Dive Brief:
- Counties that voted for Donald Trump during the 2020 presidential election have gained about half of the $470 billion in private sector investment backed by a Biden administration industrial policy, the Brookings Institution said.
- “Conservative counties” generate just 28% of U.S. gross domestic product but have received about 50% of private investment in semiconductors, clean energy, electric vehicles and batteries, bio-manufacturing and heavy industry under a White House program to revive “critical advanced industries and technologies,” Brookings researchers said in a report released Tuesday.
- “Dispersion of investment across suburbs and small towns means that politically conservative counties have received a higher share of private investment than would be expected given the size of their economies,” the researchers said.
Dive Insight:
During the coming decade the Biden administration’s “industrial strategy” will bolster both the U.S. middle class and national security by spurring $3.5 trillion in public and private investment in the creation of “a strong, resilient and leading-edge, techno-industrial base,” National Security Advisor Jake Sullivan said in April.
Biden’s “modern American industrial strategy identifies specific sectors that are foundational to economic growth, strategic from a national security perspective and where private industry on its own isn’t poised to make the investments needed to secure our national ambitions,” Sullivan said.
“It deploys targeted public investments in these areas that unlock the power and ingenuity of private markets, capitalism and competition to lay a foundation for long-term growth,” he said. “This is about crowding in private investment, not replacing it — it’s about making long-term investments in sectors vital to our national wellbeing, not picking winners and losers.”
The Biden administration before this year won legislative support from Congress to spur private investment in advanced industries through workforce training, research and development, and incentives such as tax breaks.
Roughly $233 billion of the new private investment announced since President Joe Biden took office in January 2021 has gone to counties won by Trump in the 2020 election, Brookings said.
Biden’s strategy appears to be fostering the cooperation between government and the private sector essential for rejuvenating advanced U.S. industries, the Brookings researchers said.
However, “continued alignment is not guaranteed,” they said. “There will inevitably be tensions between the interests of global companies on one hand, and what policymakers and voters may deem in the public interest on the other.”
Like Trump-leaning counties, southern states have netted a disproportionate share of investment under Biden’s industrial strategy, Brookings said.
The South generates 34% of U.S. GDP but has received 42% of the announced industrial investment since January 2021, according to Brookings. The Northeast has so far drawn the short straw, gaining only 13% of investment while driving 20% of GDP.
“Some observers have noted that the long-term shift of manufacturing to the South is due to its comparatively lower wage rates, anti-labor political climate and right-to-work laws that discourage unionization,” Brookings said.
Investment in new factories for manufacturing clean energy technologies and electric vehicles and batteries accounts for 62% of the investment in southern states compared with 48% nationwide, Brookings said.
Georgia Governor Brian Kemp created a public-private partnership in 2021 aimed, as he said in January, to make the state the “electric mobility capital of America.”
The success of Biden’s industrial strategy hinges in part on the “geography” of the private investments, the Brookings researchers said.
“How and where these capital investments land in local communities will largely determine whether this new industrial strategy can deliver economic benefits to a broad swath of the country,” they said.
