‘Innovation Hubs’ Aim to Lift Distressed Areas. Congress Just Has to Fund Them.
WASHINGTON — Included in the bipartisan industrial policy legislation that President Biden signed into law this summer was a $10 billion effort to jump-start economically sputtering regions across the country: a series of “innovation hubs” across 20 metropolitan areas.
Supporters of targeted federal efforts to revitalize struggling areas are eager for the Commerce Department to start picking the sites for those hubs. Researchers from a Washington think tank, the Economic Innovation Group, are set to release a comprehensive report on Monday that draws on a wide array of economic data to calculate where the hubs could best achieve their dual goals. Those include helping areas in need of an economic jolt and accelerating technological advancements that lift the U.S. economy as it competes on a global stage, and the list of potential sites is heavy on cities in the Mountain West, the Carolinas and Ohio.
“The stakes here are really high,” said Kenan Fikri, director of research at the Economic Innovation Group. “They’re high in the competition between the United States and China, and they’re high for the future of place-based policies.”
But before the Commerce Department can start the process of deciding where to put the hubs, Congress must actually fund their creation. The need for Congress to greenlight actual money extends to many of the key provisions in the new law, the CHIPS and Science Act, which authorized lawmakers to fund a variety of new programs without actually laying out the money for them.
As Mr. Biden prepares to fly to Arizona on Tuesday to celebrate investments in semiconductor manufacturing catalyzed by the CHIPS Act, the immediate fate of the innovation hubs is in flux. Lawmakers are debating whether they will be able to pass a comprehensive spending bill before the end of the year, or just a stopgap one, which would be less likely to include money for the hubs.
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Failure to secure the money before the end of the year would slow the site selection process and potentially threaten the hubs entirely, even though they enjoyed bipartisan support when the law passed. That’s because Republicans are set to take control of the House in January, and they have signaled a desire to curb federal spending and fight to roll back some of the economic legislation that Mr. Biden helped push through a Democratic-controlled Congress over the past two years.
A bipartisan group of CHIPS supporters, led by Senator Maria Cantwell, Democrat of Washington and the chair of the Senate commerce committee, urged congressional appropriators in a letter last month to fully fund more than $5 billion in CHIPS programs in a year-end spending bill. That includes the first batch of money for the innovation hubs, along with training money for manufacturing workers and expanded innovation efforts through the National Science Foundation.
“During a period of increased global competition, including with technologically capable nations like China and Russia, the United States must increase investment in the science and technology innovation that has long underpinned our economic and security leadership,” the senators wrote.
The law Mr. Biden signed in the summer centers on $52 billion in subsidies for semiconductor manufacturing in the United States. It has already spurred an outpouring of new private investments in chip plants around the nation, which Mr. Biden has touted eagerly. He visited Syracuse, N.Y., in October to welcome a $100 billion investment from the chip giant Micron in central New York. On Tuesday, he will fly to Phoenix to visit the chip maker T.S.M.C.
The law goes beyond semiconductors and also attempts to seed research, development and job growth in several emerging advanced manufacturing industries. Many of them, like electric cars and advanced batteries, are tied to the fight against climate change. Mr. Biden is attempting to position the United States as a production and employment leader in that global race and wants American factories to dominate the technologies needed to reduce fossil fuel emissions and avert catastrophic warming.
The hubs are part of that broader agenda. They are meant to help turn scientific research, from universities and other innovation centers, into new and marketable industrial applications. And by virtue of where they will be located, they seek to catalyze economic growth in parts of the country that could use a spark.
“We will plant the seeds for developing the tech hubs of tomorrow, in places with great potential but which have been overshadowed by cities like San Francisco or Boston or Austin or New York City,” Senator Chuck Schumer of New York, the majority leader, said shortly before the law passed the Senate. “The bill will help turn cities like Buffalo and Indianapolis into new centers for innovation, and the result will be countless new, good-paying jobs and a bright future for those areas for years to come.”
Mr. Schumer has pushed for Albany to have one of the hubs. Other senators are pushing for locations in their own states. The law spells out some criteria for placement — requiring a critical mass of hubs in each one of several regions across the country — but leaves much of the discretion to the Commerce Department.
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The Economic Innovation Group report is the most detailed effort yet to steer that selection, by trying to balance the needs of left-behind areas with their potential for an economic rebirth. It measures that potential using data on regions’ industrial composition and economic complexity, along with two key human ingredients for innovation: the number of working-age science and technology graduates and the number of patent authors in an area.
To measure need, the report looks at the share of a region’s prime-age adults who are not employed or are looking for work, two measures of so-called “brain drain” — the flight of college graduates from an area — and the distance from a “superstar” city like New York or Chicago.
The top 10 cities on the list are a mix between higher potential (like Phoenix and Salt Lake City) and higher need (like a pair of Ohio cities, Toledo and Akron). Many are college towns, Mr. Fikri noted, that are not quite large enough to have yet sustained a thriving industrial sector that grows out of scientific research.
Greenville, S.C., tops the list with a score balanced almost evenly between potential and need, followed by Provo, Utah, and Tucson, Ariz.
The report’s researchers say their data suggests policymakers could — and should — spread the hubs across various areas with different bases of technological expertise and differing levels of need, in hopes of maximizing both the advancements and the regional economic gains they produce.
The hubs should “engineer toward different types of outcomes, whether that’s A.I., chip fabrication or autonomous vehicles or whatever the local initiatives in question may be,” said John Lettieri, the president and chief executive of the Economic Innovation Group. “You want a lot of different bets on a lot of different types of places that are doing a lot of different types of things.”
Emily Cochrane contributed reporting.