Session IV: Mark Heppenstall, Penn Mutual Asset Management Co.

The Roles of Higher Education in Competitiveness and Global Productivity Session IV: What Business and Government Need and Want from Higher Education in the Next 5 Years Mark Heppenstall, CFA, Chief Investment Officer Penn Mutual Asset Management, LLC

The views expressed are those of the presenter and do not necessarily reflect the views of Penn Mutual Asset Management, LLC.

A Tale of Two Cities: ‘From Metal to Minds: Economic Restructuring in the Rust Belt’

Source: BLS

2 Source: BEA

Lessons for Higher Education from Pittsburgh’s Economic Resurgence  Under leadership of Carnegie Mellon University (CMU) President Richard Cyert, universities could be the economic drivers for a region  A knowledge-based, service-based economy can flourish without a manufacturing economy  CMU transformed from simply supplying graduates to traditional industries to become a research institution focused on new technologies  Commercialization of Research & Development (R&D) did not ‘incubate’ inside the universities, but resulted from established technology companies using research institutions as R&D labs  Confluence of education and research can help solve the economic challenges of shrinking U.S. productivity growth

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The Importance of Ethics in Higher Education  “Wells Fargo: We were 70% more corrupt than initially revealed” Mother Jones, August 31, 2017  “5 More Nike Executives Are Out Amid Inquiry Into Harassment Allegations” NY Times, May 8, 2018  “Danske Bank CEO quits over $234 billion money laundering scandal” Reuters, September 19, 2018  “How Silicon Valley got played by Theranos” Vox, June 15, 2018  “VW takes another hit from emissions scandal” MarketWatch, August 2018 4

College Affordability and the Opportunity Gap

Source: National Center for Education Statistics; National Association of Colleges and Employers; U.S. Department of Labor

 Growing stratification of access to quality higher education contributing to income inequalities  Improve the “undermatching” of high achievers from less wealthy families  Student debt can result in a drag on new business formation1  Innovation may lead to more cost-effective forms of education 1 The Impact of Student Loan Debt on Small Business Formation, Ambrose, Cordell, Ma - July 2015

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ThankYou Mark Heppenstall, CFA Chief Investment Officer www.pennmutualam.com