University of Economic Impact Report

Office of Institutional Analysis March 2013 Table of Contents

Executive Summary ...... 3 Introduction ...... 4 Methodology ...... 5 Total Economic Impact ...... 7 Institutional Spending ...... 9 Student Spending ...... 11 Visitor Spending ...... 12 Alumni Education Premium ...... 14 Research Impact ...... 16 Creation of Knowledge ...... 16 Supplying R&D Human Capital...... 18 Interactions with Researchers and Industry (Spillover Effects) ...... 21 Estimating ’s Research Impact using Total Factor Productivity ...... 21 A Comparison of Economic Impact ...... 22 Additional Economic Impacts ...... 24 Conclusion ...... 24 Acknowledgements ...... 24 Appendix A – University of Calgary Alumni Education Premium Calculations ...... 25 Appendix B – Average income in below bachelor’s level ...... 26 Appendix C – Workforce Participation ...... 27 References ...... 29

Economic Impact Report Table of Contents 1 Figures

Figure 1: The Economic Impact Model ...... 6 Figure 2: Total Economic Impact ...... 7 Figure 3: Institutional Spending Economic Impact ...... 10 Figure 4: Economic Impact of a University of Calgary Education Premium ...... 15 Figure 5: Research Publications ...... 17 Figure 6: Research Publication Impact ...... 17 Figure 7: License Income Generated from Research Activities ...... 20

Tables

Table 1: Economic Impact Summary ...... 7 Table 2: Institutional Spending ...... 10 Table 3: Student Spending ...... 11 Table 4: Visitor Spending ...... 13 Table 5: Differential Earnings ...... 14 Table 6: Education Premium Summary ...... 15 Table 7: Selected Outcomes of Research Commercialization ...... 19 Table 8: Economic Impact of Research ...... 21 Table 9: Economic Impact Comparison ...... 22 Table 10: Economic Impact Multiplier Comparison ...... 23 Table 11: Alumni Education Premium by Credential ...... 25 Table 12: Average Income in Alberta below Bachelor’s Level ...... 26 Table 13: Workforce Participation ...... 27

Economic Impact Report Table of Contents 2 Executive Summary

The University of Calgary contributes at least $7.92 far-reaching and difficult to comprehensively measure. billion annually to the Alberta economy through various Exclusive of direct spending on research activities, the direct, induced, and dynamic teaching, research, and creation of knowledge, supplying of R&D human capital, community service activities. and spillover effects to industry contribute to the University of Calgary’s total research impact of $3.14 Spending associated with institutional operations billion annually in the Alberta economy. generates $1.27 billion of impact inclusive of $257 million in direct spending on the research enterprise. The institutional spending multiplier represents the Full-time students attending the University of Calgary amount of total economic impact in the region resulting induced multiple rounds of spending thereby creating from each dollar spent by the institution. In 2009- $298.2 million in economic impact. 10, the Alberta economy realized $9.40 for every dollar spent by the University of Calgary in the region, The university also attracts visitors to its academic and slightly higher than the University of Alberta’s spending non-academic events generating $186.1 million of impact. multiplier ($9.10). Graduates of the university’s programs quickly move Similarly, the government spending multiplier indicates into the workforce and earn increasingly higher salaries that for every dollar of operating grant invested by relative to those without undergraduate or graduate government (federal & provincial) into the University level education. In Alberta, bachelor’s degree graduates of Calgary, $12.90 is generated in economic impact earn between $14K and $50K per year more than within Alberta—just under the University of Alberta’s those without a bachelor’s degree, depending on their government spending multiplier ($13.40), and higher age (2009 data). Similarly, those with graduate level education (i.e., master’s, PhD) earn between $20K and than that of University of , University of $62K per year more than those without a bachelor’s Ottawa, and University. degree, depending on their age (2009 data). The In standardized terms (i.e., per dollar invested or spent), “education premium” earned annually by the total base the University of Calgary has an economic impact on of University of Calgary alumni in the Alberta workforce the province of Alberta that is approximately equivalent is estimated to be worth $3.02 billion in economic to that of the University of Alberta, and is greater than impact. that of research-intensive universities in other provinces The impacts of the university’s research enterprise are undertaking similar studies.

Economic Impact Report Executive Summary 3 Introduction

Founded in 1966, the University of Calgary is Since the university’s founding, its enrolment and recognized as one of ’s most research- research activities have grown substantially in intensive universities. It is located in Calgary, Alberta: contribution to Alberta’s overall economic growth. The a region that has proven to be a key economic engine University of Calgary has become a significant economic within the country. The university’s contributions to driver in a relatively short period (less than 50 years). regional spending, the labour market, research and This report will attempt to measure a significant portion development, and technology transfer in the region help of the university’s annual contribution to Alberta’s bolster the entrepreneurial spirit and overall economic economy using a model developed for use in Canada growth of Calgary and Alberta. by the University of British Columbia (Sudmant, 2009) The University of Calgary is not only a disseminator of and later adopted by several other Canadian research knowledge, but a creator of knowledge that translates universities. This “new generation” model improves into increased innovation and productivity within the upon prior models in that it incorporates the dynamic Alberta economy and beyond. “Through its inquiry- economic impacts of a university’s research enterprise based teaching and research programs and strategic as well as the annual contribution of all alumni currently and entrepreneurial partnerships, the university’s employed within the region. faculty, staff and students pursue knowledge, contribute to the development of societal goals, and engage in creativity and innovation in many fields.”1 Teaching, research, and community service drive all facets of the day-to-day operations of the university in its contribution to society and the economy.

In its inaugural year (1966), the University of Calgary enrolled approximately 4,000 full-time students and there were 355 academic members of staff. In 2013, the university now serves more than 31,000 credit students across 14 faculties offering over 200 credit programs/specializations. The university employs 1,800 full-time faculty plus 2,900 full-time staff across multiple campuses. Each year, 6,400 graduate and undergraduate degrees are conferred, adding to its total base of 150,000 alumni. In addition to credit programming, there are over 30,000 non-credit students annually participating in programs, courses, and activities offered through Continuing Education and academic faculties.

1 University of Calgary, 2012 Comprehensive Institutional Plan, p.17

Economic Impact Report Introduction 4 Methodology

The university’s mandate is centered on teaching, earnings of university degree holders relative to research, and community service. While the three those without a degree. (dynamic impact) are inextricably linked, the purpose of this paper is to • Research Impact that measures the impact of attempt to quantify the economic impacts primarily the development of new technologies, innovations associated with the first two, while leaving community and organizations by faculty, students, and service and socio-economic impacts for further alumni. It is estimated using the link between R&D research. spending and regional total factor productivity as This report replicates the methodology used by the outlined in Martin (1998). (dynamic impact) University of British Columbia (Sudmant, 2009), which Earlier generation economic impact models focused was in turn adopted by Simon Fraser University (Sun & primarily on quantifying total expenditures in a region Lee, 2011), the University of Ottawa (Diaz, Mercier and that were attributable to the university’s activities. This Duarte, 2012), and the University of Alberta (Briggs and total spending was then multiplied by a factor (“the Jennings, 2012). The study incorporates the effects of multiplier”) in order to estimate the impact of additional direct, induced, and dynamic economic impacts within rounds of spending that were induced by the initial the following categories: financial stimulus. Each successive round of spending • Institutional Spending on faculty, staff, students, would be progressively smaller as a result of leakages materials, supply and services, and student aid. in the form of spending outside of the region and a (direct & induced impact) marginal propensity to consume that is less than unity.

• Student Spending that occurs as result of While this pure Keynesian model approach was students relocating to the region to attend the perfectly valid in measuring direct and induced university and students not having to leave the spending impacts, it did not capture the dynamic region in the event of insufficient university economic impacts generated by a research-intensive capacity. (induced impact) university. One such dynamic impact is the effect of research and development activities that result in new • Visitor Spending that occurs as a result of technology, inventions, discoveries, and innovations university-related academic and non-academic that drive productivity gains leading to higher economic events. (induced impact) output. Another is the effect of supplying an educated • Alumni Education Premium that measures the workforce in the form of alumni that apply the skills and impact of our total alumni base in the workforce. knowledge acquired through their university experience This is estimated by quantifying the higher throughout their working career.

Economic Impact Report Methodology 5 Figure 1: The Economic Impact Model

UNIVERSITY OF CALGARY

Institutional Student Visitor Graduates in Research spending spending spending Workforce Outputs

Direct Economic Induced Dynamic Impact Economic Impact Economic Impact

Education Total Factor Premium Productivity

“The Economy” (Business, industry, non-profits etc.)

M u lt ip lie d) r ce Effect (Indu

Figure 1 above, provides a conceptual illustration of the economic impact model used in this report. Each component of the model and its application will be described in the corresponding section of this paper.

Economic Impact Report Methodology 6 Total Economic Impact

The University of Calgary has a total economic impact dollar of operating funding from government, $12.90 is of $7.92 billion on the provincial economy as a result of realized in total economic impact. Relative to the $426 its operations. With federal and provincial government million in provincial operating grant, it is 18.6 times the funding in 2009-10 of $614 million, the total impact is original investment. 12.9 times the original investment. That is, for every

Figure 2: Total Economic Impact

University of Calgary Total Economic Impact of $7.92 Billion ($ Millions; 2009-10) Institutional, $1,265.9

Students, $298.2

Research, $3,141.3 Visitors, $186.1

Alumni Education Premium, $3,023.8

Table 1: Economic Impact Summary

Economic Impact Summary ($Millions; 2009-10) Direct Induced/ Dynamic Total Economic Impact Impact Category ($M) ($M) ($M)

Institutional 843.9 422.0 1,265.9

Students 198.8 99.4 298.2

Visitors 124.0 62.0 186.1

Alumni Education Premium 2,015.9 1,007.9 3,023.8 Research * 3,141.3 3,141.3 Total 3,182.7 4,732.6 7,915.2

* Direct research expenditures of $257M are already included in the ‘Institutional” spending category.

Economic Impact Report Total Economic Impact 7 The institution directly spends $843.9 million in the The education premium attributed to University of region, which in turn induces a further $422.0 million to Calgary alumni working in Alberta during 2009 was generate $1.27 billion in impact. $2.02 billion. When the induced spending effects are taken into account, the total economic impact of the Student expenditures that can be attributed to their Alumni Education Premium is $3.02 billion. attendance at the University of Calgary tally $198.8 million, which leads to a further $99.4 million of The creation of knowledge, supplying of R&D human induced spending for a total of $298.2 million. capital, and spillover effects to industry contribute to the University of Calgary’s total research impact of Visitors to both academic and non-academic events at $3.14 billion annually in the Alberta economy. the University of Calgary spend $124.0 million which, after the multiplier effect, yields a total visitor spending economic impact is $186.1 million.

Economic Impact Report Total Economic Impact 8 Institutional Spending

The University of Calgary’s operating expenditures • Student aid in the form of undergrad scholarships totaled $986.1 million in fiscal year 2009-10. Major and bursaries as well as graduate teaching and spending categories include: research assistantships.

• Salaries and benefits paid to faculty members, • All other expenses including utilities, travel, cost researchers, and various staff groups in support of goods sold, maintenance and repairs, and of the academic mandate. As one of the largest financing. employers in the City of Calgary, and with a Table 2 and figure 3 summarize the University of knowledge- and research-intensive employee Calgary’s direct operational spending and total spending complement, salaries and benefits represent the impact in the Alberta region by category of expenditure. largest proportion of total operational spending. With $843.9 million in direct institutional spending in • Materials, supplies, and services. This is the the region, the University of Calgary’s total institutional university’s second-largest operational expense spending economic impact is $1.27 billion. and includes supplies for building construction and renovations as well as a significant research component.

Economic Impact Report Institutional Spending 9 Table 2: Institutional Spending

Institutional Spending in Region ($Millions; 2009-10) Direct Regional Total Spending Type of Expenditure Direct ($M)1 % Regional2 ($M) Impact ($M) Salaries and Benefits 604.4 98% 592.4 888.5 Materials, Supply and Services 182.1 78% 142.0 213.1 Student Aid 61.1 100% 61.1 91.6 All Other Expenses 138.5 35% 48.5 72.7

Total 986.1 843.9 1,265.9

Source: 1. University of Calgary financial statements 2009-10; 2. Briggs & Jennings (2012)

Figure 3: Institutional Spending Economic Impact

University of Calgary Total Institutional Spending Impact of $1.27 Billion ($ Millions; 2009-10) Materials, Supply and Services $213.1

Student Aid $91.6

All Other Expenses $72.7 Salaries and Benefits $888.5

Economic Impact Report Institutional Spending 10 Student Spending

The rationale for the inclusion of full-time student Part-time students are excluded as a reasonable proxy living expenditures in the economic impact is that for the subset of full- or part-time students that, in the these student expenditures would not occur in the absence of the University of Calgary, may not have region if the University of Calgary did not exist. This chosen to attend university at all. Similarly, non-credit seems obvious for those students who are relocating and continuing education students are excluded to allow to the region for the express purpose of enrolling at for a conservative estimate and avoid potential overlap the University of Calgary. However, how can we justify with credit students and/or credit program alumni. including expenditures associated with students who Table 3 shows a high-level summary of full-time student already reside in the region at the time of enrolling? living expenditures in the region. Simply put, if the university wasn’t there, these potential enrollees would have to seek out another research-intensive university in which to enroll. If the Table 3: Student Spending alternative university was out of region, the province would clearly lose this expenditure impact; if it was Student Spending (2009-10) within the region, it would imply that an institution Type of Expenditure of similar stature and capacity would be present and hence the same expenditure impact would occur Undergraduate (FT) 21,534 simply under a different moniker. Graduate (FT) 4,763 Total Students1 26,297 Monthly Living Expenses ($)2 1,255 Academic Months 8 Total Annual Spending ($M) 264.0 Less Residence Payments ($M)3 4.1 Less Financial Aid ($M)4 61.1 Total Direct ($M) 198.8 Total Spending Impact (Direct + Induced; $M) 298.2 Source: 1. OIA Fact book; 2. University of Alberta Grad Studies website; 3. University of Calgary Residence Services; 4. University of Calgary Financial Statements 2009-10

Total annual expenditures are estimated as the product of the number of full-time students, monthly living expenses, and an eight-month academic year. Full-time students’ residence payments and financial aid are subtracted because they are already part of institutional spending.

With direct student expenditures of $198.8 million in the region, the University of Calgary’s total student spending economic impact is $298.2 million.

Economic Impact Report Student Spending 11 Visitor Spending

Each year, the University of Calgary hosts visitors Library, is responsible for attracting a portion attending the campus for a wide range of academic of the 13,000 library visitors a day. The Nickle and non-academic events. Some examples are Galleries highlights the best of contemporary highlighted below. art in western Canada. It offers exhibitions and ongoing public programming to engage students • With 30,000 individual applicants, there are an and scholars and to encourage collaboration both estimated 7,200 prospective student visits to nationally and internationally.2 campus each year. • The on the University of Calgary main • From a base of over 31,000 students and 6,200+ campus attracts the best athletes from Canada graduates annually, parent/family visits to current and around the world to train and compete in a students and to graduation ceremonies generate world-class facility. Every year, the Oval welcomes thousands of visits each year. thousands of visitors, spectators, coaches, 3 • Approximately 1,800 full-time University of athletes and public skaters. Calgary faculty generate visits from international • With permanent seating of 35,650, McMahon academics including individual scholars and Stadium at the University of Calgary is the fifth- longer-term research visitors by way of the 80+ largest stadium in Canada. The stadium currently research centres and institutes. serves as the home venue for several varsity and • Academic meetings and conferences result in professional sports teams including the University thousands of visitors attending these events at of , of the CFL, the Hotel Alma, Olympic Volunteer Centre, Dining of the Canadian Junior Football Centre, and the Energy Environment & Experiential League, Calgary Gators, and Calgary Wolfpack of 4 Learning facility. the .

• The Nickle Galleries (formerly The Nickle Arts Museum), located in the Taylor Family Digital

2 http://library.ucalgary.ca/nickle/about-nickle 3 http://oval.ucalgary.ca/node/333 4 http://en.wikipedia.org/wiki/McMahon_Stadium

Economic Impact Report Visitor Spending 12 In the absence of a comprehensive tally of visitors resulting from all university activities, the number of annual visitors to the University of Calgary is estimated here using a 1:8 ratio of the number of full-time undergraduate students to the number of visitors (see table 4). The same method was used by the University of Alberta report (Briggs & Jennings, 2012). By comparison, visitors reported in Simon Fraser University’s study (Sun & Lee, 2011) translated into a ratio of the same magnitude (1:8) and the estimates 350,000 visitors annually (a 1:14 ratio). At 5.53 million “person” visits to the Calgary area in 2010, the University of Calgary’s share represents about 3.1%.

Table 4: Visitor Spending

Visitor Spending (2009-10)

Type of Expenditure

Number of Visitors 172,272 Average Length of Stay (Days) 2.4 Spending per Day ($) 300 Total Direct ($M) 124.0 Total Visitor Impact (Direct + Induced; $M) 186.1

Source: Tourism Calgary & Calgary Economic Development

The average length of stay in the Calgary area is reported by the “Government of Alberta Tourism in Calgary and Area Report” (2010) as 2.4 days. Average spending per day is a conservative estimate based on “Visit Calgary’s” spending by delegates at meetings and conventions. The estimate for spending per day ($300) is similar to that used in the University of Alberta report ($296), and less than that used in the Simon Fraser University and University of British Columbia studies ($315).

With direct visitor expenditures of $124.0 million in the Calgary region, the University of Calgary’s total visitor spending economic impact is $186.1 million.

Economic Impact Report Visitor Spending 13 Alumni Education Premium

The University of Calgary has graduated over 150,000 The education premium can be thought of as a proxy alumni since 1966. It is estimated that over 82,000 for the value of increased productivity attributed to a alumni have remained in the province and are currently degree holder in the workforce. active in Alberta’s workforce. As employees, they add Using Statistics Canada data, table 5 summarizes value to their employers through the application of the earnings differential within Alberta as calculated skills and knowledge attained through their university in 2009 dollars. In Alberta during 2009, bachelor’s education. In return for their value-added services, degree graduates earned between $14K and $50K they will earn a premium over those who have not per year more than those without a bachelor’s degree, completed a university education. We refer to this as depending on their age. Similarly, those with graduate- the “education premium” and can estimate its value as level education (i.e., master’s, PhD) earned between the differential between the average annual earnings of $20K and $62K per year more than those without a an individual with a bachelor’s or higher degree and the bachelor’s degree, depending on their age. average annual earnings of an individual with the level of education immediately below a bachelor’s degree.

Table 5: Differential Earnings

Earnings by Level of Education in Alberta (2009) Average Annual Income ($2009) Differential Earnings ($2009)

Age Group Below Bachelor’s Bachelor’s Graduate Level Bachelor’s Graduate Level

25-34 46,617 60,771 66,573 14,154 19,956 35-44 56,379 89,826 104,054 33,447 47,675 45-54 62,625 119,804 127,877 57,179 65,252 55-64 57,897 107,433 119,931 49,536 62,034

Sources: Statistics Canada, 2006 Census of the Population, catalog no. 97-563-XCB2006054. Alberta Consumer Price Index (CPI) data from Statistics Canada CANSIM table 326-0021. (1.069=114.4/107.0)

Economic Impact Report Alumni Education Premium 14 Table 6 and figure 4 summarize the education premium Education premium calculations use the same earned annually by credential for University of Calgary approach as that taken by Simon Fraser University alumni who are working in Alberta. Completers of non- (Sun & Lee, 2011) and University of Alberta (Briggs credit courses and continuing education programs are & Jennings, 2012). The education premium is excluded to avoid double counting. calculated by deriving the differential earnings of alumni in the workforce by credential, age, and gender Table 6: Education Premium Summary using Statistics Canada data on salaries and work participation rates in Alberta. Taxes are removed from salaries to derive a net income. See appendix A, B, & C Education Premium (2009) of this report for the detailed calculations. Total Education Credential* Direct ($M) Premium The education premium attributed to University of Impact ($M) Calgary alumni working in Alberta during 2009 was Doctoral/PhD 83.9 125.9 $2.02 billion. When the induced spending effects are taken into account, the total economic impact of a Master 404.6 606.9 University of Calgary Alumni Education Premium is Graduate Diploma 21.3 31.9 $3.02 billion. Post Bachelor Diploma 99.8 149.7

Bachelor 1,406.2 2,109.4 Total 2,015.9 3,023.8

*Impacts of Non-Credit/Continuing Education programs are excluded. Source: See Appendix A

Figure 4: Economic Impact of a University of Calgary Education Premium (2009)

University of Calgary Total Education Premium Economic Impact of $3.0 Billion ($ Millions) Doctoral/PhD $125.9 Master $606.9

Graduate Diploma $31.9 Post Bachelor Diploma $149.7 Bachelor $2,109.4

Economic Impact Report Alumni Education Premium 15 Research Impact

To measure the dynamic economic impact of the 1. creation of research & knowledge University of Calgary’s research enterprise this 2. supply of R&D human capital (graduate report will rely on the Total Factor Productivity (TFP) students) methodology described in The Economic Impact of Canadian University R&D (Martin, 1998). 3. spillover effects resulting from researchers interacting with industry The concept of total factor productivity (TFP) is premised on the fact that growth in Gross Domestic Product (GDP) cannot be explained by increases in Creation of Knowledge capital and labour inputs alone. This additional growth in GDP arises from product and process innovation borne out of research and development activities. Research-intensive universities like the University of Calgary are not only knowledge disseminators, but Martin refers to numerous studies showing the are also knowledge creators. Faculty, post-doctoral causal relationship between university research and fellows, and graduate students create new knowledge economic growth. Specifically, that R&D leads to through their research activities and share it through increases in knowledge and technology, which then peer-reviewed publications. Notwithstanding research lead to increases in productivity that spur growth patents, published information is available for use by in a region’s economic output. industry and other researchers to further create and innovate. Work by researchers such as Adams (1990) Prior to the calculation of the University of Calgary’s has made the case that scientific publications and research impact using the TFP method, it is worth economic growth are correlated. examining how the university’s research activities contribute to increases in productivity and economic Figure 5 illustrates the magnitude of growth in growth through: University of Calgary research publications within peer- reviewed journals captured in Thomson Reuters’ Web of Science database. Thomson’s database covers over 12,000 of the highest-impact journals worldwide.

Economic Impact Report Research Impact 16 Figure 5: Research Publications

University of Calgary Research Publications

Figure 6 shows the impact of the University of Calgary’s research relative to the world using Thomson Reuters’ publication impact metric. An impact factor of one represents the world average.

Figure 6: Research Publication Impact

Clearly, the University of Calgary has made significant contributions to society in terms of knowledge creation and its associated impact. University of Calgary Research Publication Impact Relative to World

Economic Impact Report Research Impact 17 Supplying R&D Human Capital Interactions with Researchers and Industry (Spillover Effects) In addition to the “education premium” earned by graduate-program alumni discussed earlier in this The “spillover” effect refers to the relationship report, graduate students also contribute to the between a university’s research enterprise and economic impact of the research enterprise both as firms in the region. More specifically, companies in students and alumni. Alberta will directly benefit from, or be created out of, As graduate students in research-intensive master’s research generated by the University of Calgary. The and doctoral programs, they are directly involved linkage between research and industry will typically in research activities. They assist faculty with their occur in the form of technology transfer to industry, research projects thus contributing to both the commercialization of research, and the formation publication (creation of knowledge) and R&D processes. of “spin-off” companies. The University of Calgary They also conduct their own research under the encourages and facilitates the spillover effect through supervision and mentorship of experienced faculty its “Innovate Calgary” partnership, whose mandate members. is to bring together researchers, entrepreneurs, and investors to create innovations that drive economic As graduates of research-intensive master’s and growth, job creation, and social well-being. doctoral programs, they will be equipped to interpret and implement the results of existing research, will Table 7 presents a subset of measures providing be capable of teaching and mentoring those who evidence of spillover effects resulting from University will become future researchers, and can continue to of Calgary research. As an example, “invention become accomplished researchers themselves. Within disclosures” represent new inventions for which the public or private sector workforce, they will have University of Calgary researchers are seeking patent a high probability of engaging in R&D activities. The protection. New invention disclosures are granted outcomes of these activities can leave a lasting effect patent protection for ideas or processes that result on organizations and entire industries that generate in products, processes, machines, or compositions of largely intangible benefits that may far surpass the matter, or any new and useful improvements of these. education premium they earn. Whether they proceed within the academy, participate in private-sector firms, or both, they will play an important role in the continuum of education, research, productivity, and economic growth.

Economic Impact Report Research Impact 18 Table 7: Selected Outcomes of Research Commercialization

Selected Outcomes of University of Calgary Research Commercialization

Indicator 2009 2010 2011

Total research funding1 524.5M 524.7M 463.3M Research funding from industry sources1 44.5M 109.0M 116.1 Licenses/options executed 19 8 15 Invention disclosures 55 40 48 Total license Income 5.71M 6.23M 5.22M Total US patents filed 44 22 23 Total US patents issued 3 7 8 Total patent applications filed 55 48 48 Start-up companies 0 2 1 Start-up companies currently operational 12 12 17 Cumulative active licenses 173 215 217 Invention disclosures (3yr total) 210 172 143 Licenses/options executed (3yr total) 72 73 44

1. As per AUTM definitions, includes direct and indirect costs, special purpose and endowments; excludes investment income. Source: Association of University Technology Managers (AUTM) Annual Survey

It should be noted that the measure for “start-up” License income refers to the stream of revenue companies in table 7 is based on a narrow definition received by the University of Calgary from companies by which companies are considered start-ups only using University of Calgary inventions for commercial if they were based on inventions that were directly purposes. University of Calgary’s licensing revenue is funded by the university (Sudmant 2009). It would consistently in the top three relative to peer research- exclude the more general and common case where a intensive universities in Canada. In 2010, the University University of Calgary graduate student or researcher of Calgary ranked third among 38 Canadian Institutions accumulates skills and knowledge at the university, in licensing revenue and number of Canadian patents then subsequently forms a company. issued. Figure 7 illustrates the 10-year flow of license income realized by the University of Calgary.

Economic Impact Report Research Impact 19 Figure 7: License Income Generated from Research Activities

University of Calgary License Revenue Generated from research activities ($000)

In the last decade alone, there are numerous examples of innovation, R&D, and spin-off companies emanating from researchers and graduates of the University of Calgary. A few examples are mentioned here:

• University of Calgary researchers invented • Gushor Inc. was created by a University of Calgary the “neurochip”—“a microchip with the ability researcher and a PhD student. It is a fluid analysis and to monitor several functions of the brain.”5 reservoir engineering company.6 The invention has led to the spin-off company NeuroSilicon. • Profero Energy Inc. is a “Calgary-based oil and gas technology company whose proprietary technology • Trusted Positioning Inc. (www.trustedpositioning. is based on leading biodegradation research by com), “a spin-off company from the department of researchers at the University of Newcastle and the geomatics engineering that specializes in multi- University of Calgary.”7 sensor integrated navigation.”6

5 http://www.ucalgary.ca/news/advisories/july2012/neurochip 6 http://www.ucalgary.ca/news/utoday/july19-2011/technology 7 http://www.iseee.ca/about-iseee/spin-off-companies/

Economic Impact Report Research Impact 20 Estimating University of Calgary’s Research Impact using Total Factor Productivity

After examining how the University’s research activities from the picture. Statistics Canada estimates Alberta’s contribute to increases in productivity and economic domestic R&D to be 69% of the total. growth, we can now move to calculate the University of Calgary’s research impact using the Total Factor The Alberta government has calculated the share of Productivity (TFP) methodology developed by Martin domestic R&D by Alberta universities to be 39%. The (1998). University of Calgary represents 35% of total Alberta post- secondary spending on R&D activities. Table 8 summarizes the results of the TFP calculation as the proportion of the growth in Alberta’s domestic The creation of knowledge, supplying of R&D human capital, research and development (R&D) that can be and spillover effects to industry contribute to the University reasonably attributed to the University of Calgary. of Calgary’s total research impact of $3.14 billion annually Growth in the Alberta economy as measured by Gross in the Alberta economy. Domestic Product (GDP) between 1971 and 2010 is If a research-centric approach is taken that includes shown here as calculated by Briggs & Jennings (2012). direct research spending (already included in institutional See Martin (1998) and Sudmant (2009) for justification spending), induced spending impact, and dynamic R&D of the use of 1971 as a base year that would yield a impacts, the total impact of the university’s research conservative result. enterprise would be $3.52 billion, or 44.4% of the University Martin estimates total factor productivity as 20% of of Calgary’s total economic impact. GDP growth and suggests the removal of foreign R&D

Table 8: Economic Impact of Research

Research Impact

$ Millions

Alberta GDP Growth (1971-2010)1 166,760 Total Factor Productivity (TFP) (x 20%)2 33,352 Domestic R&D (x 69%)3 23,013 Share of Domestic R&D by Alberta Universities (x 39%)4 8,975 Share of Domestic R&D by University of Calgary (x 35%)5 3,141 Research Impact (University of Calgary’s share of domestic R&D) 3,141

Source: 1. Briggs & Jennings (2012); 2. Martin (1998); 3. Table 4-1, Statistics Canada, No. 88-221-X; 4. Alberta Facts & Figures (2011); 5. University of Calgary submission to CAUBO on research expenditures

Economic Impact Report Research Impact 21 A Comparison of Economic Impact

This report adopts the economic impact methodology contribute to higher levels of institutional spending. used by several other Canadian universities, notably With this in mind, it is worth noting that one of the University of British Columbia (2009), Simon Fraser comparators (Simon Fraser University) is somewhat University (2011), University of Ottawa (2012), and smaller than the University of Calgary, one (U of Ottawa) University of Alberta (2012). It also uses data from the is of similar size, and the other two (University of British fiscal year 2009-10 so that comparative data previously Columbia and University of Alberta) are considerably compiled by the University of Alberta study (Briggs & larger. Jennings 2012) on other universities can be utilized. As such, the University of Calgary’s annual impact can The age of a university can also be a factor in be put into comparative context while recognizing that determining the magnitude of economic impact. Older each university will have its own unique environment in universities are more likely to have a larger alumni which it operates e.g., political, economic, demographic, base that is eligible to earn an education premium (an geographic, etc. important factor in the model). The University of Calgary is the youngest research-intensive university in Canada. The sheer size of a university, as measured by a combination of full-time enrolments and tenured/ In this context, table 9 shows the relative economic tenure- track faculty, is a legitimate factor in the impacts of the five Canadian universities that have realization of economic impact. A larger student base recently produced economic impact reports using leads to a higher level of student spending as well as the same methodology. For reasons outlined above, additional graduates who enter the workforce and we might expect University of British Columbia and earn an education premium. Similarly, a higher number University of Alberta to generate significantly higher of full-time faculty conducting research increases impacts. the likelihood of attracting R&D funding. Both can

Table 9: Economic Impact Comparison

Impact Summary ($Millions; Adjusted to 2009-10 Fiscal Year) University University of University of University of Economic Impact SFU of British Ottawa Calgary Alberta Columbia Institutional 658.5 711.0 1,265.9 2,014.0 2,020.8 Student 295.1 390.8 298.2 313.8 292.8 Visitor 165.5 18.1 186.1 283.5 212.5 Alumni Education Premium 1,682.1 1,604.2 3,023.8 2,667.6 4,133.1 Research 851.7 1,208.8 3,141.3 5,097.3 5,654.3 Total Economic Impact 3,652.9 3,932.9 7,915.2 10,376.2 12,313.5

Source: Modified from Briggs & Jennings (University of Alberta, 2012)

Economic Impact Report A Comparison of Economic Impact 22 Relative to Simon Fraser University and Ottawa, the institutional and governmental investments in higher University of Calgary compares favorably on economic education. In an effort to “standardize” the comparison, impact, particularly within the institutional spending, we can look at an institutions’ economic impact relative alumni education premium, and research categories. to an initial financial stimulus. Table 10 shows the government and institutional spending “multipliers” for University of Calgary’s education premium is higher than five Canadian universities. that of all comparator universities, except University of Alberta, for three main reasons: higher average The institutional spending multiplier represents the salaries earned, higher work participation, and a greater amount of total economic impact in the region resulting proportion of alumni staying within the region. from each dollar spent in the region by the institution. In University of Calgary’s research impact is higher than 2009-10, the Alberta economy realized $9.40 for every that of Simon Fraser University and Ottawa for two $1 spent by the University of Calgary—slightly higher primary reasons: the province of Alberta has enjoyed than the University of Alberta’s spending multiplier a higher GDP growth rate than that of BC (a significant ($9.10). variable in the model for determining growth in R&D), Similarly, the government spending multiplier indicates and universities in Alberta represent a larger share of that for every $1 of operating grant invested by provincial R&D (39%) than is the case in both British government (federal & provincial) into the University Columbia (37%) and Ontario (34%). University of of Calgary, $12.90 is generated in economic impact Ottawa also represents a smaller proportion of higher within Alberta—just under the University of Alberta’s education R&D within its region relative to Alberta government spending multiplier ($13.40), but higher universities in their region. than University of British Columbia, Ottawa, and Simon It is helpful to put the University of Calgary’s impact Fraser University. in context by comparing the relative effects of both

Table 10: Economic Impact Multiplier Comparison

Economic Impact Multiplier (Using Adjusted 2009/10 Fiscal Year)

Impact Multipliers SFU UOttawa UBC UofC UofA

Total Economic Impact ($M) 3,653 3,933 10,376 7,915 12,314 Direct Institutional Spending ($M) 439 474 1,343 844 1,347 Government Spending (Federal & Prov.) ($M) 290 326 967 614 919 Institutional Spending Multiplier1 8.3 8.3 7.7 9.4 9.1 Government Spending Multiplier2 12.6 12.1 10.7 12.9 13.4

1. ratio of total impact to direct institutional spending. 2. ratio of total impact to government spending (Federal & Provincial) Source: Modified from Briggs & Jennings (University of Alberta, 2012)

Economic Impact Report A Comparison of Economic Impact 23 and other reports using the same methodology, that Additional Economic research-intensive universities in Canada have a significant Impacts economic impact on their respective regional economies. Within this context, it is worth noting the following: • The University of Calgary has a greater economic In addition to the direct, induced, and dynamic impact on its region in standardized terms (i.e., per economic impacts quantified in this study, there are dollar invested or spent) than do research-intensive numerous other impacts associated with the University universities in other provinces undertaking similar of Calgary that are not addressed in this report. studies. Relative to other provinces, this is mainly due These include socio-economic impacts, community to: enhancement, and broader social, cultural, and environmental impacts. a) The higher education premiums accrued by alumni of University of Calgary (and University As an example of socio-economic impacts, research of Alberta) in Alberta’s workforce. indicates that university graduates are much less likely b) The larger share of provincial R&D that is to need social assistance or employment insurance attributable to Alberta research-intensive benefits, and are less likely to smoke or abuse alcohol. universities. Socioeconomic impacts that result in avoidance of additional health care and social safety net costs will • The economic impact in standardized terms (i.e., per save Alberta’s taxpayers millions of dollars each year. 8 dollar invested or spent) of Alberta’s two research- intensive universities is approximately equivalent. Conclusion As the youngest research-intensive institution in Canada (under 50 years of age), the University of Calgary has generated a significant annual economic impact on Alberta’s The University of Calgary generates $7.92 billion economy in a relatively short period. annually in economic impact within Alberta and returns to the economy 12.9 times the initial operating grant investment of federal and provincial governments. For every dollar the university spends in Alberta, $9.40 of Acknowledgements economic impact is yielded in the region.

When the dynamic effects associated with the alumni This report was authored by Allan Starr, Office of education premium and the research enterprise are Institutional Analysis, University of Calgary. The report was taken into account, a more comprehensive picture of compiled with the assistance and support of the following total economic impact emerges. It is evident from this offices and portfolios: University Relations, Financial Services, Residence Services, Calgary Innovates, and the Offices of the Provost and President.

8 Christophersen, K. & Robison, M. (2003). The Socioeconomic Benefits Generated by 16 Community Colleges and Technical Institutes in Alberta.

Economic Impact Report Additional Economic Impacts 24 Appendices Appendix A: University of Calgary Alumni Education Premium Calculations

Table 11: Alumni Education Premium by Credential

Economic Impact Report Acknowledgements 26 Appendix B: Average Income in Alberta Below Bachelor’s Level

Table 12

Age Group Gender Gross Income ($2005) Gross Income ($2009)

M $64,160 $68,613 55-64 F $38,636 $41,317 M $70,299 $75,178 45-54 F $42,368 $45,308 M $61,727 $66,011 35-44 F $39,192 $41,912 M $49,782 $53,237 25-34 F $32,728 $34,999

Source: 1. Statistics Canada, 2006 Census of the Population, catalog no. 97-563-XCB2006054. 2. Calculated using Alberta CPI data from Statistics Canada CANSIM catalogs 62-001-X, 62-010-X, table 326-0021.

Economic Impact Report Acknowledgements 27 Appendix C – Workforce Participation

Table 13: Workforce Participation

Work Participation in Alberta

Male Female Male Female

Labour Force Labour Force Age Group Participation Rate Participation Rate Participation Rate (Millions) (Millions)

25-29 0.931 142.1 0.806 109.3 0.930 0.792 30-34 0.929 128.4 0.777 97.9

35-39 0.940 126.1 0.793 93.2 0.941 0.813 40-44 0.942 121.1 0.832 101.3

45-49 0.933 125.7 0.851 116.0 0.920 0.828 50-54 0.907 121.4 0.800 99.0

55-59 0.830 89.2 0.710 75.4 0.775 0.646 60-64 0.688 56.2 0.535 43.7

Source: Statistics Canada, CANSIM Table 282-0002

Economic Impact Report Acknowledgements 28 References

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Economic Impact Report References 29