In a Brookings speech, National Economic Council Director Lael Brainard champions place-based policy

Much of the focus on President Joe Biden’s economic agenda has been on its large-scale investments in infrastructure, semiconductor factories, green energy, worker training, and more. Less recognized, however, is one of the most distinctive features of that agenda: its strong geographic focus.

Which is why it was timely that National Economic Council Director Lael Brainard traveled to Brookings on Monday to explain the new approach.

Brainard’s speech and accompanying dialogue heralded the government’s broad embrace of “place-based” economics. Her remarks provided more clarity on what the Biden administration means when it says it is pursuing growth “from the bottom-up” and the “middle-out.”

Brainard began by describing what she said hasn’t worked: the nation’s history of trickle-down economics. Place-neutral in theory, trickle-down policies generated wealth and opportunity for some, according to Brainard, but it was often “at the expense of widening inequality, deteriorating infrastructure, and fragile supply chains.”

Indeed, as Brookings has documented, by the 2010s the nation’s untrammeled winner-take-most economy had brought about a radically uneven “geography of discontent.” This dynamic saw a handful of urban “superstar” regions pull far away from everywhere else and capture the lion’s share of the nation’s innovation jobs and wealth.

By contrast, Brainard said place-based policies represent “a different approach to growing the economy.” And in fact, the glaring failures of past place-neutral doctrines—local deindustrialization, disinvestment, infrastructure deterioration, community distress—turn out to be exactly the kind of problems that place-based policies may be well suited to make progress on.

Which is why many economists now agree “that place-based policies punch above their weight in distressed communities,” as Brainard noted, yielding “a greater return in the hardest hit communities for each dollar spent.”

As to how this looks on the ground, Brainard pointed to a variety of the Biden administration’s investment programs that she believes exemplify the new approach. She name-checked strategic local infrastructure investments in Allentown, Penn., and cited Treasury Department analysis showing that clean energy investments are growing fastest in energy-transition and low-income communities. She reported how the Department of Transportation’s Reconnecting Communities Pilot Program is investing in places such as Buffalo, N.Y. to rectify damaging past infrastructure decisions, and described how the Regional Technology and Innovation Hubs and Regional Innovation Engines programs in the CHIPS and Science Act are seeking to accelerate the rise of more innovation clusters across the country.

In addition, Brainard named two cross-cutting features of the new place-based programs. First, she noted the programs’ frequent leveraging of “bottom-up” local energy through the use of competitive grants. And second, she highlighted the government’s plans to “stack” multiple place-based investments in particular locations “so that the whole is greater than the sum of the parts.”

Ultimately, Brainard summed up her argument with a basic insight: “Communities are where economic development happens—where people connect with jobs, develop their skills, start businesses, make their homes, and raise families.”

Yet for all those attractive ideas, there are challenges associated with place-based policies—challenges that Brainard spoke to but did not dwell on in her speech. For one, place-based programs—especially the government’s innovative regional challenge grants—depend heavily on local and regional networks for implementation. Therefore, federal administrators will need to work out new and effective ways to help their local partners build up planning and implementation capacity, especially in small or struggling places.

The federal government will also need to think deeply about the best ways to coordinate place-based policy across scores of federal agencies. Only then will the programs’ impacts add up to more than the sum of their parts. Yet for decades, such interagency collaboration has proven difficult to achieve. Building out this capacity for collaboration will be critical to forging a “whole-of-government” approach to working with localities.

With that said, what is most needed is to continue and broaden the experiment. Brainard has advanced the case for place-based policy and established its value. Now, furthering the test is critical, despite only partial or short-term funding for several of the new programs. Given that, Congress will need to fill in several appropriation gaps and consider further investments. And for their part, federal agencies should continue to crisply implement the new place-based programs and move to assess how well they work.

Overall, the nation should avail itself of this major opportunity. We have begun to explore a place-first approach to growing the economy, and now, we should go farther.