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By Rob Feinberg April 27, 2012

Cluster spending exceeds Obama's goal

In his 2008 presidential campaign, President Barack Obama promised to  "create a federal program to support 'innovation clusters' – regional centers of innovation and next-generation industries."

Obama added that he wanted to give $200 million in grants to work with leaders in business, academics and government to improve infrastructure and enhance growth on a local level. He said the program would put money towards "building research parks, workforce attraction efforts, supporting regional transportation projects tied to developing clusters, and bolstering local job training."

Mark Muro, a senior fellow and policy director at the Brookings Institute who has written extensively about innovation clusters, told PolitiFact how they can impact a region.

"It makes it easier for them to obtain critical resources such as knowledge spillovers from one firm to another, or from institutions like universities to the firms," Muro said. "And it allows firms to essentially share various local resources or to collaborate."

As we explained in our last update, the Economic Development Administration, a Commerece Department agency, received $50 million in 2010 to support the creation of regional innovation clusters throughout the country.

Innovation clusters were also addressed in the America COMPETES Reauthorization Act of 2010, which became law on Jan. 4, 2011. The act asks Secretary of Commerce John Bryson "to establish a regional innovation program to encourage and support the development of regional innovation strategies, including regional innovation clusters, science and research parks."

That strategy was strengthened in 2010 with the formation of the Taskforce for Advancing Regional Innovation Clusters, an initiative from the Obama administration to create innovation clusters through a collaboration of government agencies like the EDA, the Department of Energy, the Department of Defense and the Small Business Administration.

The largest innovation cluster investment took place in 2010, when the U.S. Department of Energy announced that as part of a partnership with the EDA, SBA and the National Institute of Standards and Technology, it would award an almost $130 million grant to a team led by the University of Pennsylvania to create the Greater Philadelphia Innovation Cluster for Energy Efficient Buildings.

The project"s goals are to create a hub in the city that not only would improve energy use but would also "stimulate private investment and quality job creation in Greater Philadelphia and beyond," which is in line with Obama"s campaign promise.

Other projects focused on the creation of innovation clusters include the $37 million Jobs and Innovation Accelerator Challenge, which gave grants to 20 innovation regions across, the country specializing in areas such as clean energy and aerospace engineering, and the $15 million Rural Job and Innovation Accelerator Challenge, which is expected to supply funds for support of innovation clusters in up to 20 rural regions.

And in March 2012, the president also announced that the administration would invest $45 million through the Departments of Defense, Energy and Commerce to create an institute that would serve as a hub for manufacturing innovation.

Putting all of that together, the administration has spent over $225 million towards regional innovation cluster projects for the Department of the Energy, Small Business Administration and Economic Development Administration since Obama took office. And as part of its 2013 budget request, the administration has requested another $25 million.

So Obama has exceeded the $200 million that he promised.

We rate this a Promise Kept.

Our Sources

Email interview with Cleve Mesidor, spokesperson for the Economic Development Administration.

Email interview with Mark Muro, senior fellow and policy director at the Brookings Institute.

America COMPETES Reauthorization Act of 2010, full text

Economic Development Administration, "FY 2010 Budget in Brief,"

U.S. Department of Commerce, "Budget in Brief: Fiscal Year 2013,"

U.S. Department of Commerce, "Jobs and Innovation Accelerator Challenge Winners Announced," Sept. 11, 2011.

White House, "President Obama to Announce New Efforts to Support Manufacturing Innovation, Encourage Insourcing," March 9, 2012.

Puget Sound Business Journal, "Obama unveils manufacturing innovation plan," March 9, 2012.

Greater Philadelphia Innovation Cluster, "GPIC Goals," Accessed April 11, 2012.

U.S. Department of Energy, "Energy Efficient Building Systems Regional Innovation Cluster," August 1, 2010.

USDA, "The Rural Jobs and Innovation Accelerator Challenge," March 20, 2012.

U.S. Small Business Administration, "SBA Announces Funding Available to Support
Regional Clusters, Job Creation," June 22, 2010.

U.S. Small Business Administration, "SBA Announces Support for 10 Regional
'Innovative Economies" Clusters, Local Job Creation," Sept. 22, 2010

Louis Jacobson
By Louis Jacobson January 4, 2010

Regional innovation clusters are on their way

During the presidential campaign, Barack Obama promised to "create a federal program to support 'innovation clusters' -- regional centers of innovation and next-generation industries. This innovation clusters program will provide $200 million in planning and matching grants for regional business, government and university leaders to collaborate on leveraging a region's existing assets -- from transportation infrastructure to universities -- to enhance long-term regional growth."
We were initially confused by exactly what "regional innovation clusters" are, but we can now report that they are federally sponsored partnerships designed to boost economic development on a metropolitan-region-wide basis.
The Obama administration was quite specific about its interest in promoting this model. Its fiscal year 2010 budget proposal for the Commerce Department's Economic Development Administration said that "special emphasis" will be placed "on two initiatives: 1) support for the creation of regional innovation clusters that leverage regions' existing competitive strengths to boost job creation and economic growth; and 2) support for networks of business incubators that encourage entrepreneurial activity in economically distressed areas and regions. EDA expects that each initiative will receive at least $50 million in funding." (The second of these initiatives is the subject of Promise 35 .)
The final appropriations bill for the department signed by the president doesn't specify a dollar amount devoted to regional innovation clusters, but the total allocated to the Economic Development Administration stayed largely intact -- $293 million, compared to the $291 million initially requested. So sticking to the proposed $50 million allotment should be feasible.
Meanwhile, a report by House-Senate negotiators on the final bill reiterates their interest in the idea of regional innovation clusters. The lawmakers said they "encourage the use of this approach within existing authorities and funding structure," as long as the administration keeps congressional appropriators well-informed about the program's implementation.
Spending $50 million on regional innovation clusters in fiscal year 2010 is not the same as spending $200 million, as the promise suggested. But the Obama team may have meant that it would spend $50 million a year for each of the four years of his first term. Either way, the funding has been allocated to create a program, so we consider this promise to be In the Works.

Our Sources

Office of Management and Budget, proposed fiscal 2010 budget for the Commerce Department, accessed Dec. 23, 2009
House Appropriations Committee, statement of managers of for Division B--Commerce, Justice, Science and Related Agencies, accessed Dec. 23, 2009
Brookings Institution, Budget 2010: A New Embrace of Regional Innovation , May 13, 2009
E-mail interview with Linda Knopp, director of news and information with the National Business Incubation Association, Dec. 23, 2009

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