Advancing sustainable growth in the United States and China

Jim Russell

jimrussell_headshot-1-copyJim Russell is a geographer who studies the relationship between migration and economic development. He is currently affiliated with The Center for Population Dynamics at Cleveland State University’s Maxine Goodman Levin College of Urban Affairs.

When we think about the Rust Belt, we usually picture the Midwest, but all major U.S. cities were once much more industrial, and all subsequently went through various steps of clean-up and revitalization. What caused some cities to be defined as Rust Belt, while others seemed to transform earlier and more successfully?

The primary reason some cities are considered Rust Belt cities depends on when and to what extent the city industrialized in the first place. The Rust Belt isn’t just in the U.S. Midwest: there are many Rust Belt cities in the Sun Belt [roughly the southern half of the U.S.], even though there is a stereotype that the Rust Belt and Sun Belt are two separate regions. Several cities in the U.S. Southeast had textile industries, and these cities saw the exact same de-industrialization pattern and problems as Ohio. Birmingham, Alabama, and Chattanooga, Tennessee, both had steel industries and were each known as “the Pittsburgh of the South.” Both are still recovering from the collapse of local industry.

Pittsburgh was more successful earlier, and its problems began earlier. By the 1960s, the demographic realities of an aging local population made the need to restructure clear. It was a matter of implementation: leaders didn’t feel able to change the city’s focus while the legacy industry remained. In Pittsburgh, only the sudden collapse of the steel sector created the political space to enable restructuring quickly. In Detroit, where the auto industry never collapsed as quickly or thoroughly as steel in Pittsburgh, leaders lacked the political will to pivot away from auto manufacturing.

To what extent did the cities of Pittsburgh, Cleveland and Toledo draw on existing assets, such as hospitals, universities, and corporations, in their revitalizations? What lessons can Chinese city leaders draw from these experiences?

Our research, published in the Metals to Minds report, shows that the primary agent of economic restructuring is strong research universities, especially private universities that have the flexibility to set their research agenda, tuition, and construction plans. Our research began by looking at Carnegie-Mellon University (CMU), a private institution that began as a technology school for training skilled workers for local manufacturing, and gradually transitioned to become a liberal arts university. In the 1960s, university leaders examined projections for tuition and spending and decided that to remain financially viable the school would have to become a research university. Subsequently, the quality of basic research at CMU was a major driver of Pittsburgh’s successful transformation.

How do research universities drive economic restructuring? By attracting companies, spinning off startups, drawing in creative and entrepreneurial workers?

Our research found that many of these ideas are not the main driver: instead, the main predictor of economic restructuring was local research and development expenditure. Most people working on research projects actually don’t have PhDs. R&D spending has enormous spillovers into local economy, both to people and companies. Talented people arrive and take jobs related to R&D, and companies move to the region to supply equipment and technology related to the R&D supply chain. Imagine the companies that supply sophisticated equipment like microscopes—enterprising people either from the region or from outside decide to set up shop near their customers, and a cluster develops. Although the firms making decision to relocate to Pittsburgh have a variety of familiar narratives around tech transfer, cheaper real estate, and local talent, these factors don’t fully explain the result in terms of economic geography.

How important is the environment to a de-industrializing city’s economic recovery?

The immediate impact of sustainability and environmental quality on the economy relates to health and worker productivity. Cities in demographic decline need to ensure their workforce is healthy and productive. That said, today when people come to Pittsburgh they no longer hold the older stereotypes related to pollution and industrial blight. Pittsburgh’s reputation is changing. People today wouldn’t move there if they still held the 1940s stereotypes of Pittsburgh and smog. The larger benefit of cleaning up the environment is that the narrative of a place changes, and that underpins economic changes. Geographic stereotypes are persistent, even among outsiders. If residents or outsiders see a dirty city, they see a hopeless city. If you can change the psychology of the city so that the residents feel it is worth defending and changing, that is valuable.

What mistakes did Rust Belt city leaders make over the years?

The biggest mistake is an abstract one, namely the idea that there is some sort of local policy that can fix things. This is a great hubris. City leaders often don’t pay attention to the vast macroeconomic forces that are really driving what’s going on in their city. They have to look at a large enough scale to understand the problem. So many city leaders focus on stopping the brain drain or retaining the local population. How can they possibly accomplish that? Political figures and public-private partnerships often try big capital projects to stop brain drain, spending the region’s tax money on airports, convention centers, light rail, or stadiums. I’d be reluctant to spend money on capital projects to attract companies or residents. Instead, spend this money on basic research, pick a technology cluster and establish targets, like Texas went after cancer research and began poaching cancer researchers from other regions. It’s a winning restructuring technique.