Brookings Report: Clusters and Competitiveness: A New Federal Role for Stimulating Regional Economies

Clusters and Competitiveness: A New Federal Role for Stimulating Regional Economies

Due to rising global competition, the nation’s capacity for generating stable, well-paying jobs for a large number of U.S. workers is increasingly at risk. In this environment, regional industry clusters represent a valuable source of needed innovation, knowledge transfer, and improved productivity. For that reason, the public sector around the world has launched numerous programs to catalyze growth producing collaboration in key industry clusters. However, this nation’s network of cluster initiatives remains thin and uneven. As a result, many U.S. industry clusters are not as competitive as they could be, to the detriment of the nation’s capacity to sustain well-paying jobs.

Limitations of Existing Federal Policy

The federal government has the reach and the resources to stimulate the growth of cluster initiatives and to address the various barriers that limit cluster development and growth. However, current federal programs do very little to support competitive regions in general and competitive clusters in particular. They have evolved in a wildly ad hoc, idiosyncratic, and uncoordinated fashion. Further, the few federal programs that do focus on cluster and network development remain inadequate to the task.

A New Federal Approach

The federal government should move to promote cluster development and growth nationwide. In this, the federal government’s approach should be flexible, "bottom-up," and collaboration-oriented, rather than prescriptive, "top-down," or input-focused. Consistent with this, the federal government should boost the nation’s competitiveness by catalyzing increased cluster activity in U.S. regions through a two-part federal clusters program:

  Create an information center to map the geography of clusters, maintain a registry of cluster initiatives and programs, and conduct research on cluster dynamics and cluster initiative and initiative program impacts and best practices.

  Establish a grants program to support regional and state cluster initiative programs nationwide that would direct financial and other assistance to individual cluster initiatives

The report notes, in part:

For that matter, the few federal programs that support cluster and network development remain inadequate to the task. Their total cost ($558 million) is less than one percent of the total federal spending flowing towards regional economic development. The most prominent of these, one that offers a sense of the possibilities but is too small and short-lived to do the necessary work on its own, is the Department of Labor’s Workforce Innovation in Regional Economic Development (WIRED) program. Created in 2005, WIRED combines industry and economic development activities with workforce training programs. Three waves of WIRED grants have been made across the country in 14 metropolitan areas and 25 larger regions. These grants are awarded in competitive processes that reward self-organized, market-driven initiatives; private sector leadership; fact-based strategies based on existing regional advantages; collaboration across public, private, and nonprofit actors; and leveraged resources. Many WIRED projects have taken the form of cluster initiatives.

To view the full page, go to:

http://www.brookings.edu/papers/2008/04_competitiveness_reamer.aspx