If the Biden administration pours money into regional tech clusters, can it replicate the bustling success of North Carolina's Research Triangle Park, or Boston’s biotech hotspot, around the country? That’s the rationale behind Tech Hubs, a program brought to life by the CHIPS and Science Act. The idea is to invest billions of targeted dollars into different American cities and states to create jobs and companies around technologies of the future, like quantum, semiconductors and personalized medicine. On Tuesday, the Commerce Department announced a dozen winning proposals across 14 states — each securing between $19 million to $51 million. The program was supposed to eventually set up at least 20 hubs in the American heartland, but Congressional appropriators have thrown a wrench in those plans. So far, they have only released $514 million of $10 billion that lawmakers imagined for the program over the next five years. President Joe Biden has asked for Tech Hubs to get an extra $4 billion, but House Republicans are heading into next week’s spending markups with a proposal that would slash the budget of the Commerce Department office implementing the hubs by about a third. So, is it still possible to create hubs for complex technology with much smaller infusions of federal cash? This steers directly into even bigger questions around the policy, like why should the U.S. seed regional innovation with government funding in the first place, and what is needed to make that work? I put those questions to Mark Muro at Brookings Metro, who has been thinking about the idea of new growth centers for a while (his 2019 paper made the case for a federal program to spread tech innovation across America and is credited with getting the ball rolling in Congress). Tech Hubs, he said, is meant to solve two major problems. The first is the glaring concentration of benefits from the tech boom of the last two decades. Commerce Secretary Gina Raimondo highlighted that disparity in her remarks on Tuesday’s announcement. From 2005 to 2017, just five places (you can probably guess which ones) experienced 90 percent of innovation sector growth, according to Muro, leaving much of the country to stagnate or move backward economically. The other big motivator was losing ground to rivals like China. “There’s a need to jumpstart advanced industry growth, and then there's a need to make sure that we're accelerating the growth of advanced industries in all kinds of communities, not just Silicon Valley and Boston,” Muro said. One winning hub in Indiana — already home to industry giants like Lilly and Elanco — is trying to make the state a global leader in biotechnology and manufacturing. The Heartland Bioworks Tech Hub is getting $51 million for four projects, and they have a laundry list of goals. By the end of the decade, Indiana’s hub aims to launch at least 40 companies, get 50 products through FDA approval, place 970 graduates in entry-level positions, generate $2.6 billion in economic output and give grants to 36 innovators through a new venture-backed mentorship network. Another winner is the South Florida ClimateReady Tech Hub, which aspires to build and commercialize sustainable and resilient infrastructure solutions for a changed climate with $19 million. Its targets within the next five years include launching dozens of startup demonstrations for energy, cement and coastal defense technologies; capturing a share of those markets; providing training for 2,800 job seekers and placing 1,800 employees. That’s a huge menu. How will we know if this all worked? Kenan Fikri, a research director at the D.C.-based Economic Innovation Group think tank, suggested evaluating the hubs in stages. “In the near term, you might see the basic measures of programs stood up and students attended, or facility construction complete,” he said. Later, startup activity, including the number of new firms and jobs associated with them, would be an especially important marker. The ultimate goal is a transformative effect — one that’s obvious once achieved, but difficult to describe in tangible terms, or measure. The Richmond Federal Reserve actually did try to evaluate previous place-based economic policies earlier this year, and found them resistant to quick measurement. Tech Hubs, even at its shrunken size, is larger than many past place-based interventions. That’s a change that experts say would make this program different from historic attempts and hopefully, shield it from their past pitfalls. One other issue is how to keep growth alive. A look at some of the most successful tech regions in the country shows that sustaining a hub requires much more money. In 2017, North Carolina’s Research Triangle Park secured $2.7 billion in federal research funding, Boston institutions received $2.9 billion and the San Francisco Bay Area received $3.3 billion, according to a Brookings Institution analysis Muro said the Tech Hubs program should be seen as a gamble, and cautioned against expecting each one to take off. “The wise way to view it is as a portfolio, somewhat akin to an investment portfolio, or even a venture portfolio, in which there are some breakout successes, and there are some others that go sideways,” he said. “Most of them will make some strong progress.” If Congress does give the program more funding, the administration will have a dilemma: infuse more money into these winning hubs or invest in additional places. Raimondo recently hinted that the administration appears to be leaning toward seeding new projects, telling reporters there are 19 other finalists with great potential. Muro has a different view. “My priority would be to do more in the same number or fewer places to truly respond to that aspiration towards transformation,” he said. “Those of us who were developing these ideas started, in part, with an impatience with [the] small-ball [approach] and thought that we need to really try making some really big investments and see what happens.”
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