Universities, Patents and Start-Ups

University research has mostly found its reward in the contribution to knowledge through publicly available knowledge published in peer-reviewed journals. Individual researchers are often promoted on the basis of such accomplishments. Only recently, some universities also recognized the contribution to knowledge by individual researchers through protected knowledge in the form of patents or in the form of start-ups. For economic development in the country, measures of the quality of universities in terms of the number of patents and the number of start-ups are equally as relevant as the traditional measures.

Not every patent is going to be an industrial revolution to put it mildly. Often patents will end up on the shelf. But so is the case with publications, many of which will be forgotten in a couple of years after having had little or no impact on subsequent publications. It remains a fact, however, that publications in peerreviewed journals and patents have been important as a potential for furthering insights and knowledge.

Equally important to the university as academic research published in peerreviewed journals could be university staff engendered start-ups. The university might well view this as one of the contributions of its research to society and may want this to be formally recognized as such. If this is the case, then also the incentives need to be in place to reward staff members who help start new enterprises in the same manner as those who publish high profile academic journals are rewarded.

Venture Capital and “Free” Zones Around University Industrial Parks

Economic growth is generally achieved by raising labor productivity while boosting overall productivity or “total factor productivity” as economists call it. New and increasingly innovative businesses help to achieve this. Excellence in university education and research combined with entrepreneurship are major drivers of innovative businesses. The availability of venture capital and the absence of throttling regulations can contribute to innovation.

Venture capital can be created at the university from university resources or through resources organized by the university, but is more likely to occur in close collaboration between the university and financial institutions or governments without direct responsibility and risk on the university's part as far as these funds are concerned. Venture capital is important for start-ups and essential for spin-offs from the university. Part of the additional economic growth of the US compared to the EU is explained by the substantially higher availability of venture capital in the US[1] [11]. In chapter “Excellence in Innovation and Knowledge Economy”, Professor Altunbas¸ak gives examples of the organization of venture capital around universities in Turkey.

The World Bank has demonstrated the impact of regulations in the domains of, for example, applying for a permit to start a business, dealing with construction permits, obtaining electricity connection, and paying taxes on the level of innovation, showing the throttling effect of overregulation. The 2014 Annual “Doing Business” guide documents the regulations according to 11 sets of indicators for 189 countries. Countries that score high on quality of regulation criteria are also the fastest growing countries (World Bank, Doing Business, 2014 [12]).

“Free” zones around university industrial parks could help society to benefit from universities that strive for excellence. “Free” can be a relative notion. Some regulations (for example for environmental protection) can already be considered to be minimal. Yet in others, it would be wise for Governments to learn from international experience in reducing regulation on an experimental basis in some regions. China started to experiment with free economic zones in the 1980s. It has made a remarkable contribution to China's development. Such experiments are useful for the country in order to see which deregulation makes sense for the country as a whole.

Build Regional Partnerships

All of our societies suffer from fragmentation in policy. Educational policy is the domain of the Ministry of Education and Economic Policy is that of the Ministry of Economic affairs, even if the best economic policy is the one that makes the best use of the available talents and their development, in other words: an education policy. This underlines the need for attuning economic and educational policies. This is just an example. Fragmentation is broader than solely between the economic and the educational spheres. Germany has understood this as part of its drive to create a more sustainable economy, which is more energy efficient and involves reduced CO2 emissions. All German universities are involved in mapping and following this strategic direction of the Federal State.

Building regional partnerships between national governments, regional governments, local and national industry, and universities for extended (say 10-year) periods might well be a way in which universities can best realize their excellence. Such partnerships could serve as the basis for investment plans, supported by Ministries such as Economic Affairs and Education and Science and Technology alike and might well attract additional investment into the region.

Excellence in the Knowledge Economy

University excellence in teaching and in research is not an abstract notion. It is clearly discernable in the development of the region, even taking into account graduates' and university staff's mobility. The development of the region can be reinforced by complementing efforts in the area of venture capital and in overall regional investment plans (of public and private parties).

  • [1] Venture capital investments represent a very small percentage of GDP, e.g., often less than 0.03 %. Exceptions are the United States, where the venture capital industry is more mature and represented in 2012 around 0.17 % of GDP.
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