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/ Nov 22,2009
Alain Bertaud on Regional Economic Investment
CQ Researcher has produced a report, Economic Clustering: Will “Superstar Cities” Continue to Dominate? by Alan Greenblatt, which discusses the economic gains U.S. coastal cities have experienced and examines the possibility of the federal government targeting investment to less competitive areas. At the end of the report is a pro/con section that asks the question, “should the federal government invest in regional economies?” Senior Fellow Alain Bertaud has provided the con argument. He writes:
But is it desirable that some sectors of the economy be equally distributed regionally? Economists have described the advantage derived from geographic agglomeration, such as economies of scale and knowledge spillovers. Geographic concentration is a natural phenomenon for many economic sectors, but even more so for the technology sector, where innovation must be rapid and which relies on a constant global influx of new talent...
...It is unlikely that a grant program directed to specific areas, by definition driven by narrow political considerations, could provide better geographic distribution than the current spontaneous system where initial concentration is followed by selective dispersion.