The 1981 annual report of the Indiana Commission for Higher Education, which addresses the ways in which postsecondary education affects economic development in the state is presented. Attention is directed to: the strength of the higher education industry itself, and the important roles and strategies by which Indiana's public and independent institutions contribute to the economic development of other state institutions. Higher education employs about 50,000 persons, and Indiana's colleges and universities attract over 16,000 first-time students, many of whom graduate and eventually are employed in the state. As students, these persons account for substantial expenditures in Indiana, and higher education expenditures also contribute to the state and local economies. Students can earn various job-title certificates and associate degrees in technical areas that prepare them with skills valuable to the labor force. The roles of education in contributing to the economic development of other industries are concentrated in three areas: providing education and training for first-time employees; providing education for the currently employed; and providing research and development, including the dissemination of results to business, industry, and government. Suggested means for contributing to the state's economic development and for improving higher education's productivity include: creating a start-up fund to speed up the development of new academic programs, particularly those of direct economic value to the state; forming faculty/industry teams to learn from other state or county centers for high technology research and development; further developing and improving regional centers; informing students early of the educational choices available for education and training; and strengthening lifelong education, particulary off-campus instruction through telecommunications. Appended materials include information on: commission meetings and affairs, enrollment patterns, student characteristics, degrees awarded, scholastic aptitude test scores, tuition, state aid and student aid funds, and teacher salary increases. (SW)