Cluster-Based Economic Development Geography

Concerning economic development and economic globalization, better cooperation between a group of states is a fools errand. The megaregion might help you sell a boondoggle (e.g. high-speed rail), but it won't solve prosperity problems. Brookings delineates the proper scale for innovation:

A related virtue of the cluster paradigm is that it moves to the forefront the variation, diversity, and myriad local specializations of the productive economy. In this connection, a focus on clusters highlights not just that regions matter, but that every region consists of a unique local economy with its own array of traded clusters, regional advantages, and starting points. This too is a welcome aspect of a cluster focus. For too long, too much national and state policy discussion has assumed a development landscape across the nation that is largely homogeneous.59 All that really mattered, in this view, was getting the general business environment right, keeping taxes at the right (low) level, and providing some basic inputs such as R&D, access to capital, education, or infrastructure. Yet America’s production economy is not so simple or homogeneous (even if sameness rules the consumption map!). Instead, whereas a home is a home and a Wal-Mart a Wal-Mart on the consumption side, Wichita’s aviation-focused production economy in the Midwest varies sharply from Michigan’s, with its emerging focus on batteries and electricity storage, and Colorado’s, with its heavy orientation toward military and space applications. What’s more,Denver’s green economy looks very different from St. Louis’ and Sacramento’s and for that matter Philadelphia’s. And for good reason: Different regions have different starting points, different past choices, different natural and institutional advantages, different human capital inheritances, different specializations, different development opportunities and needs. To see the reality of those differences playing out witness the highly uneven extent of the recent economic recession and recovery as logged by the most recent edition of the Brookings Institution’s MetroMonitor index of metropolitan economic performance.60 In short, the present focus on clusters makes clear not just that the national economy is a series of regional economies busily engaged in trade, but that each regional economy has a particular array of specializations that drive both local productivity and growth in the national economy.61

Focus on the sentence I highlighted. I can't find the cited paper online, but there is an article that summarizes the argument. States are not homogeneous. There is no such thing as the "Michigan economy". It's a fiction. By extension, the idea that there is a Midwestern or Rust Belt economy is absurd. Economic development policy at this scale is useless.

However, the scale cluster-based economic development is a blueprint for advantageous "neighborhood" cooperation. If you want to put historical geographers to work, then have them figure out these regions of innovation. Don't waste any time noodling with a romantic Midwestern identity that could bind together a megaregion. Such a venture is pointless.

For my next post, I'll demonstrate how regional clusters can be unearthed and cultivated for purposes of economic development.