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Is the state holding back Pittsburgh's status as an innovation leader?

By Julia Mericle  – Technology Reporter, Pittsburgh Business Times


Photo: PAUL J. GOUGH

Pennsylvania’s innovation economy has “gone flat,” according to a Brookings Metropolitan Policy Program report published today.  


The authors, Mark Muro, senior fellow and policy director for the program, and Robert Maxim, research associate for the program, urged Pittsburgh to ask the state why.  


“The way we see it, Pittsburgh is the place that clearly has begun to garner real momentum in the matter of innovations in technological development, and there is a lot of reason to be excited about that,” Muro said. “It does raise the question, though, about how far Pittsburgh can go in getting to the next level if there has not been substantial state support.”  


Even with an “enviable history” of innovation, Muro said Pennsylvania is lagging behind, due primarily to reduced public investment in innovation resources.  


Titled “Ideas for Pennsylvania Innovation,” the report identifies the state’s main problem areas and looks at the best practices of state-supported innovation in competitor states and leading innovation regions. 


The lack of a comprehensive state innovation strategy 


The last time Pennsylvania conducted a state-wide innovation ecosystem inventory was in 2005 with TechFormation, an assessment of performance at various stages of the innovation lifecycle that received minimal follow-up, according to the report. 


Muro and Maxim note the completion of statewide strategies in both New Jersey and Rhode Island in recent years that also guided policymaking in those states. Likely the best example, Maxim said, can be seen in the Index of the Massachusetts Innovation Economy, a report published annually since 1997. 


“If you take everything we did this year, and fill it out with some policy recommendations, they do that on an annual basis,” Maxim said. 


Below average industry research and development 


The report notes that Pennsylvania’s industry R&D has remained stagnant even as the country overall has seen growth.  


An ambitious example Maxim and Muro highlight comes from JobsOhio, which invested $100 million to help companies establish new R&D infrastructure in prioritized sectors.  

Other examples the authors suggest Pennsylvania might try out include an innovation voucher program used in Rhode Island that offers businesses with fewer than 500 employees a chance to receive grants of up to $50,000 for research and development assistance from universities, research centers or medical centers. According to the report, Rhode Island budgeted $4.5 million on the voucher program since 2015.  


Declining investment in state resources for startups and declining venture capital 


Pennsylvania saw a sharp decline in its share of the country’s venture capital, dropping about 80 percent since the early 2000s, according to the report.  


Maxim said an ideal model for Pennsylvania to follow may be the state-supported advanced industries accelerator program in Colorado, which funds companies in select industries through product development and launch. Colorado funnels about $14 million to $20 million annually into this program. 


Other examples of steps in the right direction could include the Tennessee Angel Tax Credit that funds startups with high growth potential and the Maryland Technology Development Corporation that manages the state-supported Maryland Venture Fund.  


Significant “special divergence” between the largest innovation centers of Pittsburgh, Philadelphia and State College and the rest of the state 


“This is an area where Pennsylvania is really a microcosm of the U.S. in a lot of ways,” Maxim said. “You have high-performing, strong metropolitan areas and the more lagging, lower-performing smaller communities. There are a couple states thinking through how they can grapple with similar situations, and one that comes to the surface is North Carolina.” 


Maxim said, similar to Pennsylvania, North Carolina has Charlotte and the Research Triangle surrounded by much smaller, more conservative communities. The state established InnovateNC, a two-year collaborative project to “enhance innovation capacity” at the five cities outside Charlotte and the Research Triangle. 


As Pittsburgh strives to make its name as an innovation leader, the report aims to ask what resources it is being deprived of by the state.


“I think the region is really doubling down on this. There has been admirable focus from the mayor and the tech community in rallying around the universities and strong industry engagement,” Muro said. “…Pittsburgh needs to ask whether all of the resources are being brought to bear.”

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