Ben Armstrong’s research featured in the New York Times

Ben Armstrong, the executive director of M.I.T.’s Industrial Performance Center, argued in a 2021 article, “Industrial Policy and Local Economic Transformation: Evidence From the U.S. Rust Belt,” that the parochialism and inbreeding of local corporate elites has often proved detrimental to local efforts to rebuild economies to meet the needs of the 21st century.

Armstrong studied the largely successful economic revival in the Pittsburgh region and compared it with the parallel but less successful effort to inject new corporate innovation in Cleveland.

Armstrong argues that a major factor in Pittsburgh’s success was the fact that the city’s legacy of old-line corporations was effectively displaced by experts at Carnegie Mellon and the University of Pittsburgh, who were free both from conflicts of interest and from ties to declining industries.

That was not the case in Cleveland, according to Armstrong, where old-line companies had a much stronger voice in the planning process and were unwilling to propose the kind of radical innovation that challenged incumbent businesses.

“Industrial policies in Pittsburgh, which empowered research universities as local economic leaders,” Armstrong wrote, “contributed to the transformation of the local economy. In Cleveland, by contrast, state industrial policies invested in making incremental improvements, particularly in legacy sectors.”

The Pennsylvania government “made a political choice to empower Pittsburgh’s universities as part of state industrial policy,” Armstrong wrote, noting that “the universities’ role as an engine of local economic development in Pittsburgh was the culmination of a state industrial policy in the 1980s that gave them new authority to cultivate economic development strategy and helped them realize that their institutional priorities could align with the state’s priorities for industrial policy.”

Unlike Pittsburgh, Armstrong wrote, “Cleveland relied on pre-existing private-sector leadership that invested in downtown redevelopment and in the metro area’s legacy industries.” The result, he continued, was that instead of pursuing innovative economic proposals, the policies adopted “reinforced the status quo.”

“Between the 1940s and 1980s,” Armstrong wrote in an email elaborating on his paper, “many large cities operated in a version of ‘regime politics,’ where there is a consistent set of powerful actors in a city (typically business and nonprofit leaders) who shape who gets elected and where resources are distributed.

“For cities like Cleveland, Baltimore and St. Louis (you could also look to Detroit, Rochester and elsewhere), losing their core industries meant the eventual fragmentation of the regime. But the problem was that the regime often crowded out new economic leaders and activities from emerging.”