Spatial political economy: the case of metropolitan industrial policy

Industrial policy has become the focus of much more interest in recent times. Of particular note is mainstream economists’ fascination and their peculiar claims about how and why this new industrial policy promotes growth, redistribution, and sustainability. Such contentions warrant scrutiny. Using metropolitan data, plans, and laws, along with regional and national data from census and survey reports, this paper addresses three questions related to growth, inequality, and sustainability. On the basis of the evidence, collected and interpreted from the lens of original institutional economics, it is argued that industrial policy has been too strictly tied to (urban) economic growth which has not, contrary to expectations, led to ecologically sensitive and inclusive (urban) economic development. Instead, growth policies have cumulatively generated rising urban inequalities and ecological problems in cities and regions. This lack of congruence between the case for, and outcomes from, the pursuit of a particular type of industrial policy can be partly explained by the presence of absentee land ownership. Its entanglements with rent theft, profit seeking, and problematic engagement with persistent inequalities and unsustainability complement the explanation. A different industrial policy could seek to recoup socially-created, but privately appropriated, unearned income, reinvest this resulting revenue in ways that directly build state capacity, address persistent urban inequalities, attend to ecological challenges, and seek to create industries that avoid the problems of ‘progress and poverty’.