And by spearheading "Expanding Europe" conference, University representatives show us all that, 650 years later, you are still at the cutting edge of current affairs.

I'm really delighted to be here in Pécs, one of this year’s European Capitals of Culture. It is a fitting time for Pécs to hold this distinction, since Hungary will be taking over the presidency of the European Union in a few short months. As President Barroso told me in Brussels just a few weeks ago, and as he indicated by his presence and his words here today, the attention of all of Europe is now on Hungary. I am confident that Hungary will have a successful presidency and that there will be progress on issues that concern not just Europeans, but citizens of the rest of the world as well.

One of the priorities that the Hungarian Government has set for its presidency is to address the economic crisis and work towards creating the conditions for a strong recovery. This is a crucial goal for all of us, and I believe the modern university has a key role to play.

The relationship between University systems and society is often underplayed – in the United States as anywhere else. I’m proud to say that my husband, Markos Kounalakis, addressed this issue in 2005 on the pages of his magazine, The Washington Monthly. For years, the US News and World Report published what has been the definitive list of US College Rankings. Markos and his colleagues decided to publish a ranking too. But instead of asking what a college could do for you, they asked “What are colleges doing for the country.”

Turning the question around opened an energetic public dialogue in the United States, and the rankings, which continue to be published every year, shed new light on the issue of universities and their impact on society. In short, as the Washington Monthly editors write in this year’s edition, “Colleges and Universities do as much to shape the future as any institution you can think of. They conduct cutting edge research that drives economic growth, provide upward mobility to people of humble birth, and mold the characters of tomorrow’s leaders.”

Since I’m focusing my remarks today on the connection between universities and macro economic development, I would say that American universities are the breeding ground, birthplace, and launching pad for what we call American innovation.

Now it turns out that of the Monthly’s top ten universities on this year’s list, five are California universities. Four members of the UC system, and Stanford.

California is my home, and the University of California is not only my alma mater, but it is the system that I have worked with in many capacities, and that I know the best. So I thought I might try to share some insights into the mechanics of how California universities impact macro economy.

First, the UC system actively and passionately claims economic impact as part of its mission. I want to quote from the website “The University of California has actively driven and sustained California’s economy for more than a century, from its earliest contributions in agriculture to its catalyst role in the biotechnology, telecommunications and computer technology industries during the final decades of the 20th century.”

This is a pretty big claim. And it’s widely accepted as true. But I think it is fair to include private universities – Stanford - for instance - in explaining how universities feed into and support the economy.

It is often said that California’s economy is driven by knowledge clusters. There are roughly six major knowledge clusters in California – biosciences, computers and semiconductors, information technology, telecommunications, aerospace and agriculture. You would probably immediately recognize Silicon Valley as one such cluster. Maybe also the biotech centers around the San Francisco bay area and telecommunications in Los Angeles.

Research and development activities at the university level feed directly into these clusters, enhancing both labor and capital productivity; and technology transfers and business spinoffs carry discoveries into the market place.

I’ll try to give you a few examples of how this works. Every year, thousands of contracts, totaling hundreds of millions of dollars, are signed between the UC system and private companies. The private companies pay for the research, the universities carry it out, and private companies own that research. Of course, billions of dollars in federal research grants go directly to the university system through a highly competitive process. The more innovative the university, the more funding they can expect to receive.

The researchers behind the new innovations often take their discoveries and “spin off” from the universities into the private sector arena that exists within these “knowledge clusters”. As they transfer into the for profit world, they make room for the next generation at the universities.

What we see in California, and around the United States, is that when capital, people and ideas have ample mobility between the university system and the private sector, innovation quickly and efficiently finds its way into the market. The more vibrant and fluid this mobility is, the more intensely the macro economy is influenced.

I know that there are many Hungarians who have experienced this system – I meet them all the time. They are men and women who attended US academic institutions, and subsequently became very successful business people – many in the field of science and technology. And I know that using the US as a model is one important way that Hungary has recognized that it can keep its innovations and innovators here, fueling its economy and maintaining a competitive edge.

This brings me to the subject of the successful cooperation between the University of Pécs and the University of Ohio. Many of the issues I’ve touched upon today are regularly explored at the Simonyi Center for Entrepreneurship, Applied Education and Regional Development. I commend the leadership for focusing their programming to support the link between innovation and entrepreneurship - in particular through its use of Ohio’s integrated educational economic development model.

Of course, the relationship between university and society goes far beyond the linkages that I’ve tried to describe today. And I would like to conclude by mentioning a recent American success story. Pittsburgh, Pennsylvania is located in what was commonly referred to as the American "Rust Belt," an area where heavy industries like steel-making once ruled but have now disappeared, taking away jobs and livelihoods.

President Obama, speaking there recently said "We can’t know for certain what the future will bring. We can’t guess with 100 percent accuracy what industries and innovations will next shape our world… when industry shrank and so many jobs were lost, who could have guessed that Pittsburgh would… reemerge as a center for technology and green jobs, health care, and education? Who would have thought that the University of Pittsburgh Medical Center’s logo would one day adorn the U.S. Steel Tower, or that… Carnegie Mellon -- would be the region’s largest employer?"

So, in this great city, in Hungary's oldest university, I encourage you all to work with your universities, with your entrepreneurs, and your innovators, to create the future you all deserve. Thank you."

Source: U.S. Embassy Budapest