Today, the U.S. Economic Development Agency and President Biden announced the winners of the Build Back Better Regional Challenge (BBBRC), a $1 billion seed investment into underinvested communities at the forefront of an exciting trend across the federal government.
Currently, there are only a handful of cities with the “industries and a solid base of human capital [to] keep attracting good employers and offering high wages.” BBBRC aims to radically change this — and it arrives at the perfect time. As described in an April 2021 Day One Project memo “Regional Centers for Shared Prosperity” by Scott Resnick, “advancements in internet capabilities, communication tools, and information technology have made entrepreneurship accessible to more people in more places than ever before.”
The 21 award-winning regions will receive between $25 million and $65 million to fund a total of 123 projects that will begin fundamentally reshaping the economic prowess of 24 U.S. states. These investments will focus on cultivating 21st-century industries like biotechnology, health care, clean energy, advanced mobility, next-gen manufacturing, defense, and more. You can learn all about the list of selected projects and the funding they’ll receive here.
This is notable not just for the investment in scientific research, but also for the transparency and communication for the process. In sharing the list of 60 finalists and their proposals (a tactic developed even further by the NSF Engines program), we now have transparent information about the themes in where these communities see their future, and basis on which to make competitive decisions. This was laid out as a core tenet of how to move forward in Jonathan Gruber and Simon Johnson’s Jump-Starting America.
In this moment of celebration, it is worth pausing to highlight what was accomplished by the broader finalist group of 60 regions. These coalitions represent everything from indigenous communities and rural towns to communities historically driven by coal mining or Heartland hubs ripe for revitalization. These finalists each brought unique regional resources to bear including leveraging a total of $30+ billion in federal R&D investments at universities and national labs.
We bore witness to many of these novel collaborations as core members of the technical assistance coalition supporting the implementation of the BBBRC, along with our colleagues at America Achieves, Drexel University’s Nowak Metro Finance Lab, and the National League of Cities. What we found was remarkable.
This experience was not just rewarding, but inspiring. The federal government was intentionally investing in building ecosystems — or clusters of universities, companies, philanthropies, unions, nonprofits, and even governor’s offices — to spur local and national economic competitiveness. These clusters varied tremendously, as described by our colleague Bruce Katz at the Nowak Metro Finance Lab, and took full advantage of the given region’s cultural assets, natural resources, research institutions, demographic strengths, or transportation infrastructure.
Research has described an unparalleled multiplier effect of investing in innovation sectors, with each new high-tech industry job spawning five additional jobs outside of the sector in occupations like lawyers, teachers, nurses, waiters, and hairdressers. To borrow from Assistant Secretary of Commerce for Economic Development Alejandra Y. Castillo, “BBBRC is an evolution in EDA’s approach.”
The announcement of the BBBRC communities is the first step toward distributing the more than $10 billion in cluster development funds that have been appropriated by the federal government. The NSF Engines program, another cluster development effort, is awaiting the close of its proposal period, and new initiatives funded by the CHIPS and Science Act won’t be far behind. In short, this doesn’t just represent a change in the EDA’s approach, it represents a revolution in the way the federal government views its role in economic development as what work it views as economic development.
To be clear, top-down economic development is a complex process. It depends on the interregional spillovers of private and university knowledge, frequent face-to-face contact and knowledge-sharing between capable workforces, and sufficient resources for startups to commercialize research from labs to the marketplace.
But BBBRC was an investment scheme that planned for these variables at the outset. For example, EDA increased the chances that R&D at a university lab would achieve commercial scale and generate well-paying jobs by creating an application evaluation criteria that valued wraparound development, including:
- Resourcing investment funds to attract and support entrepreneurs and spinoff startups;
- Funding workforce development programs in tandem with unions;
- Requiring partnerships with companies that include hiring from these workforce programs;
- Securing political guarantees, matched contributions, and other in-kind commitments to support the industry.
The BBBRC is and should be just the beginning of this cluster-based innovation strategy. Programs employing this approach will yield dividends, in both direct outcomes for the eventual winners but also in externalities for the finalists’ fruitful collaborations spurred by the convening power of national competitions. Even more ambitious programs employing these strategies should be conceived to augment our nation’s competitiveness. And it need not stop at new strategies. Our analysis of federal programs have found 28 existing and upcoming funding programs across 16 agencies could help support cluster development efforts. These agencies and program managers have an opportunity to double down, not just on cluster development but also on these communities.
Similarly, as Ishan calls for in a recent Day One Project memo “Creating the Make it in America Regional Challenge,” one way to tackle the emergent inflation and supply chain challenges would be to increase “the capability for non-superstar regions to have comprehensive supply chain solutions that couple research, manufacturing, and distribution” by launching a “$10 billion two-phase competition that would award 30-50 regions planning grants and then 10-15 ultimate winners up to $1 billion to strengthen regional capacity in economic clusters that align with critical U.S. supply chain priorities (e.g. semiconductors, lithium batteries, etc.).”
As BBBRC communities get to work, they represent our best hope for greater opportunity across the country. They will need to work hard to maintain the coalitions that have made them successful. They will need to broaden them to ensure that their work has equitable impacts, and they’ll need to continue to reach out for leveraged funding and support from local and national funders. In short, this announcement doesn’t represent an end, but the beginning of the work and a new opportunity for growth in these 21 regions.