Budget 2010: A New Embrace of Regional Innovation

The in-depth versions of President Obama’s first budget released in early May detail a number of significant direct and indirect investments in the innovation capacity of U.S. metropolitan areas. Several of these proposals reflect ideas generated by Metropolitan Policy Program (MPP) experts.

Metropolitan Policy Program’s Blueprint for American Prosperity has long linked national economic recovery and competitiveness directly to the innovation capacity of metros.

Numerous Blueprint papers argue that smart investments in science, technology, R&D, and other innovation assets are crucial drivers of productive growth in America—growth that continually creates quality jobs and rising wages. Along the way, Blueprint authors have argued that the federal government—after years of drift—should: embrace innovation as an explicit national priority; increase federal science and R&D efforts, especially in clean energy technologies; support regional industry clusters; and in general encourage technology adoption—all activities that will stimulate both metropolitan and national vitality. Along these lines:

• DOE has now requested $280 million to fund the establishment of eight new Energy Innovation Hubs aimed at supporting “cross-disciplinary research and development focused on the barriers to transforming energy technologies into commercially deployable materials, devices, and systems.” This initial set of research hubs will explore such topics as low-cost solar electricity, batteries and energy storage, grid technology, energy efficient building systems, and the creation of fuels directly from sunlight. And they will seek to do this by replicating the success of the department’s three regionally sited Bioenergy Research Centers. In short, while much remains to be ascertained about the proposed hubs, it is now clear that a key link in MPP’s vision of a multi-dimensional metro-focused federal innovation stance may be heading toward implementation.
• Across programs that invest in general innovation activities across all places (but which inordinately boost metros), the detailed budget documents call for significant added appropriations especially in R&D. The National Science Foundation, for example, calls for an 18.4 percent increase in basic research funding from $4.84 billion in FY2008 to $5.73 billion in FY2010. These increases would seek to “advance discovery, innovation, and education beyond the frontiers of current knowledge and empowering future generations in science and engineering.” The new detailed document also calls for a similar boost in funding for the foundation’s Office of Education and Human Resources (from $766 million in FY2008 to $858 million in FY2010) which runs programs that promote a diverse, competitive, and globally engaged U.S. science, technology, engineering, and mathematics (STEM) workforce, as well as scientifically literate citizens.” Such infusions have been a steady theme of the Blueprint in reports such as “MetroNation: How U.S. Metropolitan Areas Fuel American Prosperity” and “MetroPolicy: Shaping a New Federal Partnership for a Metopolitan Nation.”

• Similarly, the detailed FY2010 budget increases the budget for the National Institutes of Standards and Technology (NIST), an important agency for promoting U.S. innovation, by more than 20 percent to $535 million from a FY2008 level of $441 million. Two signature NIST programs, the Manufacturing Extension Partnership and the Technology Innovation Program, would see an increase in their combined budget appropriations, from $155 million in FY2008 to $195 million in FY2010. The Brookings policy paper, Boosting Productivity, Innovation, and Growth Through a National Innovation Foundation, stressed strongly the importance of NIST and the success of MEP and TIP in spurring innovation by facilitating technology dissemination and adoption.

Beyond these expansions of broad, mostly aspatial innovation programs, the more detailed budget documents reaffirm the administration’s embrace of the Metro Program’s promotion of regional industry clusters as a crucial object of federal focus.

In this respect, one of the most gratifying single items in the Obama budget—from a metropolitan point of view—may be the Economic Development Administration’s request for $50 million to establish a national research and information center on the geography of regional innovation clusters and award grants to foster and strengthen local cluster initiatives to boost job creation and economic growth.

This reflects the recommendations Blueprint authors Karen Mills, Elisabeth Reynolds, and Andrew Reamer made in the paper, “Clusters and Competitiveness: A New Federal Role for Stimulating Regional Economies” last spring. And so it picks up on a signal tenet of the Blueprint: that metropolitan regions—and regional industry clusters—represent a potent source of innovation and therefore productivity at a moment of national economic crisis. If this proposal is enacted, federal policy will take one more step toward absorbing MPP’s integrated vision of a federal partnership to catalyze regional innovation that at once leads by investing in R&D, empowers regions’ self-help by supporting local cluster initiatives, and seeks to maximize the effectiveness of all efforts through the provision of top-quality information and performance measurement.

Such a vision would seem an attractive one in the coming months as Congress turns to considering a budget that in many respects offers an important new view of what drives local—and national—prosperity.