PFS-03 - Capital Concentration and the Geography of Innovation

Much of today’s productivity debate still assumes that innovation automatically diffuses once it exists. This paper argues the opposite: capital concentration and geographic lock-in have become binding constraints on whether frontier breakthroughs ever translate into national gains.PFS-03 examines how venture capital, talent flows, infrastructure, and institutional design reinforce a small number of innovation corridors — and why, without deliberate connective mechanisms, productivity increasingly concentrates while diffusion stalls.This is not an argument against agglomeration. It is an argument for rebuilding the missing middle between frontier dynamism and broad-based economic capacity.