Date of Graduation

Spring 5-2026

Document Type

Thesis

Degree Name

Master of Science in International and Development Economics (MSIDEC)

College/School

College of Arts and Sciences

Department/Program

Economics

First Advisor

Jesse Antilla Hughes

Abstract

This paper studies the long-term effects of large federal investments in place-based industrial policies on regional economic development, contributing new evidence on how industrial policies shape regional local productive capabilities over time. While extensive research show that industrial policies impact regional development by advancing productive technology (capabilities), the fundamental question remains how to measure this technological transformation. The study employs the use of Economic Complexity Index (ECI) as a measure of “technological advancements” resulting from large federal investments in place-based industrial policies. Previous evaluations of such investment were based on livelihood, employment and income outcomes, with productive capability of receiving regions largely unmeasured. I investigate the federal funding of the Tennessee Valley Authority (TVA) to determine how federal funding affected economic complexity and productive capability of the seven-state region. I utilize a matched sample of TVA and the counterfactual proposed Valley Authority counties, the novel Economic Complexity Index, and county-level GDP data. I find that the counties receiving federal investment grew in economic complexity by an estimated 0.4 standard deviations more than the counties that did not. I also find that after about seven decades the two groups begin to converge in regional complexity. In the aftermath of policy, real GDP follows the opposite trajectory between 2001 and 2020, rising 9 percentage points faster in TVA counties even as relative complexity declines. The result confirms the importance of consistent bundling of productive capabilities for sustaining regional complexity. Place-based policy can lift a region above its counterfactual, but it must move beyond the capability the program built.

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