Teeing up innovation

How research universities drive local economic growth

Stellenbosch is synonymous with its old oaks and Cape Dutch architecture. But the town’s success is found on the fringes. Beyond the vineyards and the fairways of the golf course lies Technopark: a cluster of unremarkable buildings at first glance. Yet inside, engineers and entrepreneurs are quietly building the industries that will shape Stellenbosch’s – and perhaps the country’s, even the continent’s – future.

It began with a decision in the late 1980s. Gerrit “Boel” Pretorius, then leading an electronics firm, recognised a critical gap: despite a strong local arms industry, South Africa lacked the expertise and facilities to design and produce its own advanced surveillance and tracking radar systems. With the arms embargo tightening and technological isolation increasing, Pretorius chose Stellenbosch as his base, not because it was the obvious industrial heartland, but because of its proximity to one of the country’s best pools of engineering talent. What started as a small, technically ambitious team quickly outgrew its makeshift offices, eventually becoming the anchor tenant in a newly established science park – Technopark – perched directly adjacent to the golf course and a stone’s throw from the university campus.

Stellenbosch in those days was still a small town, its reputation tied to agriculture and academia rather than industry or entrepreneurship. But the arrival of Reutech, and soon after a cohort of similarly minded ventures, marked a turning point. The physical proximity between Technopark and Stellenbosch University was more than a convenience. It became the foundation for a model of economic growth that is now being replicated – often with the university as its cornerstone – in cities around the world.

Urban economists have long recognised that universities are not only beneficiaries of city growth but also powerful drivers of it. As Harvard economist Ed Glaeser argued in his Thys Visser Memorial Lecture in Stellenbosch in early June, ‘the best economic development strategy may be to attract smart people and get out of their way’. Cities that thrive are those that succeed in drawing talented individuals and providing them with opportunities for interaction, collaboration, and serendipitous innovation.

This is not just theory. The empirical evidence linking universities to urban prosperity has grown considerably in recent years. Many of the world’s most innovative regions – Silicon Valley around Stanford, Boston’s Route 128 corridor anchored by MIT and Harvard – owe their dynamism to the clustering of knowledge and people around universities. The reason is partly due to the so-called ‘knowledge spillover’: ideas and skills developed within universities are rarely confined to the campus. They seep into the surrounding economy, finding commercial expression through start-ups, patents, and partnerships. This process is fundamentally local. As research by Naomi Hausman has shown, when U.S. law changed in the 1980s to allow universities to commercialise their research, the growth in employment and wages was concentrated in industries most closely linked to the research strengths of nearby universities. A single standard deviation increase in a university’s innovation output led to 18 more jobs and a measurable wage premium in those related sectors. These effects were most pronounced in places with dense concentrations of skills and firms.

It is not only about proximity to knowledge, but about creating the right platforms to turn that knowledge into economic value. Science parks and innovation districts, typically co-located with universities, have become a key part of this strategy. Recent research on science parks in China reveals that the establishment of a university science park results in a 50% increase in university-industry collaborative patents, with the effect concentrated among firms located within a few kilometres of the campus. Parks act as both physical and social intermediaries: providing space, facilitating introductions and ensuring that tacit knowledge can be transferred face-to-face. In practical terms, when smart people can easily walk between the lab and the office, and when the local environment encourages collaboration, new ideas are more likely to be commercialised. The ‘smart people get things done’ argument is borne out in practice: where universities provide talent and foster networks, companies form, grow, and multiply.

Stellenbosch is a wonderful case study of these dynamics. The original investment in radar technology did more than give rise to Reutech; it seeded a generation of engineers, many of whom went on to start or invest in spin-off companies across a remarkable array of fields. Over the decades, this ecosystem has produced globally competitive ventures, particularly in the space technology sector. The latest NASA Small Spacecraft Technology State-of-the-Art Report singles out several Stellenbosch firms – Cubecom, CubeSpace, NewSpace Systems, and Dragonfly Aerospace – as among the world’s leaders in their field, an achievement rooted in this region’s scientific and technical capacity. Today, the legacy of this investment is evident in a diverse innovation ecosystem: alongside world-class space tech firms, Stellenbosch is home to companies pioneering advances in artificial intelligence, radio astronomy, and drone technology. These firms operate not only locally but also in global value chains, exporting products and expertise to clients on every continent.

Crucially, the connections to the university have not faded with time. As Jaco Roux, head of programmes at Reutech Radar Systems, puts it:

There’s a very good reason the RRS building was established right next to top universities like Stellenbosch and UCT over 30 years ago. Our strong ties with these institutions have been a game-changer in driving innovation and delivering cutting-edge Radar and Command & Control solutions to clients in the mining, defence, and security sectors – both locally and internationally.

These links extend beyond hiring graduates. Many of the engineers who once worked in Stellenbosch’s laboratories have become serial entrepreneurs or investors, ensuring that talent and capital are continually recycled back into the local ecosystem.

Sometimes, the strongest evidence for the power of local networks comes from watching them unfold just down the road. On 7 August, Malan Joubert, Stellenbosch graduate and co-founder of FireID, will share his insights into building some of South Africa’s leading startups, including SnapScan, Offerzen, and Luno. (You can still reserve a seat here.) Many of the original FireID founders, Malan included, were in res with me at university, though, evidently, I was neither smart enough to join them nor prescient enough to invest early.

But why do some university regions outperform others? New research in economic history provides part of the answer: local conditions shape the type of research conducted and, by extension, the industries that flourish. Recent work using US land grant colleges has shown that the scientific research output of universities tends to mirror the unique needs and characteristics of their immediate surroundings. Where a college was established in a wheat-growing county, it focused more on wheat; where in a cotton county, it focused on cotton. These effects persist across generations, suggesting that the local context of a university not only shapes academic inquiry but also influences the trajectory of regional innovation and growth.

If land grant colleges once focused their science on nearby wheat or cotton, here in Stellenbosch, the local golf course has become the catalyst for new ideas. Inrange, a company with deep roots in Stellenbosch’s radar and radio astronomy talent, has transformed the driving range into a laboratory for precision tracking, exporting its technology to golfers and clubs worldwide. The company now employs about 70 people. I spoke with SJ Marais, also a fellow resident from our university days and now co-founder and CEO of Alphawave Golf (the parent company behind Inrange), and his summary captures the essence of this ecosystem:

There’s definitely a legacy in the development of radar, antennas, and high-frequency electronics here. Most of us at Inrange come from that background, and we maintain close contact with Stellenbosch University’s lecturers. We’ve even made use of the university’s laboratory facilities for specialised measurements. Most of our team is recruited from Stellenbosch. Our installation team is largely made up of SU engineering graduates, who begin with us by travelling the world to set up new sites, then move into roles like project management, development engineering, or software development. This approach works exceptionally well. Beyond their technical skills, our clients can’t stop talking about the quality of the young people who arrive at their businesses to install the system. It makes a strong impression, and for us, it’s actually very important.

In other words, the success of firms like Inrange is inseparable from the local university, as well as the persistent networks of skills and trust that develop with each cohort of graduates. Knowledge, when anchored in local networks and continually renewed, becomes a powerful force for urban economic growth.

The lesson from Stellenbosch is clear: when towns attract extraordinary talent, even a golf course can tee up global innovation.

An edited version of this article was published on News24. Support more such writing by signing up for a paid subscription. The image was created with Midjourney v7.