Capturing the next economy: Pittsburgh’s rise as a global innovation city

September 1, 2017

General News

Executive Summary

Few cities have experienced the economic upheaval that Pittsburgh did in the 1970s and 1980s—and come back. During the country’s industrial heyday, the city swelled in population and income. Yet by 1980, global economic forces had shuttered much of the U.S. steel industry, and Pittsburgh’s unemployment rate reached 18 percent as Western Pennsylvania effectively experienced a second Great Depression.

Today, the competitive advantage of the region is no longer its rivers and raw materials but its high-skilled workers, world-class research institutions, and technology-intense advanced manufacturing. In 2016, for example, the region’s per capita university research and development (R&D) spending was nearly two and a half times the national average. While these assets are considerable, they also place Pittsburgh in competition with a number of other innovation cities that are rapidly investing billions in a suite of new technologies and industries poised to reshape the global economy.

As in the past, the cities at the forefront of these economyshaping technologies will be the focal points of global capital, talent attraction, and firm growth. If approached correctly, follow-along economic activity and investment will in turn lead to more and better-paying jobs—with varying skill-level needs and across multiple sectors of the economy—and higher revenues that can be reinvested in education, workforce development, infrastructure, and neighborhood revitalization.

However, Pittsburgh’s scientific and technical strengths have not fully translated into broad-based economic activity. In fact, if the region had the same share of hightech employment as university research, it would employ 9,000 more in the software industry and 5,500 more workers in drug development, not to mention tens of thousands of workers in related jobs. Instead, the city currently has seven percent fewer jobs in high-wage, hightech
advanced industries than it did in 2000.

Without a robust platform of jobs at all skill levels, the city’s significant research and technical strengths will fuel only a small portion of the region’s economy and leave many workers and families behind.

Today, Pittsburgh is once again at the precipice of a new competitive reality. In the 1980s, the city was on the losing end of shifts in the global economy. Now, in the modern, innovation economy, the city can choose its own fate. Success or failure will be determined by the speed and scale of actions taken by public, private, and civic leaders.

The Oakland Innovation District

Just as Pittsburgh’s opportunity is contextualized by a changing global economy, the spatial geography of innovation is changing as well. Cities in both the United
States and abroad are witnessing the emergence of dense hubs of economic activity where innovation, entrepreneurship, creativity, and placemaking intersect. At
the advanced, research-led end of the economy, innovation districts are developing around anchor institutions (such as universities, medical centers, and large firms) that are in close proximity to talent and firms.

Few cities have such a naturally occurring innovation district as Pittsburgh’s greater Oakland neighborhood. It is home to two world-class research institutions, the
University of Pittsburgh and Carnegie Mellon University (CMU), dozens of startup companies, co-working spaces, and the University of Pittsburgh Medical Center (UPMC).

Although it encompasses only about three percent of the city’s land area, the Oakland district accounts for ten percent of residents and 29 percent of jobs, concentrated in the city’s growing education and health care sectors. The 1.7-square-mile district constitutes over one-third of the entire state of Pennsylvania’s university research output.

To read the full article, view this PDF.

Your donation to our campaign will help us make a difference.

Join the Campaign