How can Pennsylvania boost innovation? Nudge Shapiro, for one

Brookings’ report, called “Commonwealth of innovation: A policy agenda for revitalizing Pennsylvania’s economic dynamism,” found that due to Pennsylvania’s healthcare, robotics, tech, transportation, manufacturing and life sciences industries, the region is on the right track to be a national powerhouse in this space. Yet, something is stopping the Commonwealth from reaching its full potential: In the mid-2010s, in the aftermath of the Great Recession, the state decreased its financial investment in the innovation economy. That slowed investment means the state now doesn’t have as many high-growth jobs as it could for its university graduates.

This week, the Allegheny Conference on Community Development co-hosted a discussion panel with Brookings and the Hillman Foundation centered around the report’s findings and how to leverage innovation to make the region a center of job creation and opportunities. The panel discussion included academics, researchers and founders from around the state who concluded that there was hope for the future of Pennsylvania’s innovation economy — but it’d require a lot of investment from the state’s elected officials.

Stefani Pashman, CEO of the Allegheny Conference, started the discussion by explaining that although the national employment rate has mostly rebounded to its pre-pandemic numbers, within the region, numbers aren’t quite there yet. But the report provided a roadmap for obtaining growth, namely policy changes and more funding.

Pashman said she felt encouraged during this week’s inauguration, as the Allegheny Conference would have the opportunity to work with Gov. Josh Shapiro’s administration which had promised to prioritize business investment.

“We have the opportunity to work with them to design a new model of economic development, run an increase of state investment to drive economic growth, implement policies that support innovation clusters, and foster overall and open for business mindset at all levels of government,” Pashman said.

Pennsylvania’s state capitol building in Harrisburg. (Photo by Julie Zeglen)

Panelist Mark Muro, senior fellow at Brookings Metro and co-author of the report, said the new governor gave him reasons for hope, too, although there was still much work to be done in the Commonwealth. In the way of positives, Muro explained that being home to top universities such as the University of Pittsburgh and Carnegie Mellon University worked in the Pittsburgh region’s favor, as it made the city standout as a research powerhouse. Furthermore, Muro said, the existence of initiatives like the state-backed Ben Franklin Technology Partners funding network and the Keystone Innovation Zone tax credit program signal that the region is a place that supported innovation.

“That’s an impressive lineage, really,” Muro said. “What’s more, supporting innovation has been a bipartisan tradition.”

It's not a disaster, it's only disappointing compared to some of the starting points that you have.

However, for the past two decades, the state has been stuck as a second-tier innovation hub, compared to other US cities.

“It’s not a disaster, it’s only disappointing compared to some of the starting points that you have, some of the assets,” Muro said, referring to the universities and organizations in the region. “And it’s been going sideways — really not a lot of movement over a significant amount of time. ”

Another issue found by Robert Maxim, a senior research associate at Brookings Metro, was that governors in the past weren’t necessarily committed to supporting innovation. Not only that, but he noted that even with the recent infusion of innovation funding at $40 million, the amount was still a fraction of the $100 million allocated for innovation programs prior to the Great Recession.

“Pennsylvania really lagged several other states when it comes to investment in areas of tech trade,” Maxim said. “Ohio in particular spends about five times as much as Pennsylvania spends in a typical year.”

Maxim recommended that in order to keep up with other regions, the Commonwealth should convene a new innovation strategy commission, center innovation in its economic development activities, and encourage the governor’s office to use the bully pulpit to convey the importance of innovation in policy making. By keeping the Shapiro administration involved, Maxim said, business leaders could push the governor to elevate the cause of innovation.

“That means in addition to a commitment from the governor, he should also appoint innovation champions to other high-level economic development positions in the state,” Maxim said.

Ultimately, panelists felt that the region wasn’t lacking in talent, nor institutions to foster research, but what it truly needs moving forward is increased investment. They were hopeful the new administration would provide opportunities for that.

“This is just the beginning and the continuation of an important conversation,” Pashman said. “As we move forward in the state, we can continue to have them [the Allegheny Conference’s partners] look at the process and make sure we’re delivering value.”