Science, Discovery, and Dollars – The Impact of R&D

Nick Dmitrovich June 16, 2018

There’s a whole lot of money being generated by Indiana brainpower. Looking at only part of the picture, the state’s three largest research universities, reveals a massive economic generator that contributes to each one of Indiana’s 92 counties via direct and indirect means. The impact of R&D is huge for the state.

According to a new report by TEConomy Partners titled The Importance of Research Universities, the big three universities – Purdue University, Indiana University, and the University of Notre Dame – collectively produce about $1.3 billion in annual research expenditures. This is by comparison more than four times the economic impact of the Indianapolis Motor Speedway where one of the world’s largest sporting events takes place each year.

Looking at the schools individually, each of which has been recognized among the top 150 best institutions in the world by The Times “Word University Rankings,” the annual research spending of each weighs in at roughly:

$558.6 million for Purdue University;
$544.2 million for Indiana University; and
$191 million for Notre Dame.

In addition to the spending totals, Indiana also performs very well for the amount of materials published by its universities; higher than most on a per capita basis. TEConomy Partners identified the 59,115 academic publications released between 2012 and 2016 as comprising about 2.9 percent of all U.S. academic publications. Given that Hoosiers make up about 2.1 percent of the total U.S. population, we’re exceeding our academic output.

“Research is the life blood of a top-tier public research university, and one measure of our impact and contributions are publications from our faculty and students. Solving the big global challenges is a team effort, and Purdue is proud to foster a collaborative environment that enables our world-class faculty from diverse disciplines to combine their skills and address the world’s most pressing problems,” Suresh Garimella, Purdue’s executive vice president for research and partnerships and the Goodson Distinguished Professor of Mechanical Engineering, said.

The report goes on to explain these universities are not only economic drivers in terms of their own spending, publications, and investments, they’re essential for the role they play within the bigger picture of an economic engine as a whole. The report stated that, “research universities serve critically important functions across each component of a modern economic development ecosystem and are integral to success in advanced technology-based economic development that is at the forefront of creating high-wage, family sustaining jobs.” To put it plainly, much like all of the vital components that enable a vehicle’s engine to function, R&D is one component of the system that must be present to allow forward momentum to take place.

This notion is gaining more recognition among modern economic strategies as new plans emerge. “States and regions across the nation are increasingly grounding their economic development strategies around the objectively identified R&D core competencies of their universities,” the report explained. Indiana would actually rank near the forefront of this movement for factors such as the Central Indiana Corporate Partnership which actively focuses economic development initiatives and collaborations around research and development, among other things.

The Picture Gets Bigger

The total economic impact figures created by research at universities is completely aside from the added benefits of other impacts that are made by private companies, the wages paid to both university and private employees, jobs indirectly supported by R&D activity, and more. All of which would significantly add to the total figures.

For example, while universities spent about $1.3 billion, private industry accounted for about $6.2 billion, or 81.6 percent, of total R&D spending in the same time period, according to data from Stats Indiana and The National Science Foundation.

Nationally, Indiana ranks ranked 17th nationwide in R&D expenditures, spending about $7.6 billion in 2015, the most recent data available. The state ranks 23rd nationally for per capita R&D spending, which is estimated to be about $1,159 per individual. Additionally, Indiana ranks 15th in private industry R&D spending.

Because of the variety in the types of R&D conducted by companies is so diverse, it can often be difficult to quantify the complete picture of the subcategory’s total impact on the state. But one thing is clear, because of the way that new scientific and industry discoveries often lead to entirely new business opportunities, R&D will forever remain an important component of economic development. Universities will always be at the forefront of this, serving as incubators of ideas where opportunities can come to life.

Indiana R&D Rankings