In 2019, ITIF and Brookings proposed that Congress provide funding for the U.S. Department of Commerce to establish a system of regional technology hubs with a program to identify promising metro areas and help them transform into self-sustaining innovation centers. To date, that vision has not been achieved, but the next Congress can fix it.

Dependent on intense agglomerations of highly skilled workers and based on winner-take-most network economies, the innovation sector has generated significant technology gains and wealth but has also helped spawn a growing gap between the nation’s dynamic “superstar” metropolitan areas and most everywhere else. Accordingly, ITIF urged the federal government to update a forgotten 1960s and 1970s strategy known as “growth poles”—an approach to regional economic planning that called for focusing transformative investment on a limited number of locations to spark growth in those regions and the nation. To repurpose that strategy for the 21st century, our proposal called for concentrating resources in a select few metro regions to help them become self-sustaining tech hubs—places that can successfully compete globally for technology industry activity, even after federal support ends.

Alas, this has not happened. Congress initially authorized $10 billion for Commerce to establish the Tech Hubs program under the auspices of the Economic Development Administration (EDA). While significantly lower than the $60 billion over 10 years that ITIF proposed, it still would have constituted a sizeable investment. But Congress appropriated just 5 percent of the authorized amount, $200 million.

Even so, it was a start. Unfortunately, other federal agencies soon got into the “hub business,” especially the National Science Foundation, but also the Defense Department and Small Business Administration. And rather than pool their resources and coordinate the selection of a select few places as awardees, there appeared to be little coordination and considerable dispersion of funds. The programs, including NSF’s Regional Innovation Engines program, were not structured or operated in a way that complemented the EDA Tech Hub program to concentrate resources.

As a result, four federal tech hub programs doled out awards to 48 states. As a result, these are not concentrated tech “hub” programs at all; they are instead tech “dispersion” programs—many places receiving relatively modest amounts. And we see that when looking at technologies funded. For example, at least 6 awards were made by the various agencies and departments to regions to focus on quantum technology and there were 22 for biotechnology.

This is not to cast aspersion on any of the places that won grants. Many likely submitted excellent proposals. The problem is that because so many places were selected for awards, the average award is quite small, and it will be virtually impossible for any place to develop as a self-sustaining metropolitan tech hub, because that requires sustained support at scale. There just is not enough advanced technology activity to spread to that many places.

In and of itself, this kind of dispersed, federal funding for technology innovation is beneficial. Innovation is central to America’s future, and encouraging regions to play a stronger role in technology development is in the national interest. But we should be clear: This is now a fundamentally different program than what was initially envisioned, not only by ITIF, but by its original congressional authorizers.

So, going forward, Congress has several options:

1. Eliminate or significantly reduce funding for all four agency initiatives, which would harm future U.S. innovation and competitiveness.
2. Continue providing support in the current structure and recognize it is no longer a “hub” program, but rather a distributed regional technology grant program.
3. Boost funding and require agencies to coordinate and winnow down the pool of grantees to no more than 15 centers between NSF and EDA, with any future awards from DOD and SBA to be aligned with these 15 centers.

And if Congress decides on the second or third option, it should require funds to be awarded only to hubs focusing on key technologies where America is in competition with China for national power, especially in dual-use technologies that are important for both economic and national security. Agriculture, clean technology, disaster mitigation, water, wood products, and even cybersecurity—all technologies currently funded—do not meet those criteria. They all may be interesting and promising technologies, but they are not critical to national defense and techno-economic power.

Methodology

We came to these conclusions after compiling the attached inventory of designated innovation hubs using information from the Small Business Administration, National Science Foundation, Economic Development Administration, Economic Development Agency, and Defense Department’s respective hub programs.

SBA’s Regional Innovation Clusters program designated 34 organizations as regional innovation clusters. These 34 organizations collectively serve 36 states. A few of these organizations serve parts of a state, but our list of states with designated innovation clusters from the SBA program does not reflect this. In other words, if Organization A serves only the Los Angeles area, then our list notes that the state of California is served. In compiling our list of 36 SBA-funded programs and the states they serve, we referenced the SBA’s Regional Innovation Cluster website where we noted the “regions served” for each innovation cluster under the website’s menu showing “List of RICs by region.”

NSF’s Regional Innovation Engines program designated 10 regional innovation clusters. These 10 innovation engines collectively serve 18 states. Like SBA’s program, many of these engines do not serve an entire state but rather parts of it. Nevertheless, our list of states notes that a state is served as long as an innovation cluster serves parts of it. In compiling our list of NSF-funded programs, we reviewed each of the 10 inaugural NSF engines on the NSF Engines Portfolio website, noting the region of service in the description of each engine.

The EDA Tech Hubs program designated 31 innovation clusters or tech hubs. These hubs collectively serve 34 states. Like the SBA and NSF programs, these tech hubs do not serve entire states but rather subregions. Our list of states that these tech hubs serve does not reflect that distinction. If parts of a state are served, then our list of states indicates the state is served by one of these hubs. We gathered the necessary information for our list by reviewing each of the tech hubs listed on the EDA’s 2023 Tech Hubs Designees and Strategy Development Grant Recipients website and noting the “State Served” in each tech hub’s description.

The Defense Department’s Microelectronics Commons Hub designated eight regional innovation hubs. These hubs collectively serve 44 states. They do not serve entire states but rather subregions. Like the other three programs, this is not reflected in our list of states. We gathered the requisite information by examining whether each state was served by at least one hub on the map provided on the Microelectronic Commons Hub website.

Sources

• “Regional Innovation Clusters,” U.S. Small Business Administration, accessed November 2024, https://www.sba.gov/local-assistance/regional-innovation-clusters#list-of-rics-by-region.
• “NSF Engines Portfolio,” U.S. National Science Foundation, accessed November 2024, https://new.nsf.gov/funding/initiatives/regional-innovation-engines/portfolio.
• “2023 Tech Hubs Designees and Strategy Development Grant Recipients,” U.S. Economic Development Administration, accessed November 2024, https://www.eda.gov/funding/programs/regional-technology-and-innovation-hubs/2023.
• “The Microelectronics Commons Hubs,” Microelectronics Commons, accessed November 2024, https://microelectronicscommons.org/connect/.
• “DOD Names 8 Locations to Serve as New ‘Microelectronics Commons’ Hubs,” U.S. Department of Defense, news release, September 20, 2023, https://www.defense.gov/News/News-Stories/Article/Article/3532338/dod-names-8-locations-to-serve-as-new-microelectronics-commons-hubs/.