How Atlanta’s Major Universities Strengthen The Economy

Brain Power

Terri Thornton

September 13, 2007

It’s hard to grasp the impact of Atlanta’s universities unless they suddenly disappeared. Then the economy would take a hit that would rip through every industry.

Large companies would struggle to hire qualified talent, and possibly move away. Fewer new firms would move here, and thousands of people now employed by institutions of higher education would be jobless. Entrepreneurs lacking the resources incubators provide would struggle, creating fewer new jobs.

Without an influx of businesses and people, the real estate market would falter. Hospitals and clinics would close, and fewer new drugs would be developed to treat serious diseases. Cultural events would diminish; the quality of life would suffer; and the state and local tax base would drop.

“Georgia’s colleges, universities and technical colleges are a critical factor in recruiting and growing businesses in our state,” says Ken Stewart, commissioner of the Georgia Department of Economic Development. “QuickStart, a nationally recognized best practice model for training employees for a new set of skills, was crucial in attracting Kia to West Georgia. Another instance is the internationally recognized Georgia Tech creating relationships with high-tech companies such as Samsung.”

“GE Energy, Southern Company, all the major architecture and engineering firms hire engineers and architects from our universities,” says Hans Gant, vice president of economic development at the Metro Atlanta Chamber of Commerce. “Hospitals hire our talent from nursing schools, Turner Broadcasting, Coca-Cola, UPS, you name it … they all hire from these schools.”

Gant counts 45 institutions of higher learning in the Atlanta region, which account for the fourth highest concentration of college students in America. The Atlanta Regional Council for Higher Education (ARCHE) says spending by universities, their employees, students and visitors generates $10.8 billion a year, or 3.2 percent of the state’s annual gross product.

Statistics from ARCHE (which counts Emory, Georgia Tech and GSU among its volunteer members whose goals are to strengthen public support for higher education; help its members attract and retain the best talent; and promote economic and
community development) also show Georgians who have jobs because of Atlanta’s colleges and universities, or who graduated from these institutions, pay roughly $3 billion in state and local taxes a year.

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Dr.Carl Patton, Georgia State University

Education is big business

Mike Garrett, president and CEO of Georgia Power, says the region’s colleges and universities play a huge role in fueling economic expansion. “First and foremost, they produce an educated workforce,” he says, “and an educated workforce is the key to achieving quality growth and economic development. The dozens of colleges and universities in the Atlanta region also generate an economic chain reaction that creates jobs and keeps the economy strong.”

“Among the general public, it’s not widely recognized that this is one of the great college and university towns in America,” says ARCHE President Michael Gerber. “There are a lot of other cities in this country, and the world, that would give anything to have what we’ve got.”

“We are a big business,” says Georgia State University President Dr. Carl V. Patton. GSU contributes $3 million per day to the economy, which becomes $7 million once that money is re-spent, Patton says. That’s comparable to holding a Super Bowl once a month.

Georgia Tech estimates its direct economic impact at more than a billion dollars a year, with an indirect impact, which includes student spending, almost double that figure. Emory University says its direct economic impact is $2.5 billion, which climbs to a $4.5 billion indirect impact. Its Woodruff Health Sciences Center alone has an annual budget of $2.1 billion, which translates into a yearly economic impact of $4.6 billion. Emory also ranks high as an employer. When its professors and staff are combined with the workers in the Emory Healthcare system, what results is the city’s second largest locally owned employer, after Delta Air Lines, with a yearly payroll of $1.3 billion.

Georgia State prides itself on bringing many of the best and brightest from all over the world to downtown Atlanta. Its magic number is 159: it attracts students from each of Georgia’s 159 counties, plus students from 159 countries across the world. One third are graduate students, a much higher percentage than most schools.

Georgia Tech, the nation’s largest engineering school, turns out engineers, architects and others who are prime for employment. This past June, a Google spokesman told a local publication one reason the company is expanding here is because of the rich talent base associated with Tech and other technology institutions.

“The talent base is helping to sustain the industries of today,” says Tech President Dr. Wayne Clough. “The research and new companies are creating the jobs of tomorrow.”

MBAs and more

Atlanta region universities also are impacting local corporations by the number of executive education and MBA graduates they produce. In addition to Emory, Georgia State, Georgia Tech, Kennesaw State, Mercer, DeVry and others, institutions based outside Georgia’s borders, including the University of Phoenix and Central Michigan University, are marketing to local prospective students.

“In the MBA world, Atlanta is seen as the land of milk and honey,” says Dr. Tim Mescon, dean of the Coles College of Business at Kennesaw State University, the state’s fourth largest public university. “There are few cities like this in the country that have the density of presence of higher education institutions, both indigenous and visitors, that we have here.”

Wesley Duesenberg, Jr., president and CEO of Southern Insurance Underwriters, earned a Master of Professional Accountancy from Georgia State. When he joined his family’s business, he went back and earned a Master of Insurance.

“It was strictly oriented to what I was looking to learn, not a general overall knowledge of business, so that wasthe beautiful thing about it,” Duesenberg says. “It brought me up to a knowledge level that was almost immediate, so I was able to perform way ahead of schedule of the schooling I got. The first time was so rewarding, and the information was so pertinent, it was an easy decision when I needed to go back.”

Tony Colaizzo, operations manager for UPS’ Pacific region, chose Emory’s Executive MBA Modular Program. “I’m a much more effective critical thinker and have a much broader view of business,” he says. Colaizzo, like many other MBA grads, learned from both the professors and the other students in the program. “The people that I met in the class and interacted with were first class,” he says, “and the professors shared a tremendous amount of information.” He adds UPS approved of his decision to return to school from the very beginning, and was supportive throughout the process.

Some employers contract with universities to develop specific curriculum. In addition to its other MBA programs, KSU offers an MBA just for AT&T employees, and offers a Masters Certificate program to IBM.com workers. “What we’re finding is enhanced interest in the customized delivery of these programs,” Mescon says. “Corporations want programs contoured to their needs so people can transform what they learned in one night into a sale or a better organizational decision tomorrow.”

Breaking ground

Besides producing an impressive amount of MBAs, GSU has made its presence known in downtown Atlanta. On any given day, it brings 8,000 students to the heart of the city. The fact that Georgia State sits on and near so much valuable real estate is no small matter, especially as Downtown enjoys a significant resurgence.

GSU spent a half billion dollars on construction and improvements in the decade ending in 2005, mostly paid for by private donations. Its renovation of the Rialto Theatre and expansion into downtown’s Fairlie-Poplar area was just the beginning; it has another $1 billion in projects planned for the next 10 years.

In November, GSU announced its private foundation would buy the 26-story SunTrust Tower for $52 million. This fall it opened University Commons, which provides housing for 2,000 students. The coming decade’s master plan includes $1 billion in expansion, including a new Science Park, Business and Law Professional Center; a humanities building and new housing; as well as improvements to roads and sidewalks.

Emory too has a significant construction push, spending $90 million on construction in 2005 alone. In July, it announced a partnership with Cousins Properties to convert 15 acres on Clifton Road near the CDC into a mixed-use development with stores, restaurants and 872 condominiums and apartments.

“We have young physicians, young faculty and young staff early in their careers who can’t afford to live in Druid Hills, and we don’t want them commuting from Gwinnett County,” says Emory President Dr. James Wagner. “It’s a real traffic issue. This is the largest employment center in Atlanta that is not served either by MARTA or an interstate.”

In addition to turning out some of the area’s most successful architects, engineers and developers, Tech has also produced some of the area’s leaders in smart growth. Both Atlantic Station and the Beltline began as masters theses by Tech alums Brian Leary and Ryan Gravel, respectively.

Commercial appeal

ARCHE says Georgia’s colleges and universities generate more than $1.1 billion in research and development. Tech counted $425.4 million in research and development funds in 2005, while Emory attracted $354 million in sponsored research funding in FY 2006.

While research may not always have a big return on investment, “technology transfer” frequently does. Many universities have offices of tech transfer that identify on campus discoveries with potential commercial appeal. Marketing, licensing and/or selling these discoveries can create a lucrative revenue stream.

The revenue stream for one Emory discovery turned into a flood in 2005 when the university sold the rights to manufacture and distribute the AIDS drug Emtriva R (the “Em” in Emtriva stands for Emory). If the school licensed the rights, funds would trickle in over several years. Instead, it chose to go for a large lump sum. The result: Gilead Sciences and Royalty Pharma paid $525 million up front for rights to the drug.

Wagner was particularly pleased Gilead has a program to make low-cost drugs available overseas. “We have an AIDS problem in this country,” he says. “In Africa, it’s an AIDS tragedy.”

Emory leads the nation in university tech transfers, with eight licensed therapeutic products on the market and 23 more in development. Its Vaccine Center alone is working on vaccines for AIDS, malaria, hepatitis C and the avian flu.

“Eighty percent of prescriptions written for HIV today contain at least one drug invented at Emory,” says Todd Sherer, who directs Emory’s Office of Technology Transfer. “We have done more to change the lives of HIV patients than almost anybody else can claim.”

Dr. Wayne Clough, Georgia Tech

Annual impact of Atlanta-area higher
education on Georgia’s economy

$10.8 billion. Total impact on Georgia from spending by institutions, employees, students and visitors, combined with impact of capital expenditures. That’s equal to 3.2 percent of Georgia’s annual gross state product.
129,050. Jobs created across Georgia from pending generated by Atlanta regional higher education. That’s one out of every 25 jobs in the state.
$3.0 billion. Total state and local taxes paid by Georgians who have jobs because of colleges and universities in the Atlanta region or who graduated from these institutions.

SOURCE: ARCHE
Dr. Wayne Clough,

The future of health care

Health care is an avenue for a unique and long-lasting partnership between Emory and Georgia Tech. “We are now at a time in history when we see all the world’s big problems don’t fit neatly into the old academic departments,” Wagner says. “Our specific strengths in health science and medicine are complemented by (Tech’s) specific strengths in engineering and technology.”

And Clough points out when it comes to work involving the human genome, “you can’t do that work without heavy-duty access to computing.” The universities are working together on a number of bioscience projects, including nanotechnology (which works with, and even creates, devices smaller than a micron); cancer treatment; and a project that could make certain industrial wastewater clean enough to drink.

Clough expects many new health care developments will evolve from the combined efforts of engineers, scientists and doctors. One example is predictive medicine. “If you look at the way we do medicine today, it’s actually a rather crude process,” Clough says. “The present business model for pharma is to develop a drug like Lipitor that can be used by zillions of people. You spend a lot of money developing that pill and you know it will work better for some and not others; the same for chemo.”

In the future, he says, medicine can formulate drugs based on patients’ histories and genetic codes. “It’s going to be custom-driven,” Clough says. “Instead of making a billion of these pills, they’ll only make 20,000 of them, but those 20,000 will work like a charm.” While each drug may only effectively treat 5 percent of the population, he says, “that 5 percent gets cured, and there are no side effects.”

Emory and Tech also cooperate on a unique degree program. Students can spend three years at Emory and two at Tech, and graduate with a degree in biomedical engineering. The one diploma carries the seals of both schools. Shuttles with wireless Internet connections run between both campuses all day long, getting students to class on the appropriate campus.

Emory also teams with Agnes Scott College on a similar program where students spend three years at Agnes Scott and two at Emory. Graduates earn a nursing degree from Emory along with their undergraduate degree from Agnes Scott.

Georgia State is also making its mark in health sciences. In addition to its planned science park, it has state-of-the-art facilities in neural imaging and molecular analysis, plus four neuroscience research centers, and a CDC biosafety Level 4 lab. Level 4 clearance is required for work with agents that pose a high individual risk of aerosol-transmitted infections, such as anthrax, the Ebola virus and herpes B.

Incubators

The universities also generate more than ideas – they help sustain entrepreneurial companies that create new jobs.

University incubators give entrepreneurs the resources they need, such as office space, consulting services and all-important contacts. They help provide stability that entrepreneurs need to help their fledgling firms grow toward the light of funding and expansion.

Georgia Tech’s Advanced Technology Development enter, or ATDC, is one of the most successful in the nation. Its member companies generated $1.75 billion in revenue in 2005 alone, and $12.5 billion since 1987. Recent figures show ATDC companies raised more than a billion dollars in venture capital since 1999, and accounted for one of every five venture capital deals done in Georgia over the last eight years. And while industry statistics show four out of five new business fail, three-quarters of ATDC members since 1995 are either still operating or have been acquired.

The Metro Atlanta Chamber says by the end of this year, the region will have more than 50,000 square feet of incubator space devoted solely to life sciences companies.They include EmTech, another collaboration between Georgia Tech and Emory, and CollabTech Biotechnology Development Center at Georgia State.

As for long-term results, the chamber counts 50 bioscience companies launched at Emory, Tech and GSU. Together, they account for more than 250 patents. Overall, when looking at the relationships between academia and business in Atlanta, the cliché of the “ivory tower,” which describes a setting where the intellectual is completely disconnected from the practical,no longer exists.

“There still needs to be some ivory walls,” Wagner says. “There needs to be havens for people with unconventional ideas to come and incubate those ideas.” But he adds the walls have come down to a height where academia and business can reach across to each other, and share the wealth.

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Dr. James Wagner, Emory University

The Atlanta Regional Council for
Higher Education says spending
by universities, their employees,
students and visitors generates
$10.8 billion a year.