Six keys to unlocking a new era of place-based federal investment

HUDSON, OH - JULY 28, 2018: A view along North Main Street with shops, cafes, and businesses as the charming small town comes to life on a sunny Saturday morning in northeast Ohio.

The first years of the 2020s have forced the United States to contend with a litany of major issues, including the COVID-19 pandemic, digital disruptions, climate change, racial and gender divides, and the continuing need for more middle-class jobs. But they have also ushered in a period of bold, urgent responses. Across the federal government, agencies are launching larger-scale, more in-depth initiatives for accelerating innovation, optimizing supply chains, mitigating climate change, and addressing demographic and geographic inequities.

An important part of this response is the surge of programs using place-based, challenge-oriented designs to generate experiments with the potential to fix the nation’s largest problems, as displayed first by the Economic Development Administration’s (EDA) $1 billion Build Back Better Regional Challenge (BBBRC).  

These experiments see federal agency leaders mobilizing regional networks, building collaborative financing approaches, and aligning it all with the nation’s most urgent priorities. They are also piloting a new era of national problem-solving across geographies and in service of economic inclusion.  

Specifically, the BBBRC provides five-year grants ranging from $25 million to $65 million across 21 competitively selected regions. These investments will support the local development of nationally critical technology clusters, and attempt to do so in ways that deliver economic opportunity to traditionally underserved people and communities. 

In that context, it is well worth the effort to study the initial blueprint of early programs like the BBBRC, with an eye toward extracting guidance for the $77 billion in new place-based programmatic investments in the coming years. In a Brookings report published earlier this month, we distilled six key policy design features that inform this new era of place-based economic policymaking: 

  1. Macro-relevant. The BBBRC’s design positions place-based actors as critical contributors to national missions and problem-solving. Regional applicants situated their cluster opportunities as responses to national needs articulated by the EDA, including global supply chain disruptions, the public health crisis, economic security priorities, and the decarbonization push. This framing ensures clusters focused on battery technology, semiconductors, biotechnology, and agriculture technology are positioned not just as regional revitalization strategies, but as investments of national and global importance. 
  2. Micro-based. At the same time, the BBBRC calls forth grounded problem-solving. National competitiveness derives, in part, from strong industry clusters rooted in geography. Macro success therefore involves getting the micro conditions right. Moreover, significant national and global forces often feel too disconnected from local civic concerns such as access to education and skills, good jobs, and quality neighborhoods. Place-based programs can translate macro concerns into the language of local actors, creating civic and political coalitions to address challenges in new ways.
  3. Network-focused. No single institution typically has the knowledge and capacity to execute transformative regional economic strategies on its own. Cluster development—because of its reliance on university-based research and talent, industry partnerships, and government funding and coordination—is uniquely dependent on networks of institutions working seamlessly across a unified vision. The BBBRC’s innovation was requiring a dynamic leader (the “regional economic competitiveness officer”) to recruit, organize, and drive these institutional networks toward a shared strategy. 
  4. Competition-driven. The BBBRC drew over 500 applicants, and its competitive nature was critical in mobilizing regions and consortia, avoiding “business-as-usual” approaches, and catalyzing local urgency and financing. Indeed, the competitive structure—coupled with its significant resources—likely motivated new institutional networks to rally around a shared agenda.
  5. Learning-enabled. The BBBRC’s designers put continuous learning and technical assistance at the core of the challenge, knowing that the process would push regional leaders to the limits of their capacity. By establishing a community of practice, offering pre-development resources to lower-capacity regions, and helping applicants learn from one another, the EDA has built a model for other federal agencies executing such programs.
  6. Risk-adjusted. The BBBRC’s 60 finalists and 21 awardees cut across a wide swath of industries, communities, and opportunities. The reviewers had to balance several factors: likely effectiveness based on cluster maturity and potential; equity concerns; contribution to national priorities; and fairness across the urban, rural, and tribal spectrum. Ultimately, the EDA created a balanced, risk-adjusted portfolio of grantees. As with investing, the program’s success will be measured at the portfolio level, as success will vary across individual awardees.

The BBBRC represents the early stages of a major federal investment agenda to create better, more accessible jobs in the nation’s regional economies. In addition to the EDA’s efforts, there are tens of billions of dollars in other new place-based programs inside the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the Inflation Reduction Act. As federal leaders design those programs and regional and state leaders seek their funding, we hope this initial analysis proves useful in undertaking such critical work. 

This report was prepared by Brookings Metro using federal funds under award ED22HDQ3070081 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.