TBED's Role in a Free Market Economy

As the U.S. approaches the July Fourth weekend, during which time we celebrate all the good that is America, columnists and politicians across the country will sing the praises of free-market capitalism. And with our material abundance and relative wealth compared to the vast majority of the world's population, examples of success for our chosen economic system are numerous.

Readers of the SSTI Weekly Digest -- and there are thousands of you -- may recall, however, that most economic development policy is intended to address the failures of our market system. Or at least to prod it along to certain conclusions that it may not reach if left entirely to its own devices. For example:

• Location-based tax incentives (e.g. technology enterprise zones) and brownfield redevelopment are used to entice new development in previously used lands because the total social, environmental and economic costs of building on open land are not fully reflected in the market price nor borne by the developer of greenfield sites.
• Tax incentives to encourage early-stage, angel and venture capital buy down risk for equity investment, risk the market is unlikely to take in some geographic areas.
• Scholarships, internships and mentoring programs to encourage science, technical, engineering and math education can help to elevate lower income groups and decrease pressure on the middle class while addressing the need for a more technological competent population.
• Public expenditures to widen broadband access to the Internet offset costs for the private sector to enter markets it may consider less profitable than other potential uses of its resources. And,
• Public funding for research and technology commercialization hastens the innovation process, giving our firms early entry advantage in globally competitive markets.

The press advisories, newsletters, and annual reports of the nation's local, regional and state level technology-based economic development (TBED) initiatives testify hundreds of times over to the positive impact this form of public intervention in the free-market economic system can have. For the TBED programs and policies that work best, the industrial, business and financial communities are strong collaborative leaders.

Yes, we will be celebrating our independence, our democracy, and our free market capitalist system this weekend. But public-private partnerships to encourage technology-based economic development are increasing opportunities for innovation, entrepreneurship, wealth generation and economic prosperity across all regions of the U.S. That's worthy of celebration and recognition as well this weekend.

Kudos to all of you and enjoy the Fourth of July.

NOTE: With the coming holiday weekend, the next issue of the SSTI Weekly Digest and Funding Supplement will be published on Monday, July 12.