Contrasts in Innovation: Pittsburgh Then and Now

Abstract

Assessments of the relationship among law, innovation, and economic growth often begin with one or more propositions of law or law practice and predict how changes might affect innovation or business practice. This approach is problematic when applied to questions of regional economic development, because historic and contemporary local conditions vary considerably. This paper takes a different tack. It takes a snapshot of one recovering post-industrial economy, in Pittsburgh, Pennsylvania, USA. For most of the 20th century, Pittsburgh's steelmakers were leading examples worldwide of American economic prowess. Pittsburgh was so vibrant with industry that a late 19th century travel writer called Pittsburgh "hell with the lid taken off," and he meant that as a compliment. In the early 1980s, however, Pittsburgh's steel economy collapsed, a victim of changing worldwide demand for steel and the industry's inflexible commitment to a large-scale integrated production model. As the steel industry collapsed, the Pittsburgh region collapsed, too. Unemployment in some parts of the Pittsburgh region peaked at 20%. More than 100,000 manufacturing jobs disappeared. Tens of thousands of residents moved away annually. Over the last 30 years, Pittsburgh has slowly recovered, building a new economy that balances limited manufacturing with a broad range of high quality services. In 2009, President Barack Obama took note of the region's rebirth by selecting the city to host a summit of the Group of 20 (G-20) finance ministers. The paper describes the characteristics of Pittsburgh today and measures the state of its renewal. It considers the extent, if any, to which law and the legal system have contributed to Pittsburgh's modern success, and it identifies lessons that this Pittsburgh case study might offer for other recovering and transitioning post-industrial regions.

Keywords: Innovation, agglomeration, regional economics, urban economics, entrepreneurship, Pittsburgh, Chinitz

JEL Classification: J18,J21, J24, L11, L26, M13, N32, N92, O14, O15, O17, O18, R10, R11, R12, R58, Z13