Sizing and seizing Washington’s $40 billion down payment on place-based industrial policy

Though President Biden and Vice President Harris are leaving office in January, the ramifications of four pieces of economic legislation the Biden-Harris administration passed with the 117th Congress will continue to impact local economies across the country.  

The American Rescue Plan Act (ARPA), Bipartisan Infrastructure Law (BIL), CHIPS and Science Act, and Inflation Reduction Act (IRA) signified a new federal commitment to building the productive capacity of the nation—and importantly all its regions—to respond to global geopolitical competition, the ongoing threat of climate change, and economic inequities that have left many people and places behind. 

Those three objectives—national security, energy abundance, and place-based economic opportunity—uniquely converge in a nearly $80 billion portfolio of “place-based industrial policies” authorized by these major bills. A prior Brookings Metro report selected place-based industrial policies using a two-part definition, requiring that such strategies should:  

1. Encourage economic transformation through interventions in key industries 
2. Explicitly leverage concentrations of talent, suppliers, and knowledge that cluster and interact in place to spur development 

This brief offers a first-of-its-kind analysis of the technological, geographic, and socioeconomic footprint of public investments flowing from place-based industrial programs. It finds that:  

• Nearly $41 billion has been awarded across 13 programs, which are distributing funding via two mechanisms: company-level investment incentives (94%) and coalition-based economic development grants (6%).  
• Technologically, most of the funding has targeted three strategic sectors—semiconductors, batteries, and clean energy— primarily through these company-level investment incentives.  
• Geographically, place-based investments are landing in 50 states, but total funding is relatively concentrated. The top 10 recipient labor market areas (LMAs) have been awarded more than three-quarters of the overall funding.  
• Economically, coalition-based economic development grants were more likely to award funding to employment-distressed communities rather than company-level incentives.  

Going forward, government, industry, and community actors all have a role in maximizing the economic benefits of this place-based industrial policy agenda. In Washington, Congress can finish the job it started by fully funding key aspects of this portfolio, including the $17 billion in authorized but unappropriated funds for the National Science Foundation (NSF) Regional Innovation Engines program (Engines), the Economic Development Administration (EDA) Regional Technology and Innovation Hubs program (Tech Hubs), and the EDA’s Recompete Pilot Program (Recompete). Yet there is considerable political uncertainty around future funding.  

Acknowledging that, the ultimate economic outcomes of this $41 billion investment will be determined in dozens of cities, metropolitan areas, and rural communities across the country. So we conclude the brief with clear implications for implementers, investors, and evaluators that want to co-invest in this generational economic development opportunity.  

Explore the tracker 

Place-based industrial policies have directed nearly $41 billion to regions since 2021 

This analysis draws on federal reporting data, award announcements, and preliminary terms of agreement across 13 place-based industrial programs authorized by the American Rescue Plan Act, Bipartisan Infrastructure Law, and CHIPS and Science Act.  

Overall, nearly $41 billion has been awarded across these 13 programs through September 2024.¹ Awards from these programs differs from the requisite programmatic authorizations of more than $77 billion for three reasons. First, not all funding was meant to be distributed yet. Funding from the $10 billion Regional Technology Hubs program, for example, was designed to be distributed over 5 years, starting in 2023. Second, for many place-based programs, congressional appropriations have considerably lagged authorizations; the Regional Technology Hubs program has only received $500 million of what should have been a $2 billion appropriation from Congress. Third, overseeing agencies are still in the process of awarding some funds that have been fully appropriated by Congress.   

To date, most place-based industrial funding is targeted to companies. Of the $41 billion, roughly 94% takes the form of company-level investment incentives, including direct incentives, cost-share agreements, and grants. Fully 80% of the awards ($33 billion) have come from the CHIPS Incentives Program, a $39 billion program to bolster domestic semiconductor production.²ii An additional $6 billion in company-specific incentives have also been awarded through several U.S. Department of Energy programs focused on clean power generation and energy supply chain resilience, such as the Clean Energy Demonstrations on Current & Former Mine Land and the Regional Clean Direct Air Capture Hubs programs.  

Even though these programs provide resources directly to companies, not places, we consider them “place-based” because they are funding specific facilities and projects in particular places with associated milestones, not just general funds for companies. While the companies decide the locations for their own investments in a production facility, not the government, the conditions of the company-level investment by the government included objectives around cluster-based economic development and explicit mandates or suggestions for companies to partner with regionally based institutions focused on innovation, education and training, infrastructure development, housing, and community-building. In effect, federal policymakers want to use catalytic private investments to create self-sustaining clusters in key strategic sectors.  

The remaining $2.5 billion has been awarded through region-level economic development programs such as the Tech Hubs, Engines, the EDA’s Build Back Better Regional Challenge (BBBRC) grant program, and Recompete Pilot Program. Unlike the industry-specific nature of programs like the CHIPS Incentives Program, these funding opportunities invest in economic development strategies designed and executed by place-based, multi-sector civic coalitions. Awarded regional coalitions are using this funding to revitalize their regions’ existing industry clusters, strengthen their competitiveness in emerging technologies, and provide economic opportunity for historically excluded communities. Yet, as Table 1 illustrates, appropriations for the region-level economic programs funded through the CHIPS and Science Act have lagged well behind the amounts authorized by Congress.  

The key industries and technology areas being targeted by federal investments vary significantly across programs, agencies, and policy domains. We find that across our universe of place-based industrial programs, investments made through company-based investment incentives are concentrated in high-priority strategic sectors such as semiconductor and microelectronics manufacturing, battery manufacturing and energy storage, and biopharmaceutical manufacturing, while region-level challenge grant funding is distributed across a wider set of sectors and technologies (see Table 2). This is illustrative of the bottom-up design featured across these programs, where regions were empowered to develop visions for economic prosperity and resiliency based on their unique industry and socioeconomic contexts.    

Though 30% of labor market areas received at least one place-based industrial policy investment, just 10 labor market areas have accounted for 78% of total funding 

Place-based industrial policies seek to support nationally strategic sectors in ways that explicitly leverage concentrations of talent, suppliers, and knowledge in a particular place, offering notable economic development opportunities for recipient communities.  

To match funding to places, we used federal reporting data, award announcements, grant documentation, and applicant-defined project descriptions to identify the anchor location of each grant’s lead awardee.³ We then aggregated these data by regional labor shed to more accurately represent the composition of the U.S. population and workforce that live and work in near-enough proximity to a federal investment such that they may benefit from ensuing growth and jobs. This report uses regional labor market areas (LMAs) instead of other higher-level aggregate geographies (such as metro areas) to ensure that workers in suburban, micropolitan, and rural counties are not undercounted (as labor market areas are mutually-exclusive and collectively exhaustive of all U.S. counties, while only around one-third of counties are located in a metropolitan area).  

Overall, we find that 169 of the U.S.’s 590 labor market areas (29%) have received (or are set to receive) at least one award from a place-based industrial program. In total, these labor markets generated nearly three-quarters of the nation’s economic output in 2023 and contained approximately 72% of the national population. By this metric, a relatively broad swath of communities across the country will likely benefit from these programs.  

Of these 169 labor market areas, 123 have received capacity-building grants to construct place-based economic strategies. These grants, typically between $100,000 and $1 million, have helped local communities design and refine investable strategies. Navajo Technical University, for example, was awarded a $1 million strategic development grant for their NSF Regional Innovation Engines proposal, which sought to engage tribal communities and Native workers in the aerospace industry emerging in Arizona and Nevada. While these grants did not themselves provide implementation funding, the multi-phase challenge grant processes through which they were deployed provided regions with the capital and guidance necessary to refine, improve, and expand upon their proposed economic development strategies. Demand is quite high for these planning resources. For example, EDA received more than 2,000 initial applications for its four major place-based programs.⁴  

Awards made through these programs to-date suggests that this accelerated, well-resourced investment in capacity-building has paid off. Of the 123 labor markets that received capacity-building/strategic development grants, 49 (40%) have also received one or more implementation grants from programs such as the BBBRC, Recompete, Tech Hubs, and Engines, which have so far invested more than $2.3 billion across 70 regions. These grants, which total as much as $65 million, often support a portfolio of project-based investments in industrial innovation, workforce development, infrastructure, and entrepreneurship.  

These programs have sought to grow key industries in parts of the country historically left behind by previous waves of growth, such as coal communities in Appalachia and tribal communities across the Great Plains. West Virginia’s ACT Now coalition, for example, will deploy nearly $63 million in implementation funding from the Build Back Better Regional Challenge grant into projects supporting the Huntington region’s economic transition from coal to solar, creating high-wage jobs in counties that have struggled with persistent economic distress. 

Finally, the largest individual place-based investments occurred through company-specific incentives to manufacturers in key strategic sectors, such as the CHIPS Incentives Program, Regional Clean Hydrogen Hubs, and the Battery Materials Processing & Manufacturing Recycling Grants Program. Fifty-nine labor market areas have received a company-specific incentive. The Phoenix labor market area exemplifies this trend. Phoenix is set to receive nearly $10 billion from place-based industrial programs, by far the highest concentration in the country. All this funding will be distributed through direct incentives to companies to help catalyze over $100 billion in private investment in semiconductors, battery manufacturing, and clean power generation flowing into Maricopa County.  

The tremendous relative scale of the company-specific incentives concentrates the overall place-based industrial policy portfolio in a relatively small set of LMAs. Indeed, over three-quarters (78%) of allocated funding is concentrated within ten labor market areas receiving at least $500 million from place-based industrial programs. Beyond Phoenix, these LMAs include Austin, Texas; Syracuse, NY; Portland, Ore.; Columbus, OH; Albany, NY; Boise, Idaho; Dallas; Salt Lake City; and Clarksville, Tenn.   

Region-level challenge grants were more likely to benefit distressed labor markets than company-level incentives 

As the national economy recovered from the COVID-19 pandemic, much of the discourse surrounding federal investment has focused on supply chain resilience, national security, and the reshoring of American manufacturing. Yet the implementation of the federal government’s industrial strategy since 2021 has come with a dual mandate for growing the economy “from the middle out and bottom up” by prioritizing strategies that create good jobs, catalyze economic opportunity, and provide economic redress for historical discrimination, exclusion, and other harms against low-income workers and workers of color. Understanding the geography of these place-based industrial investments, then, allows us to not only identify where money is flowing but also whether the federal government is living up to its intent of investing in people and places that have historically been left behind.  

To assess whether federal investments are truly reaching left-behind places, we group labor markets into quintiles based on the share of each region’s population that lives in an employment-distressed county (defined as having a prime-age employment gap of over 5.0% and median household incomes below $75,000 per year). Our analysis finds that the most distressed labor markets—those in the top-20th percentile of employment distress—have received $1.8 billion in place-based industrial investment, accounting for approximately 4% of all awards. These labor markets account for 13% of the U.S.’s overall population and generate approximately a tenth of the nation’s gross domestic product, indicating that, in total, investments from place-based industrial programs in these regions is incommensurate with their economic and social contributions. These totals, however, are skewed significantly by the 10 non-distressed labor market areas receiving more than $500 million each in federal investment (and account for 78% of investment overall).  

When restricting our analysis to challenge grant programs, inclusive of both capacity-building grants and implementation grants, we find that distressed LMAs have awarded 16% of federal investment to-date, exceeding their share of national population and GDP. This makes sense, given that these region-level economic development grants were explicitly focused on extending growth and opportunity to historically excluded communities.  

We can further see how shares of investment in employment-distressed regions vary by key technology area and cluster focus. Despite semiconductors and microelectronics accounting for nearly 80% of place-based industrial funding announced to-date, none of these awards are in the most employment distressed labor market areas (although many have distressed communities within larger non-distressed labor market areas).  

This may illustrate the importance of policy provisions in the Bipartisan Infrastructure Law, Inflation Reduction Act, and American Rescue Plan Act that prioritize or incentivize investments in distressed, low-income, or otherwise disinvested communities. While the CHIPS Incentives Program does require companies vying for funding to develop equitable workforce strategies (and provides direct resources to companies to execute those strategies) and demonstrate how underrepresented businesses will benefit from operating activities, it does not include provisions that incentivize firms to locate in disinvested or employment distressed communities.  

Conversely, challenge grant programs such as the Build Back Better Regional Challenge grant and Recompete Pilot Program, both of which have distributed funding across a wider array of technology area and industry clusters, were programmatically designed to ensure that federal funding reached historically left-behind places. Similarly, programs such as the Battery Materials Processing and Battery Manufacturing Grants Program and Advanced Energy Manufacturing and Recycling Program were designed to ensure that at least 40% of investment benefits would reach “underserved and overburdened communities,” and incorporated award selection criteria that prioritized proposals that would create workforce opportunities in low-income communities and communities that have struggled with industry shocks/labor market displacement. These design features have resulted in a much larger share of investments in battery manufacturing and clean power generation flowing to distressed communities.  

How a whole-of-country development approach can build on this $40 billion 

The place-based industrial programs analyzed in this brief constitute a notable policy experiment for a nation experiencing uneven economic progress over the past four decades. The reality, though, is that the experiment remains unfinished and underfunded relative to its potential. In the coming years, Congress should fully appropriate an additional $17 billion in authorized funding for Tech Hubs, Recompete, and Engines, delivering on the bipartisan ambitions around economic and national security that enabled the CHIPS and Science Act’s passage in 2022.  

Of course, there is newfound uncertainty for place-based industrial policy in the aftermath of the 2024 election. The new Trump-Vance administration and incoming 119th Congress may choose a different policy path toward reindustrialization, focusing more on trade policy than direct public investment.  

Acknowledging this uncertainty, the center of gravity for place-based policymaking was already shifting from Washington to local and state leaders—working in collaboration with industry—to implement and sustain this place-based development agenda. The $40 billion investment from these programs—and the hundreds of billions of dollars in incentivized private investment in strategic sectors—can catalyze high-value economic development pathways in dozens of cities, metropolitan areas, and rural communities across America.  

Seizing this opportunity will require a whole-of-country undertaking, one that federal policymakers can continue to catalyze but will be ultimately delivered by other portions of America’s complex multi-level federalist system. And because different local economies have different starting points, assets, challenges, and resources, this will not be a one-size-fits-all strategy. Indeed, the federal funding map provided in this analysis can also serve as a strategy and investment roadmap that is at once nationwide and place-specific. The analysis reveals three regional archetypes, each of which needs different supports going forward. We conclude with implications for strategies, investors, and evaluators of place-based economic strategies across these archetypes.  

Archetype 1: Regions that need planning resources to develop an investment-ready strategy 

Leaders in every local community want a future in which their residents and communities have the resources to thrive in the modern economy. But currently the demand for strategic planning resources exceeds the supply. As evidence, the Economic Development Administration received nearly 2,000 initial applications for its four major place-based programs, yet was only able to distribute strategy development grants to a fraction of those communities.  

Indeed, these competitions also revealed that many applicants had strong visions but did not have an investable strategy to operationalize that vision. The 144 regions that received capacity-building and strategy development grants through these programs are an important start, but there are still hundreds of communities that need resources to develop investable strategies. The evidence from these place-based policies is that a region can move from a high-level vision to an investable strategy through $500,000 planning grants. A wide variety of investors (federal agencies, states, philanthropies) can provide geographically widespread funding to ensure every region in the nation has an investment-ready economic strategy, especially in rural, tribal, and other under-resourced parts of the country.  

Archetype 2: Regions that need capital to operationalize investment-ready strategies 

Most local labor markets in our analysis have only received a strategy development and/or capacity-building grant. Acknowledging that they did not have enough implementation dollars to fund every investment-worthy strategy, place-based program designers often used multi-phase competitions that involve both planning and implementation grants to help coalitions make their strategies more attractive to other investors should they ultimately lose out on federal funding.  

The map below showcases the diversity of communities with investable strategies but that did not receive federal implementation funding. Ideally led by full appropriations for federal programs, national, state, and philanthropic funders can support investment-ready strategies on this map that align with their funding priorities. 

Archetype 3: Regions that need capacity-building resources to deliver on major awards 

As “winners” of these competitions, regions that have received larger-scale public and private investment may not seem like they need additional support. Yet the company-level incentives do not always provide flexible federal investments to support local civic capacity. That means that the collaborative capacity required to translate these investments into economic opportunity is often sub-scale, even in the highest capacity regions. That is a clear takeaway from Brookings Metro’s case studies from the Build Back Better Regional Challenge and our lessons learned from working with an “Implementers Network” of seven regional coalitions implementing major industrial policy investments across the country.⁵  

These policy archetypes result in regional leaders being tasked with a very complex mission from federal policymakers: grow new clusters of industry and innovation and do so in inclusive and environmentally sustainable ways. That mission demands greater place-based implementation capacity among government, non-profit, and higher education institutions. But it also requires something more foundational, given the scale of the mission: modernized regional platforms for collaborative decisionmaking, monitoring and evaluation, and capital acquisition. National, state, and philanthropic funders can help regions build these modernized regional economic platforms that can enhance strategic performance, ensure transparency in oversight and decisionmaking, and engender greater civic trust.  

Federal funding has helped regions invest in clusters of technology, innovation, and competitiveness that will power U.S. economic growth and strengthen national security. But very real questions remain about whether America’s complex multi-level governing system can marshal the vision, capital, and governing capacity to implement this development agenda in ways that benefit workers and communities.  

As the new administration transitions in, it is crucial for implementers, investors, and policymakers to sustain the momentum. Continued partnerships across government, industry, and philanthropy, rooted in place, will be essential to maximize the economic, social, and technological impact of these transformative policies. Over the next 6 months, and drawing deeply on our collaborations with the Implementers Network, Brookings Metro will be exploring the continued implementation of these place-based federal investments, distilling how emergent economic development models are structured, financed, and governed. This applied research agenda can not only improve the implementation of $40 billion in federal funding, but also surface the knowledge, networks, and ideas required to design, finance, and implement future generations of place-based economic policy.