The Biden administration embraces place-based industrial policy

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dirigiste industrial policy. So far Congress has authorised at least $80bn in place-based spending (according to the Brookings Institution, a think-tank), disbursed through a range of competitive grants. The biggest-ticket items include funding authorised in the CHIPS Act, passed last year to spur American semiconductor manufacturing.

That law contains $10bn to help create 20 regional “Tech Hubs" outside currently dominant areas such as Silicon Valley and Boston, as well as $9.6bn for “regional innovation engines" and “collaborative innovation resource centres", designed respectively to boost research and development, and to help early-stage tech firms. Other pieces of legislation authorise billions of dollars for “regional clean-hydrogen hubs" and “direct air-capture hubs". Although large majorities of Republicans voted against the CHIPS Act and the Infrastructure Investment and Jobs Act—the second-largest source of place-based funding—the bills passed with some votes from both parties.

Framing this funding not just as largesse, or a spur to private investment, but also as a response to the national-security challenges posed by China, helped broaden its support. Mark Muro of Brookings, who is a longtime champion of place-based policy, argues that this is the beginning of a lasting shift, that “place-based growth strategy is here to stay". That may well be true.

But evidence that place-based policy actually works is mixed. Boosters point to successes such as the Tennessee Valley Authority (TVA), created in the midst of the Great Depression to help develop an area spanning seven states that was then among America’s poorest regions. More recently, federal research investments and local government support helped develop