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Strategic sector investments are poised to benefit distressed US counties
Brookings
2024.02.29
Recent federal legislation―namely, the Infrastructure Investment and Jobs Act, CHIPS and Science Act, and Inflation Reduction Act―was enacted to incentivize investments in several sectors deemed important for America’s future economic growth and national security. Coinciding with the passage of this legislation, the United States is experiencing a $525 billion private investment surge in “strategic sectors,” which we define as clean energy, semiconductors and electronics, biomanufacturing, and other advanced industries.
One notable aspect of the many programs these laws fund is their inclusion of special incentives targeted to local economies that can benefit most from new industries, jobs, and economic opportunity. However, there has not yet been a full analysis of the geographic distribution of private sector investment to understand the extent to which distressed communities are benefiting from this place-based industrial strategy.
To fill this gap, this report compares the flow of strategic sector investments in distressed counties to their share of national economic activity, population, and overall private investment levels. We find that economically distressed counties are receiving a disproportionate share of private sector investment in these strategic sectors relative to their economic output and population. We also find that strategic sector investment patterns are distinctive: When compared to private investment writ large, these investments are more likely to go to distressed communities. This pattern of strategic sector investment marks a notable departure from economic growth and private investment trends in the 2010-2020 period.
Finally, we analyze commonalities across distressed communities receiving strategic sector investment, with the aim of informing how policymakers and practitioners can improve economic development outcomes in the implementation of these policies.