Blog: Building and/or boosting – Bidenomics and place based policies
I recently attended an EPRC webinar featuring Grete Gansauer, a researcher at Montana State University. The webinar was an opportunity for Grete to share her analysis of the place based dimensions of what has been termed Bidenomics.
Bidenomics is shorthand for the Biden administration’s ‘Build Back Better’ agenda whose objectives include improving regional socioeconomic inequalities in the US. The core of this agenda is investment of around $3.8 trillion in infrastructure and key national industries through four landmark spending bills: the American Rescue Plan Act, the Infrastructure Investment and Jobs Act , the Inflation Reduction Act (with its focus on green energy), and the Chips and Science Act.
Her presentation highlighted the growing regional disparities in the US. These are characterised by a number of city regions growing rapidly, building on technology based industries and the associated agglomeration economies which attract investment and talent in a virtuous upward circle. While in contrast other, often rural areas or centres of declining industries, suffer an vicious downward spiral of under-investment and outmigration. A picture not unfamiliar to Europeans, but probably more starkly illustrated in a country with less of a social safety net. This description reminded me of Gunnar Myrdal’s theory of circular and cumulative causation set out in “Economic theory and under-developed regions”, written in the 1950s but still as valid today.
Part of the downward trajectory of ‘left behind’ places is what was termed a ‘fiscal pathology’ which results in declining physical and human capacity across all sectors, which has a significant impact on the capacity of the public sector in these places to help address problems and realise potential. This was highlighted as being a particular issue when available federal investment is allocated on a competitive basis.
Gansauer’s work has involved developing a helpful typology to analyse how Bidenomics plays out across places. This includes a classification of areas into strategic, high potential, latent potential or disadvantaged regions; and programmes as regional asset builders (e.g. infrastructure and physical regeneration), regional equity builders (e.g. social and environmental justice investment) and national or regional growth boosters (e.g. cluster development).
Broadly speaking, of the elements of Bidenomics that can be considered place based, the majority of funding (78%) is going toward national and regional growth boosters, of the remainder most (16%) is going towards regional asset building. Perhaps not surprisingly given this breakdown 73% of the funding is focused on the strategic and high potential regions with 18% of the remainder going to disadvantaged regions, the lowest proportion goes towards those with latent potential.
This classification of regional potential and whether programmes are intended to boost or build provides a useful lens through which to analyse and develop policy, which might have value elsewhere. It might have particular application in systematically thinking about and articulating policy objectives and how they relate to each other. For example, the relationship between regional asset and equity building would seem to have relevance for community wealth building and laying the economic foundations for improved individual and societal wellbeing, while building regional assets should have an important contribution to make to realising latent growth potential, depending on how it is carried out.
A recording of the webinar can be found here.
By Charlie Woods, EDAS Board Member and Director of Scottish Universities Insights Institute