Paul Krugman is a mega skeptic.
It’s not at all clear to me that world competition is between mega-regions.
I’d say that there are two things that arguably define an economic unit for the purposes of economic geography. One is labor mobility: a region over which there’s high mobility of labor will be a region in which everyone with the same set of skills is paid more or less the same real wage (which may differ in money terms because of differences in the cost of living etc.). By that definition, the United States as a whole is the relevant unit: workers are as mobile between Chicago and Boston as they are between Baltimore and Boston.
The other definition is the reach of spillovers — positive externalities, for the econowonks. That’s probably much more localized: there’s a reason investment bankers cluster in expensive Wall Street or City of London locations. But again, it’s hard to see that this makes the Northeast Corridor, as opposed to individual metro areas within the corridor, a relevant unit.
I'll have more to say later (it's a busy weekend), but this paper has more on why the mega-region, alongside the cluster and the nation-state, is an increasingly relevant and important economic unit and why it needs to be considered as such from a policy-making perspective. But let me just say that when 40 of these megas which account for less than a fifth of world population account for roughly two-thirds of economic activity and 85 percent of global innovation, something is going on. Another piece of the explanation (micro-foundations if you will) is outlined in this paper with George Mason's Rob Axtell, which uses adaptive agent models to suggest that mega-regions are in fact emergent economic units, emerging that is from the evolution of localized clusters and city-regions. At the end of the day, mega-regions have large geographically defined markets, and people are more mobile across mega-regions than across nations (Krugman even calls his own mega, Acelaland, after the fast train). My hunch is that people are also much more likely to relocate within megas than across them, say from NY to Boston or to DC, and in fact recent conversations with many journalists, non-fiction writers and editors suggest a shift from NY to DC, Krugman's Times colleague, David Leonhardt being a case in point, though more research needs to be done on this issue of mega-mobility.
II'm in good company: Krugman's also also skeptical of the new paper on place-making policy by Ed Glaeser and Joshua Gotltlieb (unfortunately gated by Brookings). It's always great to have Krugman applying his ever facile intellect to these issues.