Economic History

Brief history of Gateway Cities in Massachusetts: the long-run of current economic challenges.

The new economic geography would characterize Gateway cities as an outcome of  the international division of work. In simple words: manufacturing jobs were shipped from Brockton, Lowell, and Lawrence to Asian countries and Mexico; while command activities are kept in cities like Boston, Cambridge, New York or Los Angeles. Those cities currently constitute the lag and the biggest challenge for economic development policy in the Commonwealth of Massachusetts.
Before becoming a knowledge based economy, Massachusetts’ economic prosperity was spread throughout the state in form of manufacturing boom. Springfield, Lowell, Brockton, New Bedford and cities alike started the twenty century with more than 70% of their respective population employed in textiles, shoe industry and coat factories (Brown & Tager 2000). Such economic boom benefited consistently low skills workers and low income families –mostly immigrants- evenly throughout the state. The phenomenon that has explained economic prosperity in Massachusetts is economic growth. Economic growth based on manufacturing industries that mainly benefited from infrastructure for trade and connectivity (Keyssar 1985). The pillars of Massachusetts’ economic take off were a continuous expansion of the labor force and a persistent ethnic and religious discrimination following the Gilded Age (Keyssar 1985). Based on a continuous stream of incoming migrants (Keyssar 1985); technological innovations (Brown & Tager 2000) and the openings of southern states markets, Massachusetts’ economy was able to early expand its production frontier. If there is a way to briefly summarize Massachusetts’ early economic take off, it is that the expansion of Massachusetts Gross Domestic Product was achieved by the increase of both the aggregated worked hours and the expansion of markets. This constitutes the way classic economists explained economic growth.
Another key component of the story of economic growth in the Commonwealth is its ability to continuously grow, meaning sustainability. Business cycles bring ups and downs to every economy regardless of their nature or orientation, but in the long run, Massachusetts’ economic growth has been sustained by a persistent increase in technology and by a robust spirit of innovation. Although innovation and technological changes may be made through various mechanisms, the cultivation of the knowledge industry in New England and especially in Cambridge has worked as the engine for technological change and innovation for the region. It relates to a second interpretation of the economic growth.
The modern theory of economic growth explains this phenomenon in terms of technological changes that turn into an increase of labor productivity. Robert Solow demonstrated how technological advances affect labor productivity, and take the production frontier further than the natural rate of growth, which is based on merely population rate growth (Solow 1956). In an applied perspective, it is possible to infer that the large amount of technological contributions, that have been made from Massachusetts’ prestigious academics institutions, has been successfully applied into the real world while nurturing productivity and fostering economic growth. It is also important to note that part of the influx of funding resources onto research and academia came from federal grants during the second half of the twenty century (Lampe 1988).
Up to this point it is possible to distinguish two periods of the Massachusetts’ economic history: the first and the second industrial revolutions. For those familiar with such transitions it is well known that the technological shift did materialize in form of a steam-based production economy toward an explosion-engine based economy. That was how, through science and innovation, Massachusetts reached the development stage of mass consumption in terms of Rostow’s stages[1].
However, the Massachusetts’ economic history does not end there as Rostow would have predicted. The most relevant aspect of the long run economic development in Massachusetts is its latest transformation derived from the information technology revolution. Generally speaking, if there is a word that can define Massachusetts, that is science. The cluster generated around academic industry in Greater Boston has had uncountable number of spillovers that have impacted positively its economic growth during the twenty century.
Unfortunately, the last technological revolution -the one that is based on generation of knowledge and science, and the one that Massachusetts has led from its laboratories- brought unexpectedly a new model of production that replaced the massive production paradigm. Economic geographers have successfully identified how the information technology revolution has impacted labor and its consequences on regional economies. Post-Fordism has become the concept that replaced Fordism, and the concept that summarizes flexibility and fragmentation in the industrial production process. What it has basically meant for industrialized economies like Massachusetts’ is a substantial loss of manufacturing jobs. Pollard and Storper (1996) described how this effect of net losses in manufacturing jobs reached 20% in the region starting in 1977 to 1987.
The new economic geography characterizes this phenomenon as an international division of work. In simple words: manufacturing jobs were shipped from Brockton, Lowell, and Lawrence to Asian countries and Mexico; while command activities are kept in cities like Boston, Cambridge, New York or Los Angeles. Such structural change of the economy not only has created an economy characterized as high-skill, high-technology centers (Pollard & Storper 1996), but also has generated what policy-makers in the Commonwealth call: Gateway Cities. Those cities currently constitute the lag and the biggest challenge for economic development policy –not economic growth policy- in United States and in the Commonwealth of Massachusetts.

[1] W.W. Rostow ideas on economic development are explained in the next section.
Pollard, J. and Storper, M. (1996). A tale of twelve cities: metropolitan employment change in dynamic industries in the 1980’s. Economic Geography. Vol. 72. No. 1.
Brown, R. and Tager, J. (2000). Massachusetts : a concise history. University of Massachusetts Press. Amherst MA.
Keyssar, A. (1985). Social Change in Massachusetts in the Gilded Age. In Tager. J. and Ifkovic J.W. (ed). Massachusetts in the Gilded Age : selected essays. University of Massachusetts Press. Amherst. MA.
Lampe, D. (1988). The Massachusetts Miracle: high technology and economic revitalization. MIT press. Cambridge MA.
Solow, R. (1956). A Contribution to the Theory of Economic Growth. The Quaterly Journal of Economics. Vol. 70. No. 1.

Categories: Economic History

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