Abstract: Do Innovative Regions Inevitably Decline? Lessons from Cleveland's Experience in the 1920s

Naomi Lamoreaux, Margaret Levenstein, and Kenneth L. Sokoloff


Cleveland provides an example of a famous center of innovation that ultimately lost its dynamism and declined. Once a hotbed of innovative startup enterprises in a remarkable number of important Second Industrial Revolution industries, including electric light and power, steel, petroleum, chemicals, and automobiles, Cleveland now stands out for its high proportion of residents below the poverty line. In this paper, we use the case of Cleveland to further our understanding of the life cycle of high-tech regions. Using patent data, city directories, census returns, and other sources, we examine trends in the number and productivity of Cleveland inventors and in the way these inventors exploited their discoveries. We find evidence of important changes in Cleveland's economy beginning in the 1920s. Although the city continued to spawn many startup enterprises, their individual contributions to the stock of patented technology were generally much smaller. Moreover, the city no longer attracted as many inventors from other regions.

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