The Truth About D.C.'s Growing Knowledge-Based Economy

Washington, D.C., has always been known as a city of power. But beyond politics and diplomacy, it is now the center of a big, dynamic, successful and diverse economy, one that is quickly becoming an important player on the global stage. As I wrote in last month in The Atlantic, Washington’s economy has "clearly prospered from federal spending; lobbying and government contracts are significant sources of its wealth. But its economy is not entirely or even predominantly parasitic." The D.C. metro area has in fact developed a diversified tech and knowledge economy. The Washington Post’s Jonathan O’Connell picked up on this earlier this month, noting in jest, "It’s not just cupcakes anymore." Urbanist Aaron Renn has put it this way: "We’re witnessing the start of Washington’s emergence as America’s new Second City."

But to what degree has government activity shaped the region's economy in both direct and indirect ways?