The Federal Reserve last week lowered interest rates once again in an attempt to jump-start consumer spending. In northeast Ohio, there are many ideas floating about aimed at preventing further erosion of the local economy. The Cleveland area may do well to look just two hours south to Pittsburgh as a role model. Pittsburgh is known as a "rank jumper," or a region that moves up the ranks on scales of economic success. As part of Making Change: Reinventing our Economy, ideastream's Shula Neuman reports on how the Allegheny region was able to jump rank and what Northeast Ohio can learn from it.
Shula Neuman: First, a definition: Rank Jumping, according to the director of research at the Case-Weatherhead Center for Regional Economic Issues Gregory Stoup.
Gregory Stoup: Those regions that were most successful in improving their economic performance over the past ten or fifteen years. And by that I mean, they improved their region in terms of job growth, income creation and quality of life.
SN: Stoup and his colleagues came up with the phrase when they noticed that about a dozen cities made significant advancements in certain measures. The most impressive jumps, Stoup says, were Austin, Kansas City, Denver and Atlanta. Pittsburgh didn't exactly jump off the map, but it did make some impressive gains - gains that Cleveland might be able to learn from. For example, Southwest Pennsylvania jumped seven notches up between 1990 and 1999 in terms of per-capita income. In venture capital, the city went from a mere $22 million in 1990 to a whopping $741 million ten years later.
How does this compare to Cleveland? While Cleveland does rank high in some areas, let's just say this region hasn't seen that same kind of upward movement. Which begs the question - how did Pittsburgh do it? How did Pittsburgh, which shares a similar industrial history as Cleveland, manage to start pulling ahead in the New Economy ever so slightly faster than Northeast Ohio? According to Don Smith, director of economic development for Carnegie Mellon University and the University of Pittsburgh, one possible answer is that old adage: necessity is the mother of invention.
Don Smith: Pittsburgh arguably was hit harder and things got worse here than they did in Cleveland. So there was more pain. There was more of an impetus to strike out on new tracks so I believe Pittsburgh embraced the whole entrepreneurial, economic development, high tech more thoroughly, faster than Cleveland because Cleveland was successful at holding onto it's manufacturing base in a way that Pittsburgh really wasn't.
SN: So, first came desperation. And from that came a series of initiatives that REI's Gregory Stoup says are common to all the cities that jump rank. First, they have a research base that forms the foundation for innovation; second, they are good at generating new business opportunity - especially during periods of transition Stoup says, like we have now.
GS: Third, they were engineered for happy accidents and were able to take them and really go with them when they did emerge. And they had truly tenacious and aggressive leaders that didn't just stand back and watch the landscape do what it does, but they actually were out there actively pursuing investments at scale.
SN: Pittsburgh already had the research base and they linked it to the economic progress of the community. They have been generating new businesses lately, especially in robotics and life sciences. They're still waiting for that happy accident, and while the leadership may still be developing that shark-like tenacity to pursue investments, Ronnie Bryant, head of the Pittsburgh Regional Alliance says, at least everyone is finally on the same page. The four largest economic development organizations in Pittsburgh-which includes the Regional Alliance-recently merged into a kind of joint venture.
Ronnie Bryant: And we have come together on a common vision, recognizing Southwest PA as a product, a product that our customers, if you will, will purchase.
SN: The individual organizations remain separate corporations, but they share a vision - as well as administrative services. The advantages, Bryant says, are numerous.
RB: Here, my agenda is their agenda. I don't have to convince them to buy into an initiative that we want to move forward. We have the same agenda from the beginning. So you have the full clout of four prominent organizations. So we have very strong local, state, regional and federal lobbying to secure the public support needed to drive development in Southwest Pennsylvania.
SN: Construction may still be under way, but the foundation has been laid for twenty years. And it's only a matter of time, Pittsburgh leaders believe, before they've jumped rank into the national spotlight. In Pittsburgh, I'm Shula Neuman, 90.3.