Regional Technology Hubs

What Are They, and How Are They Important for Renewing American Innovation?

By: Gregory Arcuri 
 
 “America faces two great economic challenges in the coming years.
 
The first concerns ensuring our country’s leadership role as a world-class innovator second to none. In the past decades, we have seen increasing challenges that have hindered our role as a generator of cutting-edge science. Meanwhile, other nations have upped their game tremendously and may be poised to overtake the United States as the world’s great innovators in the years ahead.
 
There is a second, even more significant challenge. America is bifurcating into two economies. High-technology centers have become dynamic and creative, while more conventional economic activity in rural and rust-belt communities is falling further behind.”
 
Dr. John Hamre
CSIS President and CEO
September 13, 2021
 
 
A more inclusive innovation economy is essential for the nation’s economic growth, competitiveness, domestic harmony, and national security. However, many Americans remain outside America’s high-tech innovation ecosystem, limiting their prospects for shared prosperity and opportunities to contribute to U.S. global competitiveness.  
 
Connectivity is a major challenge for entrepreneurs, university researchers, and small firms that reside outside the nation’s innovation hotspots. These actors often find themselves without sufficient access to the innovation infrastructure (including technology transfer resources and ready access to venture capital) to turn their entrepreneurial ideas into commercial realities. 
 
This highlights a need to expand our innovation economy beyond the current innovation centers and into micropolitan regions, while also drawing more participation from women and minorities.
 
Congressional leaders are responding to this challenge, proposing legislation meant to provide wider access to technology-led economic development. One such piece of legislation, the United States Innovation and Competition Act (USICA), passed the Senate in June of 2021 with bipartisan support and is awaiting reconciliation in the House of Representatives.
 
§2401 of USICA, a section called the “Regional Technology Hub Program,” calls for the Secretary of Commerce to designate no fewer than 20 “regional technology hubs” (RTH’s) and award them with grants and cooperative agreements out of a pool of nearly $10 billion over the next four years.
 
What is an RTH? And How Are They Selected?
 
An RTH is a consortium of universities, economic development organizations, local industry, rural communities, and local governments concentrated within a geographic area that the Department of Commerce (DoC) determines has the potential to become a new locus of innovation and technological development. 
 
USICA outlines a competitive process for achieving designation as a regional technology hub, which comes with eligibility for receiving DoC grants and cooperative agreements. Importantly, these hubs will be primarily located in lower-population, rural or industrial states and regions outside leading technology centers.  
 
Candidate communities, whose participation will likely spearheaded by local and state governments in collaboration with other stakeholders, will be tasked with developing a “regional innovation strategy,” an individually tailored plan for achieving primacy in a relevant field of STEM or innovation. These “eligible consortia” must outline how they plan to use federal funding to advance a long list of economic and national security priorities, including their potential for advancing the R&D, deployment, and manufacturing of technologies in a “key technology focus area.” 
 
Eligible consortia will have to prove how their economic growth spurred by federal investment will benefit the wider community and region, especially underrepresented and economically disadvantaged groups. Communities will also need to explain how that economic growth will be sustained after federal support ends. 
 
Once selected, RTH’s will be eligible for grants and cooperative agreements directed towards workforce development, business and entrepreneurial activities, technology maturation, and infrastructure. 
 
The Debate Surrounding the Program’s Feasibility
 
Some proponents of programs like RTH, such as Mark Muro of the Brookings Institution, argue that market forces naturally accelerate the concentration of the innovation economy within large cities. For this reason, they see the need for a targeted approach (federal investment in promising growth centers) that redistributes the economic prosperity that comes with participation in the high-tech ecosystem across the country.
 
In late 2019, the Brookings Institution developed an index* to identify cities, regions, and metro areas that would be strong candidates to become America’s next “growth centers,” something roughly equivalent to a regional technology hub. A score greater than zero indicates above average performance in innovation compared to an average of all U.S. metro areas.
 
In their report, the top 10 candidates were: 

1. Madison, WI (1.63)                                                                                                 

2. Minneapolis - St. Paul - Bloomington, MN - WI (0.68)                                         

3. Albany - Schenectady - Troy, NY (0.66)                                                                 

4. Lexington - Fayette, KY (0.58)                                                                               

5. Rochester, NY (0.53)                                                                                               

6. Provo - Orem, UT (0.47)                                                                                           

7. Portland - Vancouver - Hillsboro, OR - WA (0.47)                                                 

8. Tucson, AZ (0.45)                                                                                                     

9. Pittsburgh, PA (0.40)                                                                                                 

10. Salt Lake City, UT (0.34)                       
                                                                     
 
*The index compiled population, University STEM R&D expenditure per capita, patents per 100,000, STEM doctoral degrees per 100,000, and the innovation sector’s share of jobs in the city/region.
 
Other analysts question whether federal funding can help manufacture the next Silicon Valley in the country’s heartland. Adam Thierer with the Mercatus Center at George Mason University, for example, argues that initiatives to artificially develop centers for research and innovation have been tried before on the State and federal level, though claiming they have all failed at great cost to the American tax-payer.
 
Thierer and other critics suggest a more generalized approach: creating the environment in which entrepreneurship and innovation can flourish across the country by prioritizing simplicity and predictability in taxes, laws, and regulations. In their view, the government should avoid picking winners, and let growth centers develop organically under a friendly economic climate.
 
A more pragmatic perspective suggested by the CSIS Renewing American Innovation project would look at the specific challenges facing various actors in regions across the United States. It would focus on creating the institutions — whether public, private, or hybrid in nature – across which researchers can collaborate with innovative firms; venture investors can gain better vision into the technical capability and commercial promise of new technology startups; students and workers can accumulate STEM skills sought-after by local industry; and small and large firms can partner with each other to scale-up and introduce new goods and services in the United States.  A well-designed Regional Technology Hub program can help create these reinforcing networks and grow and connect regional innovation ecosystems.
 
How can federal, state, and local policies help create these critical partnerships? The RAI project will highlight practical solutions to these connectivity challenges in renewing America’s innovation ecosystem.
 
Be sure to check out other RAI content related to Inclusive Innovation or any of our other focus areas on our website at csis.org/programs/renewing-american-innovation-project
 
Gregory Arcuri is a research intern with the Renewing American Innovation Project at the Center for Strategic and International Studies in Washington, DC. 

The Perspectives on Innovation Blog is produced by the Renewing American Innovation Project at the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s). 
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Gregory Arcuri
Research Assistant, Renewing American Innovation Project