Eric Smith is the Tech Hubs Program Director at the US Department of Commerce’s Economic Development Administration (EDA). We sat down with him to discuss Tech Hubs, what it’s all about, and how the program is an investment in America’s people, places and potential.
Interview with questions and answers
Q: You are the inaugural director of the Tech Hubs program. What excites you about the program and your new role?
Technological development is critical to our strategy to strengthen US economic and national security. That mission—to enable the industries of the future to start, grow and stay in the United States—is compelling and energizing. There is an urgent need to ensure that we maintain and develop our global leadership in technological innovation, and it is essential that the economic benefits of our leadership accrue fairly to all.
Beyond the design and implementation of Tech Hubs, I also see the program as an important turning point in the continued development of EDA. For the first 45 or so years of EDA, we mostly had onealthough important tool—our suite of Public Works and Economic Adjustment Assistance (PWEAA) programs. Over the past decade, Congress has expanded this toolkit with innovation-focused programs such as Building to scale and on STEM Talent Challenge and has tasked EDA to implement more and larger investments. Tech Hubs build on the success of these programs and investments and enable us to focus and coordinate investments so that regions organize their resources and networks around one cohesive goal – catalyzing technology- and innovation-driven growth to become globally competitive .
Question: What does it mean for a region to be globally competitive in a given technology? As these newly designated centers compete for EDA investments of ~$50-$75 million, what do they really want to unlock for their regions?
Technology centers presented arguments for why they have the foundations for global competitiveness; in Phase 2, they will propose how they will achieve it. In Phase 2, we will invest in regions that have strong potential to lead globally in a wide range of critical and emerging technologies and the people and places that make and deliver those products and services.
In most successful Hubs, we will see these regions—and the industries within them—build and gain market share in certain industries. We also expect to see markers of increased innovation, increased business creation and expansion, and increased investment in these locations. We are looking for market potential – where are there viable commercialization pathways for these critical technologies? Which regions are building effective interfaces between their innovation engines and industry that will make them globally competitive and lead to new, good jobs? We will ask these centers and ourselves these questions repeatedly as the centers develop their Phase 2 project proposals and as we evaluate them.
As for the investments we will make in Phase 2, they will fund projects that strengthen the economic infrastructure on which regions grow – for example, that build a workforce and attract talent, that increase the flow of capital, that support startups and growth of businesses that facilitate technology testing and deployment. Each center will have its own mix of projects tailored to their specific capabilities.
“We are looking for market potential – where are there viable routes to commercialize these critical technologies?”
The association of the name between place and technology is the epitome of competitiveness. We all know the places that are existing hubs. Our goal is to enable the technology hubs we identify and fund to capture more of the market share of their focused industry globally. These investments give the regions an extra push to generate more innovation, more services, more products and more sales in a certain technology area. And one day they too may become a new place that is synonymous with their particular technology.
A question: Tech Hubs is part of the Chip and Science Act. The program was authorized at $10 billion, but EDA received only $500 million in earmarked funding. This is another EDA investment tool that calls for and prioritizes growth and development based on locally driven solutions to locally identified challenges. And EDA isn’t the only part of the federal government implementing this strategy. Why is this approach important?
Long-term growth needs support from those on the ground. People, places and organizations are complex and success requires intentionality and ownership by the local leaders responsible for its implementation. Building regional technology and innovation centers requires federal and local government, research institutions, industry, workforce, workers, community organizations and other partners to come together and unite around a common strategy. The consortium model also enables more effective governance by providing a structure and forum to enable real and lasting collaboration.
The Tech Hubs program challenges organizations in these regions to come together to identify market failures and other opportunities that cannot or will not be addressed by a single person or institution. By pursuing EDA investments, regions can not only organize themselves to take advantage of these opportunities, but also—and sometimes more importantly—can help regions attract a flow of additional capital tailored to each of these opportunities and able to increase the growth of the region to another level.
A question: How is Tech Hubs different from other place-based programs we’ve seen?
Tech Hubs is not starting from scratch. We target regions with mature ecosystems with mature assets and resources, and asking: What can EDA build on to take this region from excellent to globally competitive?
“EDA’s designation and investment should be seen as a signal to the broader capital community about the potential of these regions to generate returns in both dollars and impact.”
We also insist on a regional commitment to strategy. The entire consortium of regional organizations – from laboratory to customer – must be part of this strategy and have a stake in the game.
A question: Equity has become a central part of EDA’s investments under the current administration. In real terms, how do Tech Hubs raise capital and expand opportunities for economic growth?
Economic and national security are closely related. Creating more technology-driven economic development hubs across the country and enabling and engaging with that growth will help us realize the program’s vision. Growth must benefit the people and workers who live in these centers, as well as the companies and institutions in and connected to these regions.
For this to happen, the leadership of these centers must include people who represent and come from the different communities in their regions. We have consciously built this into the program. When we look at Hub management and leadership, we look for strength and resilience because these are long-term strategies that require collaboration and shared commitment to successful execution. To enable this, hubs must build and maintain inclusive leadership teams that will continue to strive for equity as these regional innovation economies grow in the coming years and decades.
In addition, Tech Hubs takes a data-driven approach to underlying current economic activity to better measure and understand the impact of EDA investments on overall changes in economic activity and who benefits.
With policy interventions and direct investment in talent and workforce development, we believe Tech Hubs can have a tangible impact on improving people’s lives. We work to upskill a region’s workforce so residents can fully participate in a growing economy and support the development of these critical technologies that are fundamental to the economic success of these regions and our country. We are taking concrete steps – as you can see in the way we have developed our funding criteria and in what we require and encourage regions to include in their plans and projects – to ensure that economic growth is inclusive, such as ensuring local hiring commitments to quality jobs and accounting for significant economic and demographic growth in long-term housing and transport plans.
A question: What are the ingredients of successful technical centers?
Each region has unique challenges and opportunities due to factors such as their specific assets, resources and capabilities and the core technology area in which they pursue global competitiveness. Tech Hubs is designed to work with regional consortia to identify and overcome barriers to commercial scaling of critical innovation and technology development globally.
All technology hubs, however, hold the promise of becoming leaders not only in innovation but also in production and delivery in a given technology area – the promise of inclusive economic success. This promise is based on the fusion of innovation, resources and technical expertise. We are looking for regions that have this foundation and expertise in regional collaboration within their technology innovation ecosystem.
Tech Hubs will be an active co-investor in these ecosystems. EDA designation and investment should be seen as a signal to the broader capital community about the potential of these regions to generate returns in both dollars and impact.