Beyond Trump's Budget: Driving Innovation Requires State and Local Leadership

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The new Pennovation center builds upon the innovation cluster of the Greater Philadelphia Region
April 17, 2017

When looking at the proposed budget cuts in President Trump’s skinny budget proposal, it is tempting to default to conversations on the ability of the federal government to drive (or stifle) innovation. The budget blueprint recommends cuts in research funding for the National Institute for Health and the Department of Energy’s Office of Science, as well as removes federal programs, such as the Economic Development Administration, the Manufacturing Extension Partnership, and the Community Development Financial Institutions Fund. However, when it comes to science and technology, innovation does not have to start and end with the federal government. In fact, states and local leaders have a unique opportunity to drive innovation policy.

As pillars for their communities, public leaders can improve the marketing of their academic assets; enhance the culture of collaborative research between higher education and industry; strengthen its Science, Technology, Engineering, and Mathematics (STEM) workforce pipeline; and incentivize public-private investments. In moving to a more systematic approach to encourage technology-based economic development, state and local governments can develop their own innovation ecosystems or innovation clusters.

In my home state of New Jersey, we made great strides in the past five years. One piece of legislation alone delivered over $220 million of private investments to 51 early-stage technology and life sciences companies in New Jersey. Another enacted bill unified the state to collaboratively pursue big data research. However, meeting the demands of an innovation ecosystem also requires a state to educate its future workforce, which is why Governor Christie committed $1.3 billion to fund capital investments in colleges and universities. In an effort to grow its ecosystem, state government is bridging the divide between industry and academia.

Moving forward, New Jersey has the opportunity to fill the “gaps and valleys” left by market failures and the federal government to bolster the state’s innovation ecosystem. While communication between our academic institutions and businesses improved, more can also be done. The state has not tapped into all the expertise and research and development facilities our universities offer, nor have we addressed our STEM skills gap.

Another example can be found in the Greater Philadelphia Region (GPR), home to one of the largest and most concentrated life science communities in the country. The GPR is comprised of Philadelphia, 10 surrounding counties, southern New Jersey, and northern Delaware. The region has developed a life sciences and pharmaceutical innovation ecosystem, which has also made great strides in recent years.

The GPR now has more than 100 post-secondary institutions (including six medical schools, the University of Pennsylvania, University of Delaware, and Princeton University), and 1,100 life sciences establishments (including AstraZeneca, FMC Corp. and Johnson & Johnson). Since 2010, the region produced 5,400 life sciences utility patents and obtained 526 private investment deals, totaling almost $6.3 billion (while also benefiting from $1.2 billion in research grants from the NIH and other federal agencies).

Local and state leaders deserve credit for implementing proactive policy that incentivized these developments and helped establish innovation zones across the GPR, including in University City (Philadelphia), 611 Corridor (Montgomery and Philadelphia Counties), i2n – Ideas x Innovation Network (Chester and Delaware Counties), and Bucks County Biotechnology. The zones provide startups and early stage companies accelerated commercialization, financial assistance, workforce support, and numerous networking opportunities—all the components an ecosystem needs to encourage innovation.

Fortunately, President Trump’s budget proposal is only the first step in the budgetary process. Many of the programs that drive innovation will likely be added in the House Republican budget. However, despite the congressional leadership’s mission to drive investments in technology and innovation, the federal government is limited to basic academic and mission-oriented projects. By allocating state and local funds, developing a STEM workforce, and encouraging partnerships between private ventures and academic research institutions, state and local leaders can drive their own innovation ecosystems to overcome almost any shortfall.

Fels Institute of Government

The Fels Institute of Government
3814 Walnut St. 
Philadelphia, PA 19104

(215) 898-7326

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