$80 Billion Now -- Is Your Place Ready??
America's new era of industrial policy is a boon to regions and states -- that are prepared...
Industrial policy is back, baby! To the tune of nearly $1 trillion in new programs.
America’s new era of industrial policy has fans:
Americans should embrace a new economic patriotism that calls for increasing domestic production, bringing jobs back from overseas, and promoting exports.
and folks with concerns:
The (semiconductor) ramp-up is unlikely to eliminate U.S. dependence on Taiwan for the most advanced chips.
Nonetheless, industrial policy is a centerpiece of this Administration’s policies.
Supply-side investments to boost US economic capacity, both overall and in key sectors such as semiconductors and renewable energy…. Industrial policy … is central to Biden’s economic agenda. Getting an industrial policy right is never easy, and getting a place-based one right will prove even more challenging. But doing so is now essential to achieving more equitable and sustainable growth.
A sub-set of this spending is explicitly place-based. “Place-based” industrial policy “deliberately targets interventions toward particular locations”. Brookings recently detailed the Federal programs that will award nearly $80 billion to regions through 2027.
19 place-based programs (that) have multiple goals, including expanding domestic semiconductor manufacturing; creating regional “innovation hubs” and “innovation engines” to advance technology development and job creation; and financing regionally driven efforts to scale emerging clean energy technologies.
This is … a big deal;
To put this in perspective, economist Tim Bartik has noted that the nation’s two largest, oldest place-based programs—the Tennessee Valley Authority (TVA) and the Appalachian Regional Commission (ARC)—reached maximum spending levels of $9 billion and $10 billion (in 2022 dollars), respectively, over five-year periods in the 1950s and 1960s.
Five programs account for the bulk of this $80 billion:
It’s happening fast. The Departments responsible (largely Commerce, and also Energy and the NSF) are gearing up quickly to launch all of these programs; the NSF Regional Innovation Engines initial application deadline is Jan 18. The $10 Bill Tech and Innovation Hubs program (within CHIPS) initial deadline is in March.
Critically,
“The vast majority of funding across these 19 programs—including nearly all of the funding not allocated to regionally focused commissions such as the ARC—will ultimately be distributed to communities via challenge grants.”
What should regions and states do now??
To the extent communities or regions want to compete for these pots of federal funding, they will be well served by identifying where their existing clusters align with these opportunities, as well as by ensuring various regional actors are working cooperatively toward winning funding. Moreover, state governments may want to serve as central points on coordination to ensure their regions are proposing complementary—rather than contradictory—projects.
Big states like California are well ahead in this coordination/cooperation effort. However, this Administration is committed to bringing opportunity to all Americans, everywhere. The places that win these awards won’t be those which can afford the biggest corporate incentive packages, or those which don’t need the boost. This is ecodevo 2.023; the key questions aspirants should address aren’t about incentives:
How does your application provide non-traditional pathways to family-sustaining career jobs for underestimated populations — at scale? States like Virginia are moving fast to coordinate disparate work force and higher ed efforts and funding — those efforts will help convince the Departments that those regions are ready to open new talent pipelines. (2023 is all about the skills… )
How will your effort extend and expand inclusion, particularly for underestimated populations, backed by big cross-sectoral commitments?
“Innovation hubs aim to lift distressed areas.”
“(These programs are ) designed to promote inclusive growth, and these have elicited complementary efforts at the state and local level. California, for example, has introduced a Community Economic Resilience Fund (CERF) with a four-year $600 million budget to support regional collaboration and inclusive development”
This will be a critical differentiator.
“Only about a third of the Build Back Better Regional Challenge’s 60 finalists “laid out strong, clear equity arguments,” according to a recent report from Brookings Metro. “
The Economic Innovation Group, for example, suggests that the two areas in the Denver EDA region that have the best prospect for CHIPS innovation hub funding are Colorado Springs and Provo/Orem Utah. Applications from those areas need to show cross-sectoral, quantified commitments to equity and inclusion — at scale.
Are your major educational institutions — and employers — committed together?
Have your stakeholders made tangible, measurable commitments, or just indicated support? Are these long-term?
Have you considered defining your ‘place’ differently? The Greater Washington Partnership, covering Baltimore through Richmond, is an example of a group defining economic opportunity across traditional jurisdictions. Colorado and Utah could cooperate in an Innovation Hub proposal, as another.
Governors, regional groups, employers and educators should all be convening collaborations to attract this funding today. Yes, it’s complicated, not central to anyone’s mission, and the odds of winning are long. Yet competing for $80 billion gets folks’ attention; it’s a great, immediate catalyst to accelerate cooperation. Place-based cooperation and coordination is key not just to America’s revived industrial policy but to driving all of America’s long-term sustainable, inclusive growth future — which is how we’ll collectively insure the 21st is another great American century.
Blue states in particular need to step up to this opportunity. Most don't have huge $$ incentive programs to recruit corporations -- but this is to big to ignore. Per Ron Brownstein in the Atlantic (linked above as well), "What’s clear is how much Biden has bet... on bolstering the economic circumstances of workers without advanced education by investing literally trillions of federal dollars in forging an economy that again builds more things in America." Consolidating workforce programs and emphasizing skills vs. degrees -- an important step.