A Commitment to Clusters

by Mark Muro | September 27, 2010

There were some lively moments during our big event on regional innovation clusters last week. But arguably none were more significant than the remarks made after lunch by Jason Furman, the deputy director of the National Economic Council.

Perhaps the third or fourth-highest ranking economic official in the executive branch, Furman’s remarks began with a broad review on the state of the economy and the Obama administration’s responses but passed then into what was most significant: a serious, high-level affirmation of the power, significance, and policy relevance of regional industry clusters.

To wit, Furman said, “Clusters make full use of a region’s unique assets, from infrastructure to workforce to available capital to increase collaboration and create a climate for business to grow and thrive. … Although regional innovation clusters differ in terms of geography, industry and size, they have proven to support economic development.”

Then he cited econometric research by Harvard Business School’s Michael Porter; Brookings Senior Fellow Michael Greenstone and his colleague Enrico Moretti, and others to note that clusters promote productivity growth, employment growth, wage growth, firm-start-ups, and patenting.

Finally, and most importantly, Furman acknowledged in clear terms that role that public policy has to play in providing both the needed backdrop conditions for regional growth but also “modest, but important” market and cluster facilitation, whether by helping to “convene the appropriate stakeholders,” targeting “policy and programmatic expertise,” and related activities.

And then he concluded:

"[President Obama] recognizes the constraints we face, but he also knows that Americans have an unparalleled capacity to come up with innovative and entrepreneurial solutions. Regional innovation clusters are an example of this innovation. The federal government’s role is modest but important, helping with some of the foundations that entrepreneurs, workers, businesses and regions can build upon. We are starting to do a better job in aligning disparate federal resources designed to promote regional development. By encouraging projects driven by strong  performance targets, the federal government can ensure clusters deliver the maximum benefits in terms of increased employment and income growth. We all need to work together to make sure we are working smarter, and using federal dollars more effectively, to achieve the most impact."

No, this might not sound like the most soaring rallying cry in the history of regionalism, but it should be duly noted that these sentences and Furman’s remarks may well represent the most substantial, technical, and high-level acknowledgment of the importance of regional economic activities to the nation … perhaps ever.

With these remarks, one of the nation’s topmost economic stewards--operating in a sphere typically oblivious to such concerns, as Bruce Katz and I observe in a new paper--issued in careful econ-speak a much needed and timely recognition of the power of clusters and the regional economies they drive; the relevance of that power to the nation’s economic health; and finally of the need for national economic policy to take seriously that power and relevance.

If today a new “cluster moment” is upon us, then, Jason Furman’s welcome endorsement of innovation clusters is a critical part of it. His comments mark a new acceptance of the long-neglected claim of regions at the highest level of the national government. That is extremely welcome after decades in which the nation’s central economic steerage has been dominated by macro-economics, disdainful of regions, and obtuse about the real-world, local, and practical processes by which value and national advantage are created.

 

Source URL: http://www.newrepublic.com//blog/the-avenue/77984/commitment-clusters