Unlocking Public Procurement as a Tool for Place-Based Industrial Strategy

Abstract

The Global Financial Crisis and, more recently, the COVID-19 pandemic have highlighted the perils of industrial atrophy and spatial inequality rampant within advanced economies. Despite growing interest in lifting economic performance on the part of scholars and practitioners, the nature of entrenched economic frameworks limits the extent of effective intervention. By taking an interdisciplinary approach and reviewing extant literature examining the underestimated value of advanced manufacturing, this paper identifies a context in which government can use its procurement power in a non-discriminatory manner. The nature of agglomeration economies, employment substitution and diseconomies of scale suggests that the overlooked financial benefits of place-based industrial strategy around advanced manufacturing clusters are greatest in lagging regions.