In December the unemployment rate in East Lansing and Mount Pleasant was 8.6 and 7.1, respectively.

Ann Arborites and economists alike tend to point to some indefinite and elusive ‘X’ factor that “makes Ann Arbor Ann Arbor”, but they disagree about what that factor is.

The University’s renowned international reputation, the health care industry, quality of life, green space, proximity to Detroit and easy access to Detroit Metropolitan Airport are all named as important factors to Ann Arbor’s prosperity.

Glazer said it is the size of the University’s research operations and Ann Arbor’s central location in Southeast Michigan that distinguishes Ann Arbor from other college towns.

This combination is what gives the University more spin-off potential than other schools, he said, adding that if Ann Arbor was located a hundred miles north or south, the University would have a much smaller impact on economic development.

The University of Illinois at Urbana-Champaign, another flagship research school, is an example of academia’s irrelevance if the school isn’t in a prime location, Glazer said.

“The University of Illinois in Champaign has almost no effect because it’s out in the middle of a corn field,” he said.

Glazer said the University’s growth should be a top concern not only for the region but the entire state as it tries to move away from the auto manufacturing industry and toward a high-tech economy.

“Our belief is that the asset that the state has that can have the greatest impact on Michigan’s transition to a knowledge economy is the research universities, with the University of Michigan being the most important,” he said.

It was precisely the importance of Michigan’s research universities that University President Mary Sue Coleman tried to impress upon the Michigan House Appropriations Subcommittee on Higher Education during her testimony in Lansing last week.

Coleman appeared with Michigan State University President Lou Anna Simon and Wayne State University President Jay Noren to lobby for more state funding for higher education.

In her remarks, Coleman stressed the University’s recent efforts to encourage students and faculty to be entrepreneurs and start businesses in the private sector.

“We want to encourage and reward professors who move inventions and innovations into the marketplace,” Coleman said during her subcommittee testimony.

Together, the three presidents represent the University Research Corridor, an alliance formed in 2006 with the state’s three largest research universities with the goal of guiding Michigan toward a knowledge-based economy.

In its 2008 report, the URC credited the three schools with the creation of nearly 70,000 jobs in the state. The report also estimated that the URC was directly and indirectly responsible for $13.3 billion of the state’s economy in 2007. This figure includes both the earnings of people directly employed by a URC school and the earnings of URC alumni in the state in addition to state tax revenue from these earnings.

THE DAY THE BUBBLE NEARLY BURST

Although the University provides the region some comfort, the city is by no means immune to economic strife.

Margaret Dewar, a professor of urban and regional planning in the Ford School of Public Policy, said economic downturns tends to be more gradual in economies based in education and health care.

“We’re experiencing a recession, it is just not as extreme,” she said.

Announcements like the University Health System’s hiring freeze for all non-patient care jobs and layoffs at Borders Inc.’s Ann Arbor headquarters stand as examples of the recession’s eroding effect.

In the past month, the bookseller has announced it is cutting hundreds of jobs, including 92 corporate positions at its headquarters.

But the single biggest bubble-shattering blow to Ann Arbor came on Jan.