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Growing Innovation Clusters for American Prosperity: Summary of a Symposium (2011)

Chapter: PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE

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Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
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PANEL II

REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION’S INNOVATION INITIATIVE

Moderator: Jean Toal Eisen Department of Commerce

The Geography of Innovation: The Federal Government and the Growth of Regional Innovation Clusters

Jonathan Sallet The Glover Park Group

Mr. Sallet said he would summarize a paper for the Center for American Progress that he was writing jointly with Ed Paisley and Justin Masterman.1 The basic thesis, he said, was that clusters are part of national competitiveness strategies in most countries except for the United States. In the FY 2010 budget, President Obama, he said, sought for the first time to provide explicit funding for the support of regional clusters and associated business incubators.

He noted that it is a difficult time to develop new funding for regional competitiveness, with 47 of the 50 states facing budget shortfalls. He cited the example of California, which projected the nation’s largest state deficit of $33 billion and faced large cuts in education and R&D spending. The total proposed federal funding for clusters was only $100 million. How can this help? he asked. Why is it a good idea to involve the federal agencies?

Opportunities for the Federal Government

He said that the answer to these questions was that the federal government already worked at the regional level in many ways, and that if programs make use strengths already available locally, there is no need

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1See By Jonathan Sallet, Ed Paisley and Justin R. Masterman, “The Geography of Innovation: The Federal Government and the Growth of Regional Innovation Clusters,” Science Progress, September 1, 2009.

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

to invent new approaches. These strengths can be used to stimulate positive external benefits, he said, which is how some people define a cluster. Federal agencies can act as effective conveners, form networks, and provide experienced leadership for certain functions.

As a first step, he suggested that the Economic Development Administration (EDA) be more explicitly involved with cluster development. “To me,” he said, “it’s an opportunity to focus EDA and the Department of Commerce on renewal in comprehensive fashion. There’s a fair amount of skepticism in the way EDA has operated. No doubt, it has spent money in ways that members of Congress see as beneficial to local economies. But other people have characterized it as ad hoc, unconnected sometimes to what is happening on the ground, not fully integrated into any strategy, state or federal.” He said that putting cluster initiatives at the heart of EDA could be an advantage both to the initiative and to the EDA.

EDA involvement with regional clusters, he said, would not require any new institutions. Because the EDA is in the Department of Commerce, it is already well positioned to connect to programs of overlapping expertise, including the Technology Innovation Program, Manufacturing Extension Partnership, export assistance from the International Trade Administration, and infrastructure funding from National Telecommunications and Information Administration and NOAA.

He suggested that the program should have three key features: competitive grants, a program of information exchange, and coordinated delivery of expert assistance.

The Value of a Small Grants Program

The grants program would have a relatively small amount of money, so it is important that it be competition-based and flexible for two reasons: (1) to maximize efficiency, and (2) because of the fundamental premise that federal officials do not have all the answers. A competitive approach calls on the regions themselves to take the first step, which is to define the structure and objective of the initiative. Also, a flexible grants program can respond to the reality that economic and political boundaries are not always coterminous. The grants should be matched by industry contributions, he said—perhaps one to one from the beginning or increased gradually to that level as the economy recovers. Grants could be used for business incubators, training programs at universities, and technology transfer for small and medium-sized firms. States have little or no money available for such programs now.

Among the criteria for grant applicants is that proposers have a proven track record, strategies created with the private sector, and that efforts can move fast with impact. An important requirement, he said, is that the programs show how they will integrate smaller areas into larger

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

regional economies, combating the assumption that distressed areas are a “separate” part of the economy that cannot contribute. “We want to foster integration that brings strengths together,” he said. Among the criteria for selection is that the cluster consider goals in sectors of national priority, such as energy, health care, manufacturing, and life sciences. This would make clear not only the regional but also the national advantage of the activity. Not every place in the country has a cluster, he pointed out, so some grants should be smaller planning awards—for universities, regional governments, planning agencies—to help move such a region toward clustering. “That’s useful,” he said, “because it would help regional authorities make the right decisions about their comparative strengths.”

Data Exchange and Flow

The second key feature, data exchange and flow, is described expressly in the Obama Administration’s FY2010 budget submission. “It is an obvious point,” he said. “If we can all be on our PDAs during a conference, surely we can find ways to exchange information easily and efficiently between the federal government and regional clusters.” The federal government can provide data on cluster formation, performance, and composition from a national information center. Participants within the cluster can benefit by knowing what businesses are located there, or have filed patent applications, which helps understand the level of expertise in an area. Also, clusters have much to teach other clusters, which “is a fundamental aspect of what we ought to be trying to achieve here.” That could be done efficiently—not just through data exchange, but through the next point, which is learning. In short, policy should not only focus on knowledge as an output of a cluster, but on steps need to facilitate the sharing of knowledge within clusters. At the federal level and among regions, websites, wikis, and social networking help people exchange knowledge and understanding.

Forms of Assistance for Clusters

The third feature was “one-stop shops,” in acknowledgement of the need for people in clusters for some forms of assistance that require in-person consultation. The intended audience would be not only businesses, but also those who contribute to business success. The one-stop shop would not have all 250 federal programs related to regional economic development, but perhaps a selected few: e.g., existing Department of Commerce programs related to infrastructure, trade, and technology; programs of the Small Business Administration; the WIRED2 program of the Department of Labor; and other business-

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2The Department of Labor’s Workforce Innovation in Regional Economic Development (WIRED), was initiated in 2005. According to its website, it “goes

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

generating efforts with a regional focus. “The point is not to try everything at once,” he said, “but to align federal efforts with the expertise of the regions, to make sure the way the federal government acts in a region is suited to the region. The one-stop shop is not just a delivery mechanism; it’s a dialogue mechanism.”

TABLE 1 Potential Criteria for One-stop Shops

One-Stop Shops for Cluster Assistance
  1. Initial inventory of need: bottom up
  2. Importance of in-person expertise
  3. A cluster plan to share “shared advantages”
  4. Tight coherence between distinct federal programs
  5. Integrate distressed areas into larger regions
  6. Convenient location to existing regional offices

SOURCE: Jonathan Sallet, Presentation at June 3, 2009, National Academies Symposium on “Growing Innovation Clusters for American Prosperity.”

He suggested a pilot program that begins in two kinds of areas: those with many resources, and those with few resources. “We already know that some forms of federal assistance bring gains where there are resources on the ground. But other regions have few resources—just an SBA office and nothing else. We want to know whether long-distance professional assistance can add to those locations in useful ways.”

Locating the One-stop Shop

To win a one-stop shop, a region would be expected to complete a bottom-up inventory of need and demonstrate the value of in-person expertise. “It’s location, location, location,” he said. “We need to think about where they are. For example, they should be near existing regional offices.” In addition, a cluster plan should demonstrate how it would benefit from shared advantages, how it would enhance and make use of tight coherence between the distinct federal programs, and integrate distressed areas into larger regions. “We ought to be talking not only about why this is smart economics, but why it is smart public policy.”

He concluded by saying that the notion of clusters is based on a long history of academic scholarship that is rigorous and strong. He said that clusters have been implemented at the state level by Democratic and

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beyond traditional strategies for worker preparation by bringing together state, local and federal entities; academic institutions (including K-12, community colleges and universities); investment groups; foundations; and business and industry to address the challenges associated with building a globally competitive and prepared workforce.” <http://www.doleta.gov/wired/>.

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

Republican governors alike. The current proposal in the FY2010 budget has funding requirements that “are very modest by federal standards, and provides “a basis to think about federalism for the 21st century.”

“This is not just a question of top-down or bottom-up,” he summarized. “It’s the federal government having a defined role that is complementary to regional efforts. The federal government can frame national challenges, facilitate information exchange and learning, and fund the cluster efforts in helpful but not exclusive fashion.”

New York State’s NANO Initiative

Pradeep Haldar Energy and Environmental Technology Applications Center (E2TAC) Albany, New York

Dr. Haldar told a story of rapid technological evolution near Albany, New York, that in just a few years has produced a high-tech cluster so vibrant as to reverse the declining image and reality of the region. The story began in the 1990s, when much of upstate New York was in an “economic shambles,” he said. Manufacturing jobs were disappearing from every region: steel mills from Buffalo, high-tech Xerox and Kodak jobs from Rochester, the gas turbine division of General Electric from the capital. Traditional industries, such as textiles, shoes, and typewriters had long since conceded to foreign leadership. Albany itself was “a sleepy government town” of 800,000, including the surrounding area.

In the 1990s, then-Governor George Pataki gathered a diverse group of stakeholders to develop a strategy to revive the economic fortunes of the Upstate. They decided they needed an integrated R&D, education, and business strategy, built around a Governor’s Center of Excellence that was anchored by a university. They chose nanotechnology as the focus, and in 1993 launched a Center for Advanced Technology. This was joined in 1997 by a NanoFab 200 Building, and the following year the Semiconductor Industry Association (SIA) chose the site for a National Focus Center Consortium.

“When I arrived in 2001, it was mostly still a dream,” said Dr. Haldar. “We had about 40 people at the site, hoping we would create a great nanotech center. What we really needed was an ‘anchor tenant’ for our high-tech mall.”

Just such a tenant arrived, in the form of IBM, whose corporate headquarters were in suburban Armonk, New York. IBM decided in 2001 to build its new Nanoelectronics Center of Excellence in Albany, along with a consortium of partners. The following year, this news was followed by the announcement that SEMATECH would establish a new research center there, called International SEMATECH North. In 2002 a

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

TEL R&D Center was added, and in 2003 a NanoFab 300S, and in 2005 an ASML R&D Center.

A Nanotechnology College from Scratch

Still, these new enterprises all needed a highly trained work force, and university strength in engineering that was not locally available. The Albany campus of the State University of New York, built in 1999, had only one building, a great deal of green space, and no engineering department. The planners decided to build what they needed from scratch and, in 2004, a College for Nanoscale Science and Engineering (CNSE) was established. By 2007, it was ranked the number one college in the world for nanotechnology by Small Times Magazines, and today it has 48 faculty members and 150 graduate students. An undergraduate program is scheduled to begin in 2010.

TABLE 2 Infrastructure: Shared-use, Co-location Model

Key Features of the Albany NanoFabs

  800,000 square feet in facilities, including 80,000 square feet of 300 mm wafer clean rooms
  Partners include SEMATECH, IBM, AMD, Micron, Infineon, Tokyo Electron, and ASML among others
  Over $4.5 billion in assets, in addition to the buildings themselves
Over 2,200 employees within the complex

SOURCE: Pradeep Haldar, Presentation at June 3, 2009, National Academies Symposium on “Growing Innovation Clusters for American Prosperity.”

Once the CNSE was established, IBM’s consortium partners and other firms came to Albany as well, including Applied Materials, Micron, AMD, Infineon, and a NIST/Army partnership. Vistec closed its facility in Cambridge and moved it to Albany. In 2008, IBM announced a new $1.5 billion packaging R&D center. Today the “green space” holds a cluster of half a dozen major buildings, totaling about a million square feet.

Bringing in the Entire Value Chain

The “main mantra,” said Dr. Haldar, was industry-government partnership. In the last six years, about $4.5 billion have been invested by industry, seeded by less than $800 million in state investment, a leverage effect of six. Today the campus has more than 2,500 employees, which will grow to 2,900 by the end of 2009 when SEMATECH is scheduled to complete its move north from Texas. One objective, he said, is to bring together in a single cluster the entire value chain of the nanotechnology

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

industry. This includes not only manufacturers and end users, but also suppliers and construction firms.

Knowing What Industry Needs and How It Works

At the nanotechnology college, he said, one of the main strategies was to “break silos” and bypass ordinary departmental categories in favor of constellations of engineering and business people who could communicate easily. “Our model differs from traditional university setting,” he said. “Since we built from ground up, 70 percent to 80 percent of the people we hired came from industry, so they know what industry needs. Academics do good basic research, but in the future, universities are being forced to deliver for companies in exchange for support. The traditional model—do the research, throw it over the fence, try to license it—will not work.” CNSE does not rely on a tech transfer office, he said, which seldom produce income. “That’s a barrier we’ve broken down,” he said. “Instead, we partner with our industry and figure out ways to break down IP barriers. We’re not trying to make money at the college—the companies give us money in return for the research we do.”

The consortium now extends all the way from Buffalo to Long Island and includes more than 800 companies spread throughout the supply chain. These companies support more than 364,000 high-tech jobs paying average wages of more than $75,000. The cluster had become a one-stop shop for not only technology, but also for business, financing, IP, and eventually manufacturing.

The largest success story was the announcement by AMD that a fab, built in 2006 in Saratoga, would be expanded. “This will be the first green field manufacturing site built in the U.S. in 20 years,” he said. “It will need up to 6,000 highly skilled workers. They look at us to provide the technology, a lot of the work force, and the business connections they’ll need going forward.”

He said that the key drivers of the cluster have been the center of excellence model and creation of the college. “We created a lot from scratch. It looked crazy when we started 10 years ago. But looking back, we changed the paradigm.”

Bridging the Gap between Knowledge and Making Money

In summary, he said, the cluster is bridging the gap between the knowledge creation of the universities and the stage where companies begin to make money. The activities in this gap include business incubation, pilot prototyping, and test bed integration. “We do the entire gamut of what’s of interest to these companies.” Workforce development is a key component, including partnerships with community colleges, with K-12 schools, construction trades training, high school and

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

undergraduate internships, equipment supplier training, and institutes to develop the semiconductor workforce.

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FIGURE 1 A statewide industry, extending from Albany to Buffalo and NYC to North Country and Long Island.
SOURCE: Pradeep Haldar, Presentation at June 3, 2009, National Academies Symposium on “Growing Innovation Clusters for American Prosperity.”

He concluded by recalling that planners of the regional cluster wanted it to be a global force from the outset. “Our governor and industry leaders saw the vision of creating a real key gateway for industry clustering,” he said. “We had companies from all over, including Asia, come to work here. We have huge investments in a range of semiconductor technologies and we are looking at deploying them into every sector, including energy, wireless communications, automotives, aerospace, sensors, bio-health, and defense. Right now, we’re again in partnership with New York State to create clusters for green technology jobs. The applications of nanotechnology are just huge.”

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

The Technology Innovation Program: Connecting the Dots

Marc G. Stanley Technology Innovation Program National Institute of Standards and Technology (NIST)

Mr. Stanley began by noting the Obama administration’s strong interest in innovation. “I have never seen such enthusiasm,” he said, “which began with transition people coming to see us at NIST, trying to find ways we can be engaged.” Given that interest, he said, the challenge is to “find ways to remanufacture what we’re doing at the federal level so it gets to the states and is useful.”

Saying that the states can be considered “laboratories of democracy,” he offered a quote from former Justice Louis Brandeis: “There must be power in the states and the nation to remold, through experimentation, our economic practices and institutions to meet changing social and economic needs…It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments....”

Looking for Ways to Support Clusters

He said that the TIP would look for ways to support clusters and other state programs that share this spirit of adventure. TIP could do so, he said, by bringing federal R&D dollars and helping retain or develop high-tech industries. Indirectly, this would bring or maintain high-tech jobs and increase local revenues. It would also be consistent with national imperatives, he said, and administration priorities:

  • To use science, technology, and innovation to solve the nation’s most pressing problems, including affordable health care, climate-friendly energy, modern public safety networks, and advanced biomedical and stem cell research.
  • Promote a “transparent and connected democracy.”
  • Improve America’s competitiveness.

“I think this approach is essential,” he said,” and I think it will work. We all have a responsibility to help it work.”

Rejuvenating American Innovation

At the heart of the effort is the challenge to rejuvenate American innovation. He outlined several aspects of this challenge.

The first is to invest resources that are commensurate with the challenge. These resources include talent, in the form of an educated and motivated workforce; investments that provide resources for invention and innovation; infrastructure, including physical environments to

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

support innovation and business conditions that encourage risk-taking and collaborative endeavors. He noted that investments are a particular problem during the recession, when the venture capital community has reduced its investments in early-stage projects.

A second key to rejuvenating innovation is encouraging public-private partnerships at local, state, and federal levels. Useful partnerships may involve foundations, consortia of firms, philanthropists, corporations, venture capitalists, angels, and investors. Because each of these sectors has its own ideas and perspective, partnerships can develop and use more knowledge than individual actors can.

Rejuvenating innovation also needs policies that consistently reward invention, innovation, and competitiveness. He said that he had worked toward these goals for many years, and was familiar with how difficult it is to propel exciting discussions into actual implementation. “We all talk about it—and then it stops. Innovation is a change agent, and it takes a lot of hard work. Every other country is trying to do this.” He said that he had just talked to a group representing 40 companies based in France, and all of them wanted more information about the TIP program.

Joint Ventures Led by Universities

The TIP program itself, he asserted, had “changed the paradigm.” It is different from its predecessor as TIP focuses on early-stage basic research and investment in areas of critical national needs. Only small and medium-size companies were eligible to participate, and the majority of joint ventures were being led by universities.3 This, he said, represented a “huge shift.” TIP would still be involved in high-risk, high-reward research, but it would be targeted at critical national needs rather than open to all ideas.

The identity of TIP was shaped by its relationship to NIST, he said, which provided $65 million in funding for FY2009, including management of ongoing TIP and ATP awards. Because TIP is able to draw upon NIST’s scientific and technical expertise, it can more credibly and easily identify and select areas of critical national need for TIP funding and evaluate proposals. Among these national needs, he said, are building the smart grid electrical system, enhancing cyber security, and strengthening technologies, including those developed under ongoing ATP programs.

TIP uses a filter of critical national needs to shape its competitions and collaborative programs. Such a need is defined as “An area that justifies government attention because the magnitude of the problem is large and the societal challenges that need to be overcome are not being

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3Large companies may participate as joint venture members that fully fund their participation, as contractors, or as informal collaborators.

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

addressed, but could be addressed through high-risk, high-reward research.”

Key Features of TIP

He said that TIP has three key features. First, it emphasizes societal challenges that are not being addressed and that have potential benefits that extend significantly beyond the proposed project. Second, the program has exceptional scientific and technical ability to pursue high-risk, high-reward research. Third, the program has exceptionally strong potential to advance research, contribute to the U.S. science and technology base, and help the nation deal with major societal challenges. “What I’m interested in,” he said, “is investing in disruptive technologies.”

For eligibility in the TIP program, applicants can have one of several structures:

  • Single-company projects proposed by a small or medium-sized U.S. company (SME).
  • A joint venture of at least two for-profit U.S. companies with an SME as lead project.
  • At least one SME and one institute of higher education or other eligible organization, with the lead being either the SME or the institute of higher education.

Single-company projects may receive up to $3 million over a maximum of three years. Joint venture projects may be funded up to $9 million over a maximum of five years (these include direct project costs only). Cost sharing is required on a 50-50 basis, with matching funds including yearly total project costs (direct plus indirect). These may be a combination of cash and in-kind contributions.

He ended by asking for input from a host of external stakeholders and organizations to uncover needs not yet being addressed. For example, at the end of 2008, TIP issued a call for white papers on critical national needs. TIP has so far identified civil infrastructure and manufacturing as areas of critical national needs.4 It has also highlighted five “interest areas”: energy, green technologies, health care, networks, and water. “What I need from you,” he told the participants, “are your views about what we should be focusing on. Most of all, we need innovators who will strengthen U.S. global competitiveness.”

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4The 2009 TIP competition for civil infrastructure projects emphasized two elements: (1) inspection and/or monitoring technologies; and (2) repair/retrofit materials and application technologies. The competition for manufacturing also emphasized two elements: (1) process scale-up, integration, and design of advanced materials; and (2) predictive modeling for advanced materials and materials processing.

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

Discussion

Sam Morris of the Association of Public and Land Grant Universities asked for additional comment on the role of university leadership in the Albany initiative. Dr. Haldar said that the university played the central role in bringing together both public and private partners. “If we had not played that intermediary role,” he said, “competing companies wouldn’t have wanted be part of the process. Being neutral let us get people together, and to convince government to make the substantial investment in infrastructure to make it happen.”

Dr. Eisen asked about how best to build support for regional programs. She said that the Department of Commerce had been criticized for trying to impose industrial policy from the top down. “While we appreciate the advantage of federalism and regional approaches,” she said, “how do we talk to people outside this room?” Mr. Sallet suggested that she “try a little tenderness.” He noted that the Congress was debating funding for this area, and that they must hear about advantages of policies at state and regional levels. He said that committee members need to hear from governors and other local leaders. “Maybe the 21st century paradigm,” he said, “is that states lead, and the federal government facilitates.”

The Issue of Picking Winners

Dr. Wessner raised the issue of winners and losers, which he said is usually applied in a misleading fashion during debates about federal support for innovation. He noted that the U.S. and state governments—like industry—had always picked and favored “winners,” as have other governments around the world. For example, choices have to be made in defense procurement and those choices are often decisive. More broadly, it is easy to forget that government policy and support played key roles in industries as diverse as radio, aircraft engines, radar, computers, semiconductors, nuclear power and, more recently, GPS and the Internet. Some distinguished economists, such as Vernon Ruttan have argued that most major industries, agricultural sectors, and other exporters owe at least some of their success to some form of public subsidy.5 A key point to keep in mind is that the rest of the world is not worried about whether they should support local “winners”; their only concern is how.

Dr. Haldar said that the Albany project was not built with federal money because New York State was then “flush with cash,” but that more recently they have received more federal grants. In terms of choosing winners, however, he said that the decision to give SUNY/Albany, a liberal arts school, $100 million for nanotechnology

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5Vernon Ruttan, Technology, Growth, and Development: An Induced Innovation Perspective, Oxford: Oxford University Press, 2001.

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

was certainly a case of choosing a winner, and one that had paid off many times over.

Mr. Sallet said that while he did not predict that the government would ever select which firms would succeed, he did see it creating more institutions that would be “public goods that create shared advantages to the benefit of communities that assist universities and businesses alike,” he said. “They do not look like anybody’s depiction of industrial policy, but this will be a formulation that is important for us to use.”

Steve Crawford of the Brookings Institution followed up with a question about the Sallet report. He said that while economies and innovation are regional, it is difficult to match them with programs because of “dozens of competing townships, cities, and other entities.” He suggested that EDA reorganize itself around the concept of regions, and help them coordinate infrastructure and workforce investments. He proposed “extra points” for an economic region that is coterminous with a political region, such as a city, to better align these efforts. “Otherwise,” he said, “there is a real tension.” Mr. Sallet said his proposal intended to use grants as incentives to promote clusters and regional cooperation. Having grants go to an economic rather than political unit, he said, would be an incentive for regional cooperation. But, he added, small planning grants could be used by those with a regional understanding of networking. He concluded that “your point is important.”

Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×

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Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×
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Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×
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Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×
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Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×
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Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
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Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
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Page 62
Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
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Page 63
Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
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Page 64
Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×
Page 65
Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×
Page 66
Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×
Page 67
Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×
Page 68
Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
×
Page 69
Suggested Citation:"PANEL II: REGIONAL INNOVATION CLUSTERS: THE OBAMA ADMINISTRATION'S INNOVATION INITIATIVE." National Research Council. 2011. Growing Innovation Clusters for American Prosperity: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/12926.
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Page 70
Next: PANEL III: STATE AND REGIONAL INITIATIVES »
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Responding to the challenges of fostering regional growth and employment in an increasingly competitive global economy, many U.S. states and regions have developed programs to attract and grow companies as well as attract the talent and resources necessary to develop innovation clusters. These state and regionally based initiatives have a broad range of goals and increasingly include significant resources, often with a sectoral focus and often in partnership with foundations and universities. These are being joined by recent initiatives to coordinate and concentrate investments from a variety of federal agencies that provide significant resources to develop regional centers of innovation, business incubators, and other strategies to encourage entrepreneurship and high-tech development. This has led to renewed interest in understanding the nature of innovation clusters and public policies associated with successful cluster development.

The Board on Science, Technology, and Economic Policy (STEP), conducted a symposium which brought together state and federal government officials, leading analysts, congressional staff, and other stakeholders to explore the role of clusters in promoting economic growth, the government's role in stimulating clusters, and the role of universities and foundations in their development.

Growing Innovation Clusters for American Prosperity captures the presentations and discussions of the 2009 STEP symposium on innovation clusters. It includes an overview highlighting key issues raised at the meeting and a summary of the meeting's presentations. This report has been prepared by the workshop rapporteur as a factual summary of what occurred at the workshop.

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