Pennsylvania Economic Revival Lies in its Metro Assets

Bruce Katz,
Bruce Katz Founding Director of the Nowak Metro Finance Lab - Drexel University
Amy Liu, and
Amy Liu Headshot
Amy Liu Senior Fellow and Co-Director - Metropolitan Policy Program

Steve Wray

April 14, 2008

In the long run-up to the Pennsylvania primary, there’s been a good deal of candidate discussion of the state’s economy and how to fix it.

But missing from the prescriptions of what the federal government would do and how it would do it has been a discussion of where it will happen.

That needs to change because place matters. For all the ink spilled on the declining fortunes of the commonwealth, there are many bright spots around the state that could be catalysts to growth and prosperity.

Recent Brookings research shows strength in varied fields across the state:

Advanced health care, pharmaceuticals, and information technology in Greater Philadelphia.

Health care, architecture and engineering, and banking in Pittsburgh.

Heavy construction, machinery and food processing in Lancaster.

Industrial gases, health care and higher education in the Lehigh Valley.

The state’s economy is an amalgam of its 16 metropolitan areas that generate 92 percent of its economic output.

The top six metropolitan areas alone – Philadelphia, Pittsburgh, Harrisburg-Carlisle, Allentown-Bethlehem-Easton, Scranton/Wilkes-Barre, and Lancaster – constitute 68.4 percent of the state’s population and produce 80.5 percent of the state’s economic output.

The research underscores that four key assets overwhelmingly located in metropolitan areas – innovation, modern infrastructure, strong human capital, and quality places – are needed today to drive productivity of firms and workers, improve the wealth and opportunities of families, and ensure sustainable growth. America’s metropolitan assets – the universities, the health-care concentrations, and the skilled-labor pools – are the drivers of our national economy and the key to future American competitiveness and success.

So what does this mean for Greater Philadelphia? And what would a more thoughtful federal role look like?

Two realms with extensive current federal involvement are transportation infrastructure and innovation. Cogent efforts from Washington in both these areas could significantly leverage state and local efforts.

Rather than thinly spreading transportation-infrastructure dollars across the country, the federal government should spend strategically.

For Greater Philadelphia, supporting its competitive advantage as the linchpin of Amtrak’s Northeast Corridor with federal dollars for more frequent and reliable service would strengthen the region as a rail hub, as has been championed by the Greater Philadelphia Chamber of Commerce.

Additionally, federal transportation policy should empower metropolitan areas with the discretion to spend funds flexibly, whether that’s improving the aging SEPTA system, beginning the work of reinventing and burying Interstate 95 to increase access to the Delaware waterfront, or increasing transit access of city residents to suburban jobs.

Regarding innovation, unfortunately, the federal government currently has no unified national strategy to maximize high-quality jobs and spread their benefits throughout the Philadelphia region. Instead, it has a series of highly fragmented investments and programs.

Current programs put strong emphasis on research, but are insufficiently attentive to the commercialization of that research and blind to how innovation and jobs arise from the intense interaction of firms, industry associations, workers, universities and investors – a nexus ready to be capitalized on in Greater Philadelphia as documented by the Economy League of Philadelphia in a report for the CEO Council for Growth.

To this end, the federal government should reorganize its efforts and create a National Innovation Foundation, a nimble, lean organization whose sole purpose would be to work with industries, universities, business chambers, and local and state governments to spur innovation. Similar, successful national agencies are already up and running in competing nations, such as Britain, France, Sweden and Japan.

This effort should include R&D and support for technology-intensive industries such as information technology and pharmaceuticals, but it also must make small and medium-size manufacturers more competitive and train workers in manufacturing and low-tech services to work smarter.

Looking forward, our federal government must realize this is a “Metro Nation” and value and strengthen economic juggernauts such as Philadelphia.

Only by organizing our currently fragmented investments in transportation and innovation – and targeting them where they will provide the greatest return, metropolitan America – will the United States continue not only to compete, but also to lead.