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Leveling Up Is Hard to Do

If clustering of knowledge-based firms resumes as the pandemic fades, the momentum toward ever-increasing geographic inequality risks becoming inexorable. The first step toward addressing the problem is to recognize that a holistic approach to public policy – one that adopts the viewpoint of users and administrators – is essential.

CAMBRIDGE – One of the economic challenges facing all Western governments in these uniquely testing times is how to redress geographic inequalities that have emerged over several decades. Tackling this problem will require policymakers to adjust their perspective and adopt a much more holistic approach to economic development.

In the United Kingdom, regional inequality has given rise to its own vocabulary: the “red wall” of longtime Labour but now Conservative electoral constituencies in England’s former industrial heartlands, and the imperative of “leveling up” the country to bring about a more equitable economic balance between the struggling north and the richer south. But many governments face the same challenge of restoring prosperity to rural communities and small towns that have not shared in the economic boom enjoyed by large urban areas.

The pandemic-induced trend of working from home might temper these underlying economic dynamics, but it is unlikely to reverse them. The most productive businesses in today’s services-oriented Western economies are those best able to attract highly skilled employees, and that rely on “tacit” knowledge, or know-how – insights that are impossible to write down in detail.

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