Can Pa. reclaim its status as an economic powerhouse? | Friday Morning Coffee

The state must ‘unlock its innovation potential. ‘ A new report looks to provide a roadmap to the next governor

By: - October 21, 2022 7:16 am
One of Pittsburghs famed yellow bridges (Brookings Institution image).

One of Pittsburghs famed yellow bridges (Brookings Institution image).

The commonwealth boasts powerhouse research universities, and a diverse and talented workforce that should put it on the map as nationwide leader.

But, as a new report makes clear, for a combination of reasons, the state hasn’t been able to convert on those opportunities, and is “emerging from the pandemic with a set of middling trend lines,” that have short-circuited its efforts for “high-quality economic growth.”

“Pennsylvania needs to unlock its innovation potential, which will require catalytic steps on the part of state government,” experts at The Brookings Institution’s Brookings Metro wrote, as they set out to provide a roadmap to the state’s next governor and the General Assembly.

Business Ownership Graphic
(Source: The Brookings Institution)

On one hand, the state “has a rich innovation history, with strong research universities and several groundbreaking innovation programs,” with its $4.8 billion higher education research and development enterprise ranked the fourth-largest in the nation in 2020.

The state was further aided by “nationally competitive innovation clusters, mostly centered in Philadelphia and Pittsburgh but extending into other regions as well,” the report’s authors wrote.

On the other hand, Pennsylvania’s accumulation of  “advanced industry jobs” has trailed the rest of the nation, according to the report. Between 2010 and 2019, the state saw its advanced industry jobs grow by 10.9 percent, trailing the national rate, according to the report.

The commonwealth also ranked sixth out of nine peer states for its advanced industry job growth, lagging Indiana and Massachusetts by 9 percentage points and Michigan by 23 percentage points, according to the report. And from 2015 to 2021, employment in the Pennsylvania advanced industry sector grew by just 3 percent.

And “scientific research, software, and pharmaceuticals/medicine activities surged, but dozens of advanced manufacturing categories went sideways or shed jobs,” the report’s authors wrote.

According to the report, four underlying challenges are holding the state back:

  • “State government has seemed to lack a clear commitment to innovation and has let its core innovation programs languish,
  • “The state lags on converting top-quality research into growth firms and broader employment growth,
  • “Innovation is struggling outside of the state’s largest cities,” and
  • “Throughout the state, access to the innovation economy is unequal by race and gender.”

“With less access to STEM education, female, Black, and Latino or Hispanic Pennsylvanians are also underrepresented in the state’s advanced industry jobs. Women hold just one-third of all advanced industry jobs, while Black workers hold advanced industry jobs at a rate half their share of the state population,” the report’s authors wrote. “Finally, significant inequalities exist across race and gender when it comes to entrepreneurship and firm ownership.”

And “just 1 percent of firms with employees in Pennsylvania have majority-Black ownership,” while “just 1 percent have majority-Latino or -Hispanic ownership. Meanwhile, only 19 percent of firms with employees in the state have majority female ownership,” they noted.

(Source: Brookings Institution)

The report offers a number of strategies for the state to catch up with the rest of the nation, from fostering innovation outside major metropolitan areas to insisting on inclusion and making STEM education more equitable.

The bottom line? The state “needs to renew its commitment to innovation as a fundamental driver of high-quality, broad-based prosperity,” according to Brookings.

“Having lost its focus on innovation in the last 15 years, the commonwealth needs to refocus on innovation as the best way to unlock its economic possibilities,” the report’s authors conclude. “Given its world-class anchor institutions, promising urban ecosystems, and diverse talent, the state possesses vast potential to invent, grow, and participate in the next crucial technology platforms.”

But if the commonwealth is “to meet that potential, Pennsylvania must reclaim its history of supportive policy innovation. Such assistance remains a crucial aspect of the kind of ecosystem-building critical for the state’s innovation enterprise,” they wrote.

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John L. Micek

A three-decade veteran of the news business, John L. Micek is the Pennsylvania Capital-Star's former Editor-in-Chief.