The federal government’s funding for land development in the 1960’s, which established the legal framework for taking land and deferring the social and economic cost of expanding the university, had a significant impact in increasing the capacity of research universities to expand spatially (Tretter 2016). With the help of this federal funding, the University of Texas quickly shot up the national rankings, and the city of Austin began to attract investment and development in technology: including software design, semiconductor manufacturing, aerospace, biotechnology, and computer equipment (Tretter 2016). While part of the attraction came from Texas’ lax lending economy, bolstered by large reserves of money from the high price of oil in the 1980’s, the university also played a prominent role by providing incentive packages to attract investment from national research firms.
The potential for Austin to develop into the tech hub of Texas was dramatically increased when the Microelectric and Computer Corporation (MCC) and the Semiconductor Manufacturing Company (Sematech) chose Austin as the location for their national headquarters (Tretter 2016). Austin’s ability outshine the numerous other cities competing for these investments was largely due to the state’s ability to raise money for the construction of new research facilities through the university. The university used is authority to sell bonds against its Permanent Utility Fund to raise around $50 million to be spent on land and construction of new facilities. This “opened up new possibilities by connecting a state university’s endowment, and its bonding authority, to land development schemes designed to subsidize for-profit business and support the state government’s industrial policy” (Tretter 2016, 78).
The rapid growth of Austin’s tech industry was also facilitated in part by the developing of a legal infrastructure to patent/copyright knowledge in order to secure rents. The University of Texas “has been a leader in commercializing its research discoveries, connecting its patenting ability to regional growth and attracting venture capital financing” (Tretter 2016, 31). This has encouraged investment in the university as a site of R&D, as venture capitalists have a higher chance at garnering profit from the production of knowledge and technology.
