Time to close regional economic divides

On June 8th, the Senate Democrats and Republicans met to discuss the $ 200 billion innovation and competition law, a comprehensive package of laws aimed at boosting the country’s R&D competitiveness vis-à-vis China. The 68-32 vote was a rare bipartisan convergence on two common dividing points: money and government participation in the economy.

But that wasn’t all that stood out about the vote. Also noteworthy is the proposed law’s creation of 18 “regional technology centers” to stimulate economic growth in new places, which is the country’s most significant foray into regional policy in decades – perhaps since the Great Depression.

For decades, Congress has neglected the country’s deepening regional divides. New economic trends a growing gap has emerged between the dynamic “superstar” metropolises and everywhere else. In the meantime, policymakers fought, argued, and stood as the chasms opened up between income levels in coastal, technology-oriented metropolitan areas and the areas “left behind”.

A Brookings 2019 report documents that only five of the top innovation hubs – Boston, San Francisco, Seattle, San Diego and San Jose, California – were responsible for more than 90% of the country’s innovation sector growth from 2005 to 2017.

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But what to do to counter this dramatic divergence was not always clear. Since the 1960s, Congressional location-based responses have mostly resulted in limited ad hoc investments in grants, programs, and tax breaks that have been too small and disparate to resolve the vast economic forces that are tearing the nation apart. The result was inaction.

But now senators on both sides of the aisle have come together to acknowledge the economic, social, and political crisis of interregional inequality – and advocate the use of location-based government measures to counter it.

The legislature has arguments and ideas from ideas Brookings and MIT professors Jonathan Gruber and Simon Johnson to respond to regional divergences by creating a series of location-based technology centers in the interior of the Americas that aim to catalyze local economic growth. Originally, the bill provided for the creation of eight to ten centers scattered across the heartland, costing $ 10 billion over five years. At the time of the final vote, the number of centers had doubled to at least 18, supported by the same budget – reflecting pressure from senators in smaller states to have more cities and rural areas receive a portion of federal R&D spending.

Despite the change, something seems to have come together over the problem of the country’s regional divergence that is approaching a bipartisan consensus. A preponderance of senators from large and small states – as well as from blue and red states – generally appears to agree that:

  • The status quo – as reflected in the country’s unequal innovation map – is unacceptable
  • The nation can and should counteract this inequality
  • The nation just doesn’t need scaled nationally But answers location-based also which

This is a milestone and a far cry from the philosophical and political divisions that have typically woven all three of these proposals.

Nonetheless, the idea of ​​creating large technology centers sparked heated debates among senators over the geography of the program, while the regional issue in the House could face stronger headwinds. Furthermore, nothing currently under consideration comes close to the extent of comprehensive action required to address the country’s gigantic regional imbalances. In order to really master the challenge, much larger location-based interventions such as innovation centers must be included “Location conscious” adaptations to large “universal” programs This involves topics such as poverty, infrastructure, personnel development, location aid and market concentration, as the sociologist Robert Manduca notes.

Despite these warnings, the Senate vote this week could really be seen as a turning point. In the main focus of the draft law on industrial policy, there is an emerging consensus that the country’s ruinous regional divisions do not work and need not be tackled for anyone. Now we can finally start.

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