A surprising source of techno-optimism: the rust belt
You can find a pessimistic take on growth in the digital age just about anywhere you click at the moment. Leading the charge is Robert Gordon, whose new book, The Rise and Fall of American Growth, argues that computing advances won’t have nearly the same impact on society or the economy as prior great technological shifts of the past 200 years. But another new work takes an opposing stance on innovation in the U.S. (as well as Europe), saying it’s not only here but smarter than ever.
The book is called The Smartest Places on Earth, and it’s written by financial policy advisor Antoine van Agtmael (who coined the term “emerging markets”) and finance journalist Fred Bakker. You could also call it the anti-Gordon for its techno-optimism:
So, our message is an extremely positive one: the economies of the United States and Northern Europe are regaining their competitive edge. Not only are they reinventing manufacturing, creating new jobs, and revitalizing regions, they are — and this is perhaps most important of all — developing new products and technologies that will transform just about every aspect of our daily lives: vehicles and transportation, homes and cities, farming and food production, medical devices and health care.
As intriguing as the promising forecast in The Smartest Places on Earth is the geography of its revival. Instead of focusing on the usual suspects of Silicon Valley and the like, van Agtmael and Bakker identify a surprising new locus of innovative power: rust belt cities. Many of these former industrial centers, gutted by the outsourcing of factory jobs, have reemerged as what the authors call the “brain belt” — highly collaborative areas directing their old production expertise on materials, sensors, and other elements of connected technology.
“Manufacturing will not so much ‘return,’ then, as be reinvented,” they write.
Van Agtmael and Bakker reached their conclusion by traveling to dozens of these places in the U.S. and Europe. Some of the rust belt-turned-brain belt cities they found include Research Triangle Park in North Carolina (biosciences); Akron, Ohio (polymers and new materials); Albany, New York (semiconductors); Pittsburgh (robotics); and Wichita, Kansas (aerospace). On the Continent, cities like Eindhoven in The Netherlands, Dresden in Germany, and Lund-Malmö in Sweden fit the bill.
Along the way they catalogued a number of general traits shared across the brain belt:
- They take on complex challenges no single company could handle alone.
- They’re organized by a visionary “connector” who jumpstarts the local innovation ecosystem.
- They’re highly collaborative environments with start-ups, established companies, and even government institutions orbiting around a strong research university.
- They’re “desiloed,” with private and public players alike open to sharing information and expertise.
- And they anchor themselves in urban districts that both appeal to creative workers and serve as strong incubators of innovation.
This last trait deserves further detail. Van Agtmael and Bakker argue that brain belts require places “conducive to brainsharing” — city districts that stand in contrast to suburban corporate campuses. This innovation infrastructure includes smart factories (old warehouses converted into clean, flexible work spaces dedicated to robotics, 3D printing, and the Internet of Things), relaxed zoning (so shops and apartments can exist in close proximity to manufacturing sites), and digital and physical connectivity (from local cloud services to knowledge corridors that link institutions).
It also requires all the qualities that make up attractive urban neighborhoods: density, affordable housing, access to public transportation and shared mobility, mixed-use buildings filled with consumption amenities, pedestrian-friendly streets, and parks and public spaces that foster creative exchange.
So if there’s so much innovation in the works, why aren’t its benefits showing up in the economic measures that Gordon and company find so bleak? There’s no easy or single answer to the productivity paradox. Van Agtmael and Bakker lean on the idea that economists lack the proper tools to measure digital innovations. The purchase of a book gets counted in GDP, for instance, but a Google Maps search doesn’t register because it’s free.
That point is intriguing but limited. After all, the time Google Maps saves us in terms of traveling and locating services should preserve mental capital for more productive efforts … like writing books that get counted in GDP. It seems more likely, then, that there’s simply a longer time lag between the onset of technological benefits (such as saving time) and their appearance in the productivity measures — hence why even electric power took decades to reach its full economic impact.
There’s also the fact that the digital age hasn’t truly integrated itself into city life like other major advances from the past. Indeed, van Agtmael and Bakker expect many of the advances that emerge in the brain belt to impact cities themselves. Autonomous vehicles, shared mobility systems, urban farming, smart lighting, energy management, and data analytics are among the areas where they see a strong potential convergence of digital innovation and the physical environment to improve urban life.
“The result, we believe, will be the return of a ‘village’ mentality in large cities, particularly among young people,” they write. “It is a form of sharing brainpower and collaboration that goes beyond technological innovation to city reinvention.”
Rich in food for thought, The Smartest Places on Earth nevertheless has its share of shortcomings. The biggest is that many of the book’s boldest conclusions lack the sort of empirical might found in Gordon’s work. Van Agtmael and Bakker derive much of their optimistic outlook about the brain belt directly from key stakeholders in these cities. If you ask leaders of an emerging innovation district whether or not it’s been a success, you can hardly expect an objective reply.
It also remains to be seen how much these transformations will help the wider community in struggling rust belt cities. Brookings urbanization expert Bruce Katz spotlighted that concern during a recent panel discussion about the book, noting “if you go to most of these innovation hubs in the United States and you walk five blocks you’re in an area of high poverty, high deprivation.” To his credit, van Agtmael didn’t sugarcoat the reply: “Bruce, clearly the answer to your question is: not yet.”
Not yet doesn’t mean never. And pockets of urban improvement are better than none at all. What’s clear from The Smartest Places on Earth is that the digital age gives us hope for yet more progress in the future.