OTC News Archive

UT Austin has annual economic impact of $7.4 billion on state economy, study finds

By Richard Bonnin, University of Texas Office of Public Affairs
February 28, 2005

AUSTIN, Texas—The University of Texas at Austin’s annual economic impact on the state of Texas is $7.4 billion, according to a new study conducted by the university’s Bureau of Business Research.

The findings highlight the many ways UT Austin affects the economic well-being of its neighbors, from drawing new consumers to the Central Texas region, to being the region’s largest employer—with about 22,000 employees—to being a major consumer of goods and services.

“Not only is the university an anchor for the local and regional economy, the return on the state’s investment in higher education is astoundingly high,” said Dr. Bruce Kellison, associate director of the Bureau of Business Research, who conducted the study. “The Texas comptroller estimates that for every dollar the state spends on its colleges and universities, $5 reverberates throughout the economy in the form of direct spending, increased productivity and new economic development.”

The university generates 82,000 jobs throughout the state by directly employing workers and indirectly through construction, purchasing and through the economic “multiplier effect,” which takes into account the university’s expenditures on salaries, equipment and the goods and services it relies on to conduct its business.

This spending generates additional economic activity, creating jobs and more demand for goods and services throughout the economy. The study showed an additional 21,300 jobs were created statewide as a result of UT Austin student and visitor spending and through the activities of companies based on the university’s technology and research.

The study, which examined fiscal year 2003, also found that UT Austin’s economic impact on Texas is growing. In fiscal year 2001, the university had an overall economic impact of about $7 billion on the state.

The report showed that UT Austin’s global reach has local impact. More than 4,500 students from more than 100 countries—the fifth-highest enrollment of international students in the nation—study at the university. The estimated annual contribution to the Austin economy from international students enrolled at UT Austin is $68 million.

The university’s greatest impact, however, may be as an economic stimulator, thanks to its large research enterprise. UT Austin research helps build the regional economy by drawing in nearly $400 million in research grants. The strong research base attracts investment from major corporations, with companies such as Samsung announcing last year it was spending a half-billion dollars in an Austin semiconductor plant expansion that would ultimately mean $48 million to the Austin region.

Discoveries made at UT Austin help stimulate the Texas economy when companies are created to commercialize the discoveries or when they are licensed to existing companies.

Companies recently formed around UT Austin research include Molecular Imprints, LabNow, Entercel and Proactive Technologies—all based in Austin.

Molecular Imprints, which has more than 60 employees and sells its lithography machines to semiconductor companies around the world, recently received $36 million from a joint venture that included $18 million of federal funding from the National Institute of Standards and Technology’s Advanced Technology Program.

LabNow, which recently received $14 million in investment capital, is commercializing a device that will make it easier and cheaper to monitor AIDS in patients in developing countries. The company, which has 15 employees, seeks to revolutionize point-of-care diagnostic testing.

“We’re strengthening the Texas economy with discoveries made in our labs,” said Neil Iscoe, director of the university’s Office of Technology Commercialization. “We’re bringing investment into Texas and creating jobs by promoting our faculty’s research.”

The office connects university researchers and commercialization partners, ensuring smooth and fast transfer of intellectual property created at the university.

UT Austin’s licensing deals generate more than $5 million in annual licensing income, furthering research work in areas such as nanotechnology, enzyme technology to benefit the agricultural industry and the drug discovery process to treat illnesses and diseases.

The university is a key player in Austin’s emerging wireless technology industry through its Wireless Networking and Communications Group (WNCG)—the largest and one of the top programs in the country. WNCG’s research has helped Austin become a leader in creating a wireless future where voice, data and digital media converge onto broadband wireless platforms, providing information and connectivity at one’s fingertips. This pioneering technology can enhance and expand critical services, such as enabling drivers to learn about road conditions and weather in real time or helping law enforcement agencies locate missing people.

“The convergence of the Internet, personal computing and wireless technology promises revolutionary products and services for citizens throughout the world,” said Ted Rappaport, director of WNCG. “The University of Texas is committed to providing the educational underpinnings and research capabilities that are needed to design, deploy and invent this exciting future.”

Adding momentum to economic development, in April the Wi-Fi Alliance—a global Wi-Fi organization that comprises more than 200 members from the world’s leading companies—moved its headquarters to Austin from Mountain View, Calif., and is part of UT Austin’s IC2 Institute.

According to an IC2 report, “Austin’s Wireless Future,” there are more than 90 wireless companies in the Austin area employing about 3,400 people with a payroll of about $125 million. That number is expected to grow annually by almost 20 percent, to nearly 8,000 employees by the year 2008.

Other highlights in the study show:

  • The university’s nearly 50,000 students provide an annual economic boost of about $837 million into the local economy.
  • Personal income generated through direct and indirect economic activity in Texas by salaries paid to UT Austin employees totals $2.5 billion.
  • The annual value of economic expansion—the estimated amount of business activity in the state generated by UT Austin research and development expenditures and out-of-state students attracted to Austin by the university—totals $1.4 billion.

Findings in the report are an update of a 1994 study by the Bureau of Business Research titled “Economic Contributions of the University of Texas System: A Study in Three Parts.”