the past few years there have been numerous major reports from authoritative organizations articulating the road map including the National Academies of Sciences, Council on Competitiveness, Business Higher Education Forum, The Task Force On The Future Of American Innovation, and the Association of American Universities representing the 63 premier research institutions in the U.S. The slide provides the list of these reports—I encourage you to read them.

• Association of American Universities: “National Defense Education and Innovations Initiative” (NDEII)
• National Academies of Sciences: “Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future”
• Council on Competitiveness: “Innovate America—National Innovation Initiative”
• Business Higher Education Forum: “A COMMITMENT TO AMERICA’S FUTURE: Responding to the Crisis in Mathematics & Science Education”
• The Task Force On The Future Of American Innovation: Benchmarks Of Our Innovation Future II
• AAU report Science-As-A-Solution—An Innovation Agenda 3-08
• AAU Policy recommendations to President Obama 12-08

So what are the major initiatives in this collective road map for revitalizing America’s education for innovation?

Number one: Human Capital—

First we must reinvent our public K-12 educational system. Second, we must reverse the downward trend in public funding for higher education. How can we accomplish this reinvention and reinvestment?

What must we do in K-12? Five points:

1. Transform K-12 education by restructuring the system into PreK-16
2. Dramatically increase K-12 instruction through an extended education day and year—currently the Japanese K-12 system comprises almost twice the number of educational hours per year compared to the U.S.
3. Move to 14 year public education (rather than current 12 year) by including the first two years of what we now call post-secondary education as universal public education
4. Dramatically increased compensation for K-12 teachers.—Secretary of Ed Arne Duncan last week advocated >$100 K salary level for K-12 teachers (June 2009).
5. Establish national standards in math and science education, as recommended this year by The Carnegie Corporation’s Advanced Study Commission on Mathematics and Science Education

What initiatives will apply to higher education?

1. First, we must increase bachelor’s degree attainment levels which will require increased student financial aid.

The importance of increasing higher education attainment was clearly underscored in a succinct statement from the National Bureau of Economic Research, quote:

“The economic benefits from expansion in access to higher education could be substantial. Increasing the nation’s average level of schooling by one year could increase economic growth by 6% to 15%--adding $600 billion to $1.5 trillion to U.S. economic output” {NOTE—that’s one year, not even bachelor’s level}

2. Second stabilize funding for higher education through establishing a new National Higher Education Trust Fund
   1. a. We must remedy the profoundly destructive instability of higher education funding. Currently, our higher education funding tracks the economy in exactly the opposite direction to good public policy. During downturns in the economy our higher education systems experience funding cuts when what is needed is education for a re-tooled workforce to reinvigorate the economy. And we have previous successful trust fund models, most notably the Social Security Trust Fund in the 1930s and the Medicare Trust Fund in the 1960s.
3. President Obama’s proposed American Opportunity Tax Credit, if passed, will provide $4,000 annually toward college education, which will cover two-thirds of average tuition at public universities and full cost at community colleges.
4. Several specific additional initiatives have been advocated in the major reports I listed earlier by the National Academy of Sciences and others—they are critically important

Two: Basic Research and Development

Most critical is reversal of the recent inadequate NIH and NSF appropriation and additionally creation of incentives for philanthropic and corporate investment in basic research in research universities.

Again the reports I mentioned earlier from the Council on Competitiveness and others provide several essential specific initiatives that must be implemented as soon as possible

Third, Technology Transfer and Business Incubation

We must greatly enhance our Universities/Business Collaboration through University Research Parks and Business Incubators enhanced by several initiatives such as:

1. The Obama administration’s proposed innovation acceleration initiative for partnerships between research universities and businesses that will provide $1 billion in new funding to promote increased commercialization of promising discoveries and new entrepreneurial education programs.
2. Create Collaborative Partnerships among Research Institutes and Universities for enhanced R&D and tech transfer. For example, Two years ago, Wayne State University, the University of Michigan and Michigan State University became partners in an alliance called the University Research Corridor.
   1. Michigan’s URC partnership is very unusual nationally. There are only six other “clusters of innovation” among research universities like the URC in the United States such as Silicon Valley/Northern California Universities consortium and the North Carolina Research Triangle.
3. 3University-industry-government partnership through business incubators such as Wayne State’s TechTown with 90 start-up companies and Michigan’s first Stem Cell Commercialization Lab, U of M’s Ann Arbor Spark, and MSU’s Prima Civitas.
4. Joint private foundation efforts similar to Michigan’s New Economy Initiative (NEI) that created $100 million from 10 Michigan foundations for economic development.

Conclusion:

Education for a creative and entrepreneurial workforce, and associated research and development, are the essential elements for discoveries and ideas resulting in a continually transformed and strengthened economy.

The Association of American Universities, the organization of the 63 preeminent research universities in the country, issued Policy Recommendations to the President this past December. The report’s summary statement succinctly underscored the immediacy and centrality of the challenge we face, quote:

“The post-World War II basic research partnership between the federal government and universities has been a fundamental reason for American leadership in science and technology. This leadership has been critical to sustained long-term economic growth in the U.S. But recent developments threaten this unique partnership, undermining universities’ ability to conduct important research on behalf of the federal government and the American people.”

Thank you.