Budget 2011: Industry Clusters as a Paradigm for Job Growth

The New Republic (Rahman and Muro) - [T]he new budget unveils not one, but several proposals to support regional industry or innovation “clusters” through multiple federal departments. Clusters, as we have noted previously, are a fundamental fact of national economies, and a critical enhancer of regional economic performance. However, as we have also noted, the U.S. lags other nations in providing support to these “bottom-up,” region-based systems of business development, innovation, and talent matching. And so the 2011 budget seeks to change that by applying cluster approaches across multiple segments of the federal delivery system--rather than anchoring it in a single agency.

And so at least four agencies are this year engaged in a new, more pervasive embrace of cluster policy in the 2011 budget:

• The EDA’s proposed $75 million Regional Innovation Clusters program would provide regional planning and matching grants focused on leveraging regions’ competitive strengths to boost job creation and economic growth. (See pages 2, 41, 46 of the Department of Commerce Budget-in-Brief)
• The Small Business Administration would support EDA’s cluster effort by directing a proposed $11 million toward promoting greater small business participation in regional clusters by better coordinating its resources for business counseling, training, and mentor-protégé partnerships. (See page 136 of the President’s Proposed FY2011 budget for the SBA) 
• The Department of Labor (DOL) would use its newly proposed Workforce Innovation Fund (of up to an estimated $108 million) to help ensure that the workforce development system also aligns with regional cluster growth by facilitating regional collaboration among training and employment services providers and stronger linkages with employers so that worker training leads to good jobs. (See pages 4, 17 of the DOL’s Employment and Training Administration Congressional Budget Justification)
• The National Science Foundation (NSF) plans to invest $12 million to promote new “NSF Innovation Ecosystems” as a part of its existing $19.2 million Partnerships for Innovation program. The new “innovation ecosystem” component aims to support regional innovation clusters around universities by engaging faculty and students across all disciplines in efforts to increase the impact of promising innovations through commercialization, industry alliances, and start-up formation. (See page 4 of the NSF Budget Overview)
• The Department of Agriculture’s (USDA) budget request calls for a Regional Innovation Initiative to align federal resources to promote more economic opportunities in rural communities and have greater regional impact.(See page 14 of the USDA Budget Summary)