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Economic Development Impacts of Universities in Boston

by Jessica de Wit


Overview of Universities in the Boston Metropolitan Area

Compared to other regions in the United States, higher education plays a greater role in the Boston metropolitan regional economy. Atlanta Regional Consortium for Higher Education's 2000 survey of the 10 largest U.S. metropolitan areas found that the Boston metropolitan area ranked first in college and university enrollment per 100,000 population; first in degrees granted per 100,000 population; and first in per capita spending on higher education.(1) There are eight universities in the Boston metropolitan area: Boston College, Boston University, Brandeis University, Harvard University, the Massachusetts Institute of Technology, Northeastern University, Tufts University and the University of Massachusetts Boston. These universities are among Boston metropolitan area's leading employers and they provide one of the most reliable sources of job growth.(2) Their university graduates are a highly-skilled talent pool serving the Boston metropolitan area. In addition, these universities constitute a leading industry sector in Boston's regional economy. While these universities offer many benefits to the Boston area, there is often tension between universities and their neighboring communities as both continue to grow and change.

Downtown Boston. Source:

The Universities' Economic Impact on the Boston Area Workforce

In 2000, these eight universities had an enrollment total of 118,000 undergraduate, graduate and professional degree students in the Boston metropolitan area.(3) Each year, 30,000 people graduate from these universities.(4) Professor-student mentor relationships provide an unique experience for graduate students, who will have exceptional skills when they enter the region's workforce. In addition to providing a reliable, well-educated talent pool for regional employers, these graduates also attract new employers to the area. Since these graduates are so highly-skilled, there is a greater tendency for them to start their own businesses. For example, Teradyne, EMC, Forrester Research, Staples, Mercury Computer Systems, Lycos and Akamai Technologies were all started by graduates of these eight universities.(5) Several of these universities have formal programs to encourage student entrepreneurialism, like MIT's "$50K", Northeastern's "$60K" and Boston University's E-Business Center.(6)

Also, there is a strong alumni network with roughly 310,000 graduates, who have chosen to reside in the Boston metropolitan area upon graduation from one of these universities.(7) This population accounts for 30% of all of the area residents that have a four-year or higher degree.(8) So, while students are initially attracted to the Boston area universities for school, they also often become permanent members of the community when they choose to stay and work in Boston after they graduate. Having a large alumni network in the Boston metropolitan area further strengthens the ties between universities and the regional employers because alumni will be more likely to hire graduates from their alma mater.

The Universities' Research and Its Impact on Boston's Regional Economy

University research provides an important economic stimulus for creating new companies and new jobs and attracting millions of research dollars to Boston's metropolitan area. Since academic research results are shared publicly, this provides opportunities for the creation of new products, new businesses, and more technological innovation based on this shared scientific knowledge. In Boston's regional economy, these universities strengthen new and existing businesses by licensing university technology that provides the basis for new products. Thus, professors are able to partner with industries to start up new businesses or to facilitate the incubation of new businesses until they can generate enough money to establish a more permanent location for their business.

In 2000, these eight universities spent more than $1.5 billion on research, which accounted for more than 95% of all university research spending in the Boston metropolitan area.(9) Also, 97% of this research spending came from federal agency, foundation and corporation funding sources outside the Boston area.(10) University-based research significantly contributes to the Boston metropolitan area's economic growth and development. By spending more money on research, the universities will require more goods and services from the regional economy. As the universities broaden their research efforts with new scientific disciplines, their impact on the regional economy will continue to grow. In 2000, the universities were granted 264 patents, signed 280 commercial licensing agreements, and participated in the formation of 41 start-up companies with technologies that were first developed at the universities.(11) All of the universities have created "technology transfer" offices dedicated to promoting the translation of academic research into new products and businesses.(12)

Boston area universities have prestigious reputations for their research. This makes the Boston metropolitan area very attractive to businesses that want to locate near talent and potential university-industry research partnerships. The strong research base at these eight universities has enticed major corporations like Amgen, Merck, Novartis, Pfizer, Cisco and Sun Microsystems, to invest in the region with new research and development facilities so they have more opportunities to collaborate on projects with the universities.(13) For example, Massachusetts corporations have partnered with Northeastern's Barnett Institute, Boston University's Photonics Center, MIT's Auto-ID Center, Harvard's Institute for Chemistry and Cell Biology and Tufts' School of Veterinary Medicine.(14) In 2001-2002, half of the fifty Boston region start-up companies, which had attracted the most outside investment, were also collaborating with one or more universities. Moreover, the universities partner together on research projects or with other private research institutions.(15)

The Universities' Impact as a Major Regional Industry

In 2001, the Greater Boston Chamber of Commerce published a report that identified knowledge industries, which included higher education and consulting and research firms, as one of five industry clusters that drove the Boston region's growth during the 1990s.(16) The higher education sector provides stability for the Boston regional economy because it is less susceptible to cyclical swings that the other sectors face. Since October 2000, the universities' employment increased by 4 % while the overall regional economy slid into recession.(17)

Together, these eight universities' revenues totaled more than $5.8 billion in 2000.(18) Also, in 2000, the eight universities spent approximately $1.3 billion on purchases of goods and services procured from Boston metropolitan area vendors.(19) In October 2002, the eight universities employed approximately 50,750 people, which is roughly equal to the total number of people employed in Massachusetts by Fidelity, State Street, FleetBoston, Raytheon and Gillette combined. University jobs are highly regarded because they usually come with good benefits and opportunities for education and training.(20) In addition to their own workforces, these universities generate many indirect jobs through the money they spend in the local economy. In 2002, the universities' spending on payroll and on purchases of goods and services within the Boston metropolitan area supported more than 37,000 full-time equivalent jobs in industries throughout the region and paid approximately $1.6 billion in wages.(21)

From 2003 through 2007, construction spending is expected to average as much as $850 million annually for these eight universities.(22) This construction strengthens the economy by providing more employment for construction workers and more state-of-the-art, cutting edge facilities, which in turn will require additional services. The more the universities grow and innovate, the more they will attract talented students and scholars. Several universities, like MIT, Boston University and Tufts, are actively involved in the real estate development of commercial research and office space to help meet the demand of new businesses that are attracted to the region. An example is MIT's University Park, which is a 27 acre mixed use development on a former brownfield.(23) It will provide 1.3 million square feet of office space.(24) Not only is the community benefiting from the additional office space, they also get a contaminated brownfield site cleaned for re-use thus revitalizing this abandoned industrial site.

MIT's University Park development. Source:

University-Community Relations

With all of the benefits that universities provide their neighboring communities, one would expect that these communities would be very welcoming of universities. However, there is often tension between universities and their neighboring communities. Conflicts often arise when universities grow because (25):

Most of the tension between universities and their neighboring communities results from the effects when universities convert property from a taxable use to a tax-exempt, educational use. The community residents fear that as more and more land becomes tax-exempt, this means that the local government will have less money to provide community services so the burden may be transferred to the residents in the form of higher taxes.

It is important to note that the relationships between universities and their neighboring communities are generally mutually beneficial. A lot of a community's unique resources are due to the influence and activities of neighboring universities. In return, a community's amenities attract people to neighboring universities. A community's growth and vitality is directly linked to the growth and vitality of its universities. Therefore, the universities must partner with state and local government and community leaders to ensure the overall prosperity of the area.



Universities provide an overwhelming number of benefits to the growth and development of a regional economy. The eight universities in the Boston metropolitan area make it a more attractive place to live and work as they provide a strong knowledge base and entrepreneurial spirit. In addition, employers are attracted to the Boston area because of the universities' benefits, including university-industry partnerships and business incubators.

During difficult economic times, these universities are a source of stability for Boston's regional economy. While university-community tension increases as universities expand, the community and the university must work together on a long-term plan for their growth. The success of the universities are directly linked with the success and prosperity of the region just as the region's is with the universities.

References and related links

1) Atlanta Regional Consortium for Higher Education. 2001. Higher Education in America's Metropolitan Areas: A Statistical Profile, January.

2) Appleseed. 2005. Engines of Economic Growth: The Economic Impact of Boston's Eight Research Universities on the Metropolitan Boston Area. New York.

3) Ibid.

4) Ibid.

5) Ibid.

6) Ibid.

7) Ibid.

8) Ibid.

9) Ibid.

10) Ibid.

11) Ibid.

12) Ibid.

13) Ibid.

14) Ibid.

15) Ibid.

16) Ibid.

17) Ibid.

18) Ibid.

19) Ibid.

20) Ibid.

21) Ibid.

22) Ibid.

23) Forest City Enterprises. 2005. University Park at MIT. Retrieved from

24) Ibid.

25) City of Cambridge. 1991. Report of the Mayor's Comittee on University-Community Relationships. Cambridge, MA.