ABSTRACT
This chapter explains how state governments of the US developed their economy at the end of the Cold War. At the end of this War, Maryland had in place a wealth of programs to bolster its manufacturers' competitiveness. The state government looked at the special needs of Maryland's defense-oriented research and development (R&D) firms and contractors, however, it found some important gaps. With federal support, Maryland undertook to fill the gaps. State governments foster development of the economy as a whole instead of trying to lure businesses away from other states, they help create the conditions that make defense conversion less difficult. This is especially true on the job front, where a growing economy can more easily absorb workers laid off by defense companies. By using federal matching grants wisely, state governments can help manufacturers in general and defense firms in particular prepare for the competitive global marketplace and can nudge defense-dependent communities toward developing more diversified local economies.
