What If New York State Implemented Different Economic Development Upstate?

The Actual History

Since the mid-20th century, Upstate New York has experienced profound economic challenges as its once-thriving industrial base steadily eroded. The region's economic narrative stands in stark contrast to the prosperity of downstate New York, particularly New York City and its surrounding metropolitan area. This divergence has created what some economists describe as "two New Yorks" within one state.

In the post-World War II era, Upstate New York hosted industrial powerhouses like Kodak in Rochester, IBM in the Southern Tier, General Electric in Schenectady, and numerous manufacturing operations throughout Buffalo, Syracuse, and Utica. These companies provided stable, well-paying jobs and formed the backbone of thriving middle-class communities. By the 1970s, however, the combination of automation, globalization, and cheaper labor markets elsewhere began unraveling this economic foundation.

The state's response to Upstate's economic decline took shape through various initiatives across different gubernatorial administrations. Governor Mario Cuomo (1983-1994) established economic development zones offering tax incentives to businesses. George Pataki's administration (1995-2006) focused on tax cuts and created Empire Zones, which offered tax breaks to companies creating jobs in designated areas. However, these programs faced criticism for their high costs relative to job creation and for benefiting politically connected enterprises without generating sustainable growth.

Under Governor Andrew Cuomo (2011-2021), the state launched several high-profile economic development initiatives targeting Upstate. The centerpiece was the Regional Economic Development Council (REDC) system established in 2011, which divided the state into ten regions competing for funding through a consolidated funding application process. The administration also implemented the Buffalo Billion, which invested over $1 billion in the Buffalo area, and similar programs like URI (Upstate Revitalization Initiative) providing $500 million each to selected regions.

The Cuomo administration also pursued industry-specific strategies, including major investments in nanotechnology and semiconductor research in Albany, photonics in Rochester, and various clean energy initiatives across the region. Additionally, the Start-Up NY program created tax-free zones around college campuses for new businesses.

Despite these efforts, results have been mixed at best. Upstate's population has continued to stagnate or decline, with young people regularly leaving for better opportunities elsewhere. Between 2010 and 2020, while New York City's population grew by 7.7%, many Upstate counties experienced population declines ranging from 3-10%. Manufacturing employment continued its downward trend, and many communities struggled with aging infrastructure, vacant properties, and shrinking tax bases.

The economic disparity became particularly apparent in data: by 2022, the unemployment rate in many Upstate counties remained higher than the state average, median household incomes lagged behind downstate figures by 30-40%, and property values showed minimal growth compared to soaring prices in the New York City metropolitan area.

Critics of the state's approach have pointed to several shortcomings: the emphasis on signature projects rather than broader economic fundamentals; the political nature of funding allocations; inadequate attention to workforce development challenges; excessive focus on attracting outside companies rather than growing existing businesses; and insufficient investment in basic infrastructure and quality of life improvements that might retain and attract residents. Another criticism was that many programs supported projects that would have happened anyway, rather than truly catalyzing new growth.

By 2025, despite decades of economic development programs and billions in investment, Upstate New York continues to face significant economic challenges, with most communities still searching for sustainable paths to prosperity in a post-industrial economy.

The Point of Divergence

What if New York State had implemented fundamentally different economic development strategies for Upstate beginning in the late 1990s? In this alternate timeline, we explore a scenario where New York adopted a comprehensive, evidence-based approach to Upstate revitalization that prioritized long-term structural improvements over politically expedient projects and ribbon-cuttings.

The point of divergence occurs in 1999, during Governor George Pataki's second term. In our timeline, the Pataki administration continued the Empire Zone program despite early signs of its inefficiency. In this alternate reality, several catalyzing events converge to create a dramatic shift in economic development philosophy.

First, a prominent economic analysis demonstrating the poor return on investment from existing economic development programs gains significant public attention. Simultaneously, a bipartisan group of Upstate legislators, frustrated by continued economic decline despite various state initiatives, forms an unusual coalition pushing for fundamental reform.

This might have happened through several plausible mechanisms:

Policy leadership change: A new appointment to head economic development efforts—perhaps a respected economist rather than a political appointee—convinces the administration to pilot a dramatically different approach based on international best practices.
Business community catalyst: Concerned about Upstate's trajectory, a coalition of major Upstate business leaders and philanthropists funds an independent commission that delivers a blunt assessment and compelling alternative roadmap, generating enough political momentum to force change.
Political necessity: Facing challenges to his reelection prospects among Upstate voters, Governor Pataki embraces a bold new economic strategy to differentiate himself and demonstrate leadership on the region's most pressing issue.
Federal-state partnership: A federal economic development initiative offers significant matching funds, but only for states implementing evidence-based programs, incentivizing New York to pioneer a more rigorous approach.

Regardless of the exact mechanism, this inflection point leads New York to abandon its patchwork of tax incentives and industry-chasing in favor of a fundamentally different economic development philosophy for Upstate—one focused on regional assets, infrastructure modernization, quality of life improvements, and human capital development rather than transactional relationships with individual businesses.

This strategic reorientation represents a genuine paradigm shift: treating economic development as a long-term structural challenge requiring patient investment rather than a series of deals to be announced at press conferences. In this alternate timeline, New York becomes an early adopter of what economists would later recognize as more effective regional development approaches, setting Upstate on a markedly different trajectory.

Immediate Aftermath

The New Approach Takes Shape

In the immediate aftermath of the 2000 policy shift, the Pataki administration dismantles the Empire Zone program and replaces it with a comprehensive "Upstate Renaissance Initiative" (URI). This initiative establishes several core principles that would guide economic development efforts across administrations:

Regional Autonomy with Accountability: Rather than Albany dictating development priorities, ten newly established Regional Development Authorities (RDAs) receive substantial baseline funding and decision-making authority. Unlike the REDCs of our timeline, these bodies have permanent professional staffs, dedicated revenue streams from a portion of sales taxes, and authority to implement long-term plans without annual competitive reapplications.
Infrastructure-First Philosophy: The state commits to bringing all Upstate infrastructure to world-class standards before offering business incentives. Between 2000-2005, over $4 billion is directed to upgrading water systems, broadband networks, transportation hubs, and energy infrastructure across Upstate regions.
Human Capital Investment: Rather than focusing primarily on physical projects, 40% of economic development funding is directed toward workforce development, education alignment with industry needs, and universal childcare pilot programs in selected Upstate cities.
Place-Based Quality of Life Strategy: The initiative acknowledges that talented workers and entrepreneurs can increasingly choose where to live. Significant investments target downtown revitalization, public spaces, and cultural amenities in Upstate cities.

Early Implementation Challenges

The transition was not without controversy. Business groups initially protested the elimination of familiar tax incentives, and some legislators pushed back against the reduced political control over economic development resources. Several high-profile companies threatened to leave the state without customized incentive packages.

In a pivotal moment in 2001, when a major manufacturer demanded $25 million in tax breaks to retain 500 jobs in Syracuse, the administration refused to continue the "ransom payment" approach to business retention. While the company did relocate to North Carolina, the state redirected the would-be incentive funds to establishing an advanced manufacturing training center and small business incubator in the vacated facility.

By 2003, implementation was hitting its stride. Buffalo, Rochester, and Syracuse all unveiled comprehensive 20-year development plans created through intensive public engagement processes and backed by dedicated funding streams. These plans emphasized density over sprawl, prioritized waterfront reclamation projects, and invested heavily in connectivity between universities and downtown cores.

Early Signs of Success

By 2005-2006, some preliminary positive indicators emerged:

Educational Alignment: The percentage of Upstate community college and university students remaining in the region after graduation increased from 41% to 52%, as new programs aligned more directly with regional employment opportunities.
Downtown Revitalization: Initial investments in downtown housing and amenities began showing results, with residential occupancy in downtown Buffalo increasing 37% between 2000-2005.
Infrastructure Improvements: The accelerated broadband initiative brought high-speed internet to 94% of Upstate households by 2006, compared to less than 60% in comparable Rust Belt regions.
Small Business Growth: The shift from chasing major employers to supporting entrepreneurial ecosystems resulted in a 28% increase in new business formations across Upstate between 2000-2005.

Policy Continuity Through Political Transition

When Eliot Spitzer took office in 2007, his administration conducted a thorough review of the URI approach. Despite his initial skepticism and desire to establish his own economic legacy, the emerging data on the program's effectiveness convinced him to maintain its core elements while rebranding it as the "Empire State Economic Renaissance" (ESER).

This crucial policy continuity—maintained through the brief Spitzer administration and into the Patterson administration—allowed long-term investments to mature rather than being abandoned for new initiatives with each electoral cycle. By establishing bipartisan support for the fundamental approach, economic development in Upstate New York achieved something rare in American governance: consistency across administrations with different political affiliations.

Early Regional Differentiation

By 2009-2010, distinct regional strategies were bearing initial fruit:

Buffalo-Niagara Region: Leveraged its proximity to Canada, affordable energy from Niagara Falls, and water resources to become a hub for water-intensive manufacturing and food processing industries that were increasingly leaving drought-prone regions.
Rochester: Built upon its optics and imaging legacy to establish the "Photonics Valley" initiative earlier and with greater local input than in our timeline, resulting in faster commercialization of university research.
Syracuse: Embraced its central location and institutional strengths in environmental systems to become a center for green building technologies and environmental remediation industries.
Capital Region: Accelerated its development as a tech hub through earlier, more strategic investments in semiconductor infrastructure and stronger connections to the NYC tech ecosystem.

The 2008 financial crisis tested this approach, as state revenues declined and pressure mounted to revert to quick-fix tax incentives. However, the demonstrable early successes of the URI/ESER approach, particularly in workforce outcomes and small business formation, provided the political capital necessary to maintain the long-term strategy even during economic turbulence.

Long-term Impact

Transformation of Upstate Economies by 2025

By 2025, the cumulative effect of this alternative approach has significantly altered Upstate New York's economic landscape. While not eliminating all challenges, the region has achieved a remarkable turnaround compared to our timeline:

Population and Demographic Patterns

In this alternate timeline, Upstate New York has reversed its population decline. Between 2010 and 2025, the combined population of Upstate counties has grown by approximately 6%, compared to continued decline in our timeline. More significantly, the demographic composition has shifted:

The percentage of residents aged 25-44 has increased from 23% to 28% of the population
Educational attainment has risen, with 37% of adults holding bachelor's degrees compared to 29% in our timeline
The region has become more diverse, with international migration accounting for about 40% of population growth

This demographic shift stems largely from the "boomerang effect" – former residents returning after establishing careers elsewhere – and from the successful attraction of both domestic and international migrants seeking high quality of life with lower costs than major coastal cities.

Economic Diversification

Unlike our timeline where Upstate continues to chase replacement industries for its lost manufacturing base, this alternate New York has achieved meaningful economic diversification:

Advanced Manufacturing Renewal: Rather than competing for commodity manufacturing with lower-cost regions, Upstate has carved out specialized niches in advanced manufacturing sectors requiring skilled labor and proximity to research institutions:

Additive manufacturing/3D printing cluster in the Southern Tier
Medical device manufacturing centered around Rochester
Green building components production in Syracuse
Food processing technology throughout the region

Clean Energy Economy: The long-term infrastructure investments positioned Upstate as an early leader in renewable energy:

Western New York has become a major hub for grid-scale battery production and research
The North Country has developed significant wind power capacity and related maintenance operations
The Hudson Valley has emerged as a center for energy efficiency technologies

Knowledge Economy Growth: The sustained focus on aligning higher education with economic development has yielded results:

Research expenditures at Upstate universities have increased 145% since 2000
University-affiliated startups employ over 12,000 people across the region
Remote work hubs in smaller communities offer technology jobs with connections to NYC employers

Urban Revitalization Success Stories

The place-based investment strategy has transformed several Upstate cities that continued declining in our timeline:

Buffalo: The early focus on waterfront development and connecting the medical campus to downtown created a vibrant urban core. Buffalo's population has grown to approximately 290,000 (compared to about 255,000 in our timeline) with particularly strong growth in the 25-40 age demographic. Housing values have appreciated at sustainable rates rather than stagnating, enabling property wealth building while maintaining affordability.

Rochester: Downtown Rochester's residential population has tripled since 2000, with the conversion of former corporate spaces into mixed-use developments. The photonics cluster employs over 9,000 people directly and has spun off dozens of related businesses. The early investment in universal pre-K and childcare has given Rochester the highest female workforce participation rate among mid-sized Northeastern cities.

Syracuse: The city has leveraged its university presence and central location to become a leader in climate adaptation technologies and environmental services. The I-81 viaduct replacement was completed years earlier than in our timeline with more community input, reconnecting neighborhoods and spurring development in previously isolated areas.

Small Cities Renaissance: Perhaps most surprisingly, smaller cities like Jamestown, Amsterdam, Auburn, and Glens Falls have experienced remarkable turnarounds through specialized strategies focused on their unique assets rather than generic approaches.

Narrowing Regional Disparities

While New York City remains the state's economic powerhouse, the extreme regional disparities of our timeline have diminished:

The unemployment rate gap between Upstate and Downstate has narrowed from 2.1 percentage points in 2000 to 0.4 points in 2025
Median household income in Upstate regions now averages 78% of downstate figures, compared to 65% in our timeline
Property value appreciation has occurred at sustainable rates across the region, allowing wealth building without creating affordability crises

Structural Economic Changes

Beyond specific industry outcomes, the alternative approach has created fundamental structural improvements:

Governance and Fiscal Innovation

The Regional Development Authorities evolved into sophisticated governance bodies with professional management, citizen oversight, and innovative funding mechanisms:

Several regions implemented land value capture systems that allow public entities to recoup a portion of the value created by public investments
Regional infrastructure banks provide low-cost financing for critical projects
Multi-jurisdictional revenue sharing reduced destructive competition between neighboring municipalities

Technology Integration

The early focus on universal broadband and digital inclusion positioned Upstate to benefit from technology trends:

Rural communities maintained population through remote work opportunities
Precision agriculture technologies revitalized small-scale farming operations
Smart city technologies implemented in mid-sized cities improved service delivery and reduced costs

Workforce System Transformation

Perhaps the most significant long-term impact came from fundamentally rethinking workforce development:

The establishment of "Career Pathway Centers" in each region created seamless transitions between education and employment
Employer-education partnerships established apprenticeship models adapted from German examples
Universal childcare pilots expanded to cover all major population centers, enabling higher workforce participation
Mid-career retraining programs effectively transitioned workers from declining industries

National Influence

By 2025, New York's alternative approach to Upstate economic development has influenced national policy discussions:

Federal economic development programs have adopted elements of the URI model
Several Rust Belt states have implemented similar regional approaches
The demonstrated success of infrastructure-first and human capital strategies has shifted the national conversation away from tax incentive competition

Challenges and Limitations

Despite these successes, this alternate timeline isn't utopian. Significant challenges remain:

Persistent Pockets of Poverty: While overall economic indicators improved, certain neighborhoods and rural communities still struggle with concentrated poverty
Climate Adaptation Costs: Extreme weather events required costly infrastructure adaptations, though the region's water resources became an increasing economic advantage
Global Economic Pressures: International competition and automation continued to pressure certain industries despite the more resilient economic base
Political Tensions: The reduced state-level control over economic development resources created occasional conflicts between regional and state priorities

Nevertheless, compared to our timeline where Upstate continues struggling with population loss, limited economic growth, and declining fiscal capacity in many communities, this alternative approach produced meaningfully better outcomes for millions of New Yorkers.

Expert Opinions

Dr. Manuel Ramirez, Professor of Economic Geography at Cornell University, offers this perspective: "What's fascinating about this alternate economic development path is how it leveraged Upstate New York's existing assets rather than trying to create entirely new economic identities. The region always had extraordinary educational institutions, natural resources, and quality of life advantages. The traditional approach essentially ignored these foundations to chase after whatever industries were trending nationally. By instead building methodically on regional strengths and addressing fundamental infrastructure and human capital needs first, this alternative approach allowed organic economic ecosystems to develop. It's a classic case of 'the slower way was actually the faster way' when it comes to sustainable development."

Sarah Levine, Executive Director of the Center for Regional Economic Renewal, observes: "The most revolutionary aspect of this alternative policy wasn't any single program, but the governance innovation that allowed long-term thinking to prevail over electoral cycles. By creating Regional Development Authorities with dedicated funding streams and professional management, this approach overcame the chronic problem of policy discontinuity that plagued economic development in our actual timeline. When each new administration feels compelled to announce their own branded initiatives and abandon their predecessor's work, you never give strategies time to mature. The political courage to establish these semi-autonomous regional bodies—and then resist the temptation to interfere with them for political gain—was perhaps the most important divergence from our actual history."

Dr. James Wilson, former U.S. Assistant Secretary for Economic Development, notes: "What's particularly instructive about this alternate New York scenario is how it avoided the false choice between 'place-based' and 'people-based' economic development strategies that dominated policy debates in the early 2000s. By simultaneously investing in both physical infrastructure and human capital, while allowing regional variation in the specific mix of approaches, New York essentially transcended this academic debate with a pragmatic both/and approach. The lesson for other regions facing deindustrialization isn't that they should copy specific programs, but rather that they need integrated strategies addressing both place quality and human potential, sustained over decades rather than election cycles."