[Congressional Record Volume 143, Number 30 (Tuesday, March 11, 1997)]
[Senate]
[Pages S2149-S2150]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     MIT: THE IMPACT OF INNOVATION

 Mr. KERRY. Mr. President, I commend the attention of the 
Senate to a significant new study released this week by BankBoston 
regarding the impact of the Massachusetts Institute of Technology on 
the economy of the United States and of the world.
  Mr. President, we in Massachusetts have always known that MIT plays 
an outsized role in the economy of Massachusetts and of the United 
States, but this new study by BankBoston quantifies the impact. And the 
impact is staggering.
  The report shows that MIT graduates are responsible for the formation 
of over 4,000 companies worldwide, and the creation of over 1.1 million 
jobs, including 733,000 jobs in the United States.
  If MIT graduates constituted an economy all by themselves, they would 
be the 24th largest economy in the world.
  Just as significant, the report shows that fully 80 percent of the 
jobs created by MIT-related companies are manufacturing jobs, and that 
MIT-related companies are heavily invested in the production of goods 
and services for export outside the United States.
  In other words, the fruit of the sophisticated research and training 
offered at MIT is real jobs for real working Americans, and real net 
wealth for the U.S. economy.
  We are proud of MIT and its accomplishments, but what this Congress 
should appreciate about the new MIT study is not what it says about 
MIT, but what it says about our research universities throughout the 
country, for the MIT story is one that could easily be told at research 
universities throughout the United States.
  The moral of this story is that our historic Federal commitment to 
university-based research, and to support higher education, has paid 
off in jobs and in new wealth for this country, not to mention superior 
national security and continued advances for human health.
  As we face tough fiscal choices this year on the way to a sustainable 
balanced budget, we must keep the lessons of the MIT study in mind. We 
will ill serve this country if, in the name of sustaining our economy 
through a balanced budget, we underinvest in the very things--research 
and education--that have made this country the unquestioned economic 
leader it is today.
  I ask that the following article, ``Study Reveals Major Impact of 
Companies Started by MIT Alums,'' be printed in the Record.
  The article follows:

      Study Reveals Major Impact of Companies Started by MIT Alums

                        (By Kenneth D. Campbell)

       In the first national study of the economic impact of a 
     research university, BankBoston reported today that graduates 
     of MIT have founded 4,000 firms which, in 1994 alone, 
     employed 1.1 million people and generated $232 billion of 
     world sales.
       ``If the companies founded by MIT graduates and faculty 
     formed an independent nation, the revenues produced by the 
     companies would make that nation the 24th-largest economy in 
     the world,'' said the report, entitled ``MIT: The Impact of 
     Innovation.''
       Within the United States, the companies employed a total of 
     733,000 people in 1994 at more than 8,500 plants and offices 
     in the 50 states--equal to one out of every 170 jobs in 
     America. Eighty percent of the jobs in the MIT-related firms 
     are in manufacturing (compared to 16 percent nationally), and 
     a high percentage of products are exported.
       The 36-page BankBoston report, which is the result of an 
     MIT survey of 1,300 CEOs and two years of fact-gathering and 
     checking by MIT and the bank, ``represents a case study of 
     the significant effect that research universities have on the 
     economies of the nation and its 50 states.'' The study notes 
     that many of the MIT-related founders also have degrees from 
     other universities, and that these entrepreneurs maintain 
     close ties with MIT or other research universities and 
     colleges.
       ``In a national economy that is increasingly emphasizing 
     innovation, these findings extend our understanding of how 
     MIT has been instrumental in generating new businesses 
     nationwide,'' said Wayne M. Ayers, chief economist of 
     BankBoston. ``MIT is not the only university that has had a 
     national

[[Page S2150]]

     impact of this kind, but because of its historical and 
     continuing importance, it illustrates the contribution of 
     research universities to the evolving national economy.''
       MIT President Charles M. Vest, commenting on the report, 
     said, ``About 90 percent of these companies have been founded 
     in the past 50 years, in the period of the great research 
     partnership between the federal government and research 
     universities. The development of these business enterprises 
     is one of the many beneficial spinoffs of federally funded 
     research, which has brought great advances in such fields as 
     health care, computing and communications.''
       The five states benefiting most from MIT-related jobs are 
     California (162,000), Massachusetts (125,000), Texas 
     (84,000), New Jersey (34,000) and Pennsylvania (21,000). 
     Thirteen other states have more than 10,000 MIT-related 
     jobs--from west to east, Washington, 10,000; Oregon, 10,000; 
     Colorado, 15,000; Kansas, 13,000; Iowa, 13,000; Wisconsin, 
     12,000; Illinois, 12,000; Ohio, 18,000; Virginia, 15,000; 
     Georgia, 14,000; Florida, 15,000; New York, 15,000; and 
     Connecticut, 10,000.
       Another 25 states have 1,000 to 9,000 jobs from MIT-related 
     companies--Alabama, South Carolina, Missouri, and New 
     Hampshire, 9,000; North Carolina, 8,000; Arizona and 
     Michigan, 7,000; Maryland and Tennessee, 6,000; Kentucky, 
     Minnesota, New Mexico, and Idaho, 5,000; Oklahoma, Indiana, 
     Utah, Rhode Island and Arkansas, 2,500 to 5,000; Delaware, 
     Louisiana, Maine, Nebraska, Nevada, West Virginia and 
     Mississippi, 1,000 to 2,500 jobs. Only seven low-population 
     states and the District of Columbia had less than 1,000 jobs 
     from MIT-related companies.
       More than 2,400 companies have headquarters outside the 
     Northeast.
       The report noted, ``MIT-related companies have a major 
     presence in the San Francisco Bay area (Silicon Valley), 
     southern California, the Washington-Baltimore-Philadelphia 
     belt, the Pacific Northwest, the Chicago area, southern 
     Florida, Dallas and Houston, and the industrial cities of 
     Ohio, Michigan and Pennsylvania.''
       The report said the MIT-related companies ``are not typical 
     of the economy as a whole; they tend to be knowledge-based 
     companies in software, manufacturing (electronics, biotech, 
     instruments, machinery) or consulting (architects, business 
     consultants, engineers). These companies have a 
     disproportionate importance to their local economies because 
     they usually sell to out-of-state and world markets, and 
     because they so often represent advanced technologies.'' 
     Other industries represented include manufacturing firms in 
     chemicals, drugs, materials and aerospace, as well as energy, 
     publishing and finance companies.
       ``Firms in software, electronics (including instruments, 
     semiconductors and computers) and biotech form a special 
     subset of MIT-related companies. They are at the cutting edge 
     of what we think of as high technology. They are more likely 
     to be planning expansion than companies in other industries. 
     They tend to export a higher percentage of their products, 
     hold one or more patents, and spend more of their revenues on 
     research and development,'' the report said.
       In interviews, MIT graduates cited several factors at MIT 
     which spurred them on to take the risk of starting their own 
     companies: faculty mentors, cutting-edge technologies, 
     entrepreneurial spirit and ideas. The study profiled seven 
     MIT founders who started companies in Maryland, 
     Massachusetts, California, Washington state, Illinois and 
     Florida. Nearly half of all company founders who responded to 
     the MIT survey maintain significant ties to MIT and other 
     research universities in their area.
       The findings of the study also reveal:
       MIT graduates and faculty have been forming an average of 
     150 new firms a year since 1990.
       In Massachusetts, the 1,065 MIT-related companies represent 
     5 percent of total state employment and 10 percent of the 
     state's economic base (sales in other states and the world). 
     MIT-related firms account for about 25 percent of sales of 
     all manufacturing firms and 33 percent of all software sales 
     in the state.
       The study also looked at employment around the nation and 
     the world from MIT-related companies. Massachusetts firms 
     related to MIT had world employment of 353,000; California 
     firms had 348,000 world jobs. Other major world employers 
     included firms in Texas, 70,000; Missouri, 63,000; New 
     Jersey, 48,000; Pennsylvania, 41,000; and New Hampshire, 
     35,000.
       In determining the location of a new business, the 1,300 
     entrepreneurs surveyed said the quality of life in their 
     community, proximity to key markets and access to skilled 
     professionals were the most important factors, followed by 
     access to skilled labor, low business cost, and access to MIT 
     and other universities.
       The companies include 220 companies based outside the 
     United States, employing 28,000 people worldwide.
       Some of the earliest known MIT-related companies still 
     active are Arthur D. Little, Inc. (1886), Stone and Webster 
     (1889), Campbell Soup (1900) and Gillette (1901).
       The report said the MIT-related companies would rank as the 
     24th-largest world economy because the $232 billion in world 
     sales ``is roughly equal to a gross domestic product of $116 
     billion, which is a little less than the GDP of South Africa 
     and more than the GDP of Thailand.'' 

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