The East-West Divide | DC area regional economic development: anchors and where they are placed matter + airports | But military spending matters the most

The Washington Post reports ("Yet another D.C. regional group aims to overcome the east-west economic divide") on a new economic development organization in Greater Washington, focused on addressing the divide between the eastern and western parts of the region, the west--Northern Virginia--does better than the east, even Montgomery County, Maryland, which is one of the nation's richest counties (although outspanned by multiple counties in Northern Virginia including Loudoun, Arlington, and Fairfax).

And no, I haven't read the report yet, referenced in the article.

-- Regional Economic Development Strategy 1.0 Report, Connected DMV

Military versus health spending.  As I wrote in this piece last year, "Economic dynamism: Northern Virginia ascendant, while DC and Suburban Maryland lag," Northern Virginia is the Mid Atlantic's "Gunbelt" (the title of a book about the economic resurgence of the Southwest, due to military spending.)  Here are the main points from that piece:

• Northern Virginia's military spending is "off the hook"
• Health sciences and government regulatory functions don't have the same economic multiplier effect as military spending,* in particular information technology.
• Process knowledge comes from building things.
• Invention versus innovation.

Much of the difference in spillover economic activity comes down to the fact that the Department of Defense, in particular the Pentagon, is based in Northern Virginia, and even though the National Institutes of Health, FDA, and National Institute of Standards and Technology are based in Montgomery County, and various government installations in Prince George's County.

The government spends more money on military technologies and communications, and this has better seeded Northern Virginia for information technology related industries.

This has especially been the case since 9/11.

Like Amazon's choice of Arlington County (and Alexandria) for HQ2.  Amazon's profits come mostly from Amazon Web Services, and they keep aiming to win military IT contracts too.

-- "Crystal City Arlington as Amazon one-half of HQ2 | Part 1: General + Housing impact," 2018
-- "Part 2: Leveraging Amazon's entrance for complementary economic development improvements," 2018

Managing versus doing.  Agencies that produce output instead of managing activities have more spillover economic activity too.  It's not that the NIH doesn't seed new business, although not to the extent of areas like Boston, San Francisco, and San Diego when it comes to biotechnology, it's just not as much compared to the Department of Defense.  

Although yes, dealing with managing does provide a lot of opportunity for the development of government-focused contractors.  But again, it's not generating new knowledge and businesses the way that DOD does or can.  For example, how America Online or MCI became large companies, piggybacking off the DOD communications infrastructure, and the Internet more generally, which was developed through DOD research and contracts.

Most of the agencies in DC are managers of information and activity, not "doers," which is why DC proper lags in spillover economic benefit in business development, although it certainly stokes the residential market.

Airport access matters too.  Dulles and National Airports are in Northern Virginia.  Yes, BWI is in Maryland, but further away than National, and without the international connections of Dulles.

-- "DC area airport planning," 2021
-- "Privatizing Dulles and National Airports," 2018
-- "Aerotropoli and rethinking the scale of mobility networks in the context of a global economy," 2013
-- "Economic impact of National and Dulles Airports," 2014
-- "Do tax incentives pay off? : Illinois; Tennessee; Rosslyn + "The Airport Access Factor"," 2017

(National Airport offers easy access but has restrictions on flight distance, and doesn't have the ability to spark airport-related business because of land constraints.  Dulles has plenty of land available for development, but is far from the center.) 

It's easier to get to National  or Dulles Airports from Virginia than from Montgomery or Prince George's Counties.  DC is pretty easy to get to National, but it's about equidistant from Dulles and BWI.  It takes a long time to get to either.  Although merging MARC Penn and VRE Fredericksburg would help. 

-- "A brief comment on ground transportation at National Airport vis a vis VRE rail service," 2016
-- "Crystal City Arlington as Amazon one-half of HQ2 | Part 3: Leveraging Amazon's entrance for complementary transit network improvements," 2018

Montgomery County versus Fairfax.  I have written about this a fair amount, spurred in part by Montgomery County's hand wringing over its being second to Fairfax County in population and economic activity.

-- Revisiting stories: military spending, the Gunbelt, and Montgomery County vs. Fairfax County," 2019
-- "Montgomery County's real economic development problem: it's not part of the military economy," 2011
-- Montgomery County's real jobs problem is that it is an adjunct, not a full-fledged, member of the military-industrial complex," 2012

(Montgomery has military related facilities, including Lockheed Martin's hq and others, but they pale in comparison to Northern Virginia.)

And this is probably why MoCo has shifted its economic development priorities to military related business development, away from biotechnology ("Debated Montgomery County biotechnology incubator officially closes its doors Monday," "Cybersecurity tax credit part of Montgomery County’s effort to become industry hub," Washington Post, 2014).  

I think they should do both, rather than end activities in the biotechnology area, because clearly, compared to the leading centers for biotechnology, it lags.

DC.  And about Washington DC's failure to adequately leverage the multiple higher education institutions in the city and other elements of the local economy.

-- "Naturally occurring innovation districts | Technology districts and the tech sector," 2014
-- "Why Mayor Bowser is right to be leery of systematic lowering of taxes," 2015
-- "Better leveraging higher education institutions in cities and counties: Greensboro; Spokane; Mesa; Phoenix; Montgomery County, Maryland; Washington, DC," 2016

And how can DC recruit corporate headquarters?

-- "Could bringing premier regionally headquartered business enterprises to the Pennsylvania Avenue Corridor be key to its renewal and revitalization?," 2014

And should double down on regional and multi-state transit connections, and use this as a way to reposition and strengthen DC's central business district as a place for exchange beyond a focus on the federal government.

-- "DC, Transformational Projects Action Planning, and the Baltimore-Washington Maglev project," 2021

Prince George's County.  And College Park and Prince George's County's inadequate leveraging of the University of Maryland.

-- "College town follow up: alumni as residents and contributions to community capital," 2015
-- "More Prince George's County: College Park's militant refusal to become a college town makes it impossible for the city(and maybe the County) to become a great place," 2015
-- "Revisiting past blog entries: College Park as a college town and economic development | PG County and Amazon," 2018

And transit.  (From the "Purple Line" series.)

-- "Part 4 |   Making over New Carrollton as a transit-centric urban center and Prince George's County's "New Downtown"
-- "Part 6 |  Creating a transportation development authority in Montgomery and Prince George's County to effectuate placemaking, retail development, and housing programs in association with the Purple Line"
-- "Part 7 | Using the Purple Line to rebrand Montgomery and Prince George's Counties as Design Forward

Conclusion.  

(1) Montgomery County needs to work more on maximizing economic development in the biotechnology area from NIH.

(2) Montgomery County needs to figure out why NIST doesn't generate a high rate of spillover business development and address it.

(3) Prince George's County needs to better leverage the University of Maryland and consider the development of a Medical School and campus in association with the new hospital in Largo.  (WRT the latter, I hadn't thought of that til now.)

(4) Prince George's County needs to reposition development around transit.

(4) DC needs to better leverage its universities for economic development.  It should consider doing something like what Bloomberg did in NYC, creating a new IT/engineering campus with Cornell and Technion.

(5) DC should have done what I suggested and build a medical education and research initiative on the St. Elizabeth campus in association with the building of a new hospital in Ward 7.

-- "Ordinary versus Extraordinary Planning around the rebuilding of the United Medical Center in Southeast Washington DC | Part One: Rearticulating the system of health and wellness care East of the River," 2018
-- "Part Two: Creating a graduate health and biotechnology research initiative on the St. Elizabeths campus," 2018
-- "Part three: the potential for donations around an expanded program," 2018

(6) DC needs to figure out how to land some corporate headquarters businesses perhaps in conjunction with Maglev.

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* Note that military spending isn't categorically beneficial for economic development, in particular the development of spillover businesses.  It depends on if it builds knowledge and things, or destroys them, or builds knowledge and things in volume.

Baltimore County expected the expansion of the Aberdeen Proving Ground would have significant economic development effect.  But it didn't.  Because the new activities didn't require significant presence of related and spillover businesses.  Testing equipment, like they do at Aberdeen, doesn't have the same generation of economic activity as building equipment.  And firms building the equipment aren't locating in Baltimore and Harford Counties.