Did New Deal and World War II Public Capital Investments Facilitate a »Big Push« in the American South?

The »big push« theory claims that publicly coordinated investment can break the cycle of poverty by helping developing economies overcome deficiencies in private incentives that prevent firms from adopting modern production techniques and achieving scale economies. Despite a flurry of research, however, scholars have offered scarce few real-world episodes that seem to fit the theoretical model. We argue that the postwar performance of the American South, which followed large public capital investments during the Great Depression and World War II, is such an application. Both econometric analysis and a contemporary survey of firms strongly support the notion that big-push dynamics were at work.