Magazine

Grassroots Industrial Policy


Across the U.S., state governments are crafting economic strategies that blur the boundaries between the public and private sectors. They are targeting specific industries and intervening in ways that go far beyond traditional perks like tax breaks and cheap land. Some examples:

EARLY-STAGE CAPITAL

As private venture capitalists and angels focus on safer, more mature bets, almost every state has set up a fund to launch and develop high-tech startups. Public venture funds are especially pervasive in Arizona, New Mexico, Oregon, Pennsylvania, and Texas.

RESEARCH INSTITUTES

States are pouring huge sums into industry-university R&D consortiums targeting specific industries and technologies. California, Texas, Massachusetts, Maryland, and Michigan all have $1 billion-plus biotech initiatives. New York and private companies have invested $4.5 billion in nanotech.

WORKER TRAINING

Worries are mounting that the U.S. will lack sufficient skilled talent to compete in tech industries. Arizona, Maine, Oregon, and others are designing university, community college, and even high school curriculums to train engineers, technicians, and production workers for targeted industries.

DIRECT SUBSIDIES

Some states are getting less shy about investing taxpayer money in high-priority businesses. Tennessee is investing with DuPont in a biofuel producer, and New Mexico gives interest-free loans to films produced locally. New York will reimburse AMD for $900 million in costs tied to a new chip plant.

Data: States, BusinessWeek


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