Policy Versus Luck in Pittsburgh and Cleveland’s Economies

Abstract

How much does economic development policy matter? Can it catalyze a region’s economic transformation? Or is it more often the case that a region happens to be lucky or unlucky, depending on whether its historical endowments match well with national economic trends? These are key questions for economic development researchers—and for policy makers. This Forum addresses this issue in the cases of Pittsburgh versus Cleveland. Ben Armstrong argues that Pittsburgh has done better than Cleveland over the past 30 or so years—and that part of this is due to better state policy. More specifically, he posits that Pennsylvania state government policy succeeded in getting the Pittsburgh area’s leading universities, Carnegie Mellon and the University of Pittsburgh, to cooperate in economic development initiatives that helped transform the Pittsburgh area economy. In contrast, Armstrong argues that Ohio’s economic development policies did not succeed in mobilizing Cleveland institutions such as Case Western University or the Cleveland Clinic. Instead, Armstrong states that Ohio’s policies mainly led to Cleveland seeking to maintain its existing manufacturing base, without sufficient success. The methodology behind Armstrong’s argument is comparative case studies, relying on archival and interview evidence of what happened in the two cities and states. Comparative case studies, by definition, have a limited sample size—in this case, a sample of two regions—and cannot provide quantitative evidence that estimates the magnitude of effects of some economic development policies, with standard errors. But such comparative case studies can be powerful for suggesting hypotheses for what policies and economic forces matter for economic development—and for at least providing illustrative tests of hypotheses. But comparative case studies also rely on the researcher’s judgment, and good researchers can come to very different judgments, even considering the same cases. Therefore, Economic Development Quarterly decided to ask other researchers, with special expertise in Cleveland or Pittsburgh, to respond to Armstrong’s argument that Pennsylvania’s policies did more to transform Pittsburgh than Ohio’s policies did to transform Cleveland. We decided to embrace debate. Ned Hill challenges Armstrong’s view that Cleveland could have achieved Pittsburgh’s transformation with better state policies. In Hill’s view, the Pittsburgh area’s universities had stronger and more economically relevant research expertise than did the Cleveland area’s research institutions, which is part of why Pittsburgh did better on attracting federal research funds. Furthermore, Cleveland’s greater continued manufacturing specialization than Pittsburgh meant that economic development policy makers had to pay attention to upgrading the area’s manufacturing competitiveness—which unfortunately proved difficult given U.S. manufacturing trends in this period. In other words, it was not policy that made the main difference between Cleveland and Pittsburgh, but institutional quality and regional specializations. Sabina Deitrick and Christopher Briem challenge Armstrong’s view that the main impetus in Pittsburgh’s economic development was the high technology policies of the universities and the high-tech funding from the state government. Much of the state of Pennsylvania funding for economic development did not go to university hightech initiatives, according to Deitrick and Briem, but rather to infrastructure pushed for by the local private sector. Furthermore, although Pittsburgh may have achieved greater per capita income growth than Cleveland since 2000, its employment growth was not spectacular, and much of the income growth that occurred may have been due to nearby growth in natural gas development. In other words, Pittsburgh’s success in high-tech development is not as great as it may appear, and Pittsburgh area policy was focused on more than the universities. In responding to the Hill and Deitrick/Briem comments, Armstrong continues his argument that the role of universities mattered in Pittsburgh’s economic development, and that state policy helped facilitate a greater economic development role by Pittsburgh’s universities. He acknowledges that other economic forces and actors also mattered to Pittsburgh’s economic development, and that Pittsburgh was fortunate to have such strong universities. However, in Armstrong’s view, state policy was also a catalytic force in mobilizing Pittsburgh’s universities to better promote local economic development. Finally, Armstrong continues to believe that state and local policy makers in Ohio could have done more to use Cleveland’s research institutions to revitalize the area’s economy. 1029374 EDQXXX10.1177/08912424211029374Economic Development QuarterlyBartik research-article2021