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Fostering Growth in Small to Mid-Size Cities Will Make Our National Economy Stronger

Last week, the Economic Development Administration (EDA) published a Notice of Funding Opportunity for Phase 1 of its Regional Technology and Innovation Hubs (Tech Hubs) Program. Established in the CHIPS and Science Act as one of two EDA programs aimed at making America’s regional economies more competitive (details on the Recompete program are expected in the coming weeks), the Tech Hubs program will invest directly in regions with the assets, resources, capacity, and potential to transform into globally competitive innovation centers in the next decade.

In the first of two phases, EDA will designate at least 20 Tech Hubs across the country and will separately award approximately $15 million in strategy development grants to accelerate the development of future Tech Hubs. Phase 1 applications are due August 15, 2023. Once hubs have been designated and have an opportunity to develop innovation strategies, EDA will notice a second round of funding in the fall of this year, which will provide significant funding for at least 5 Tech Hubs to implement these plans. Since EDA will be awarding large, transformative grants ($50-75 million in phase 2) applications will only be accepted from eligible consortia. An eligible consortium must include one or more of each of the following: 1) institutions of higher education; 2) state, territorial, local, or tribal governments or other political subdivisions of a state, or a consortium thereof; 3) industry groups or firms in relevant technology, innovation, or manufacturing sectors; 4_ economic development organizations or similar entities focused primarily on improving science, technology, innovation, entrepreneurship, or access to capital; and 5) labor organizations or workforce training organizations.

The Tech Hubs program highlights an important concept in making America’s economy more competitive: supporting technological and industrial growth in small to mid-size cities. While technology hubs have traditionally been associated with larger cities, smaller cities can offer unique advantages to entrepreneurs and businesses.

Small to mid-size cities typically have a lower cost of living than larger metropolitan areas. Entrepreneurs and startups can operate with lower overhead costs, allowing them to stretch their funding further and invest more in their businesses and communities. And as the saying goes, “a rising tide lifts all ships.” Significant investment in the workforce resources of a small to mid-size city has the potential to lead not just to better jobs, but to a better quality of life for the entire community.

As smaller cities are often more closely connected than larger cities, businesses may be more willing to collaborate and support each other. Small to mid-size cities may also have fewer regulatory hurdles or a more flexible regulatory landscape than some larger cities, which can make it easier for startups to get off the ground and start operating. This tight-knit ecosystem can be a nurturing environment for many startups and entrepreneurs that wouldn’t have been able to thrive in a larger city.

Fostering growth in regions that have not historically been associated with technological innovation also allows for increased diversity of perspective, particularly in the context of regionalized industries. People naturally tend to focus their attention on the challenges facing their communities and regions. But without sufficient resources to conduct research and development addressing localized issues, these problems can linger even when a theoretical solution is in sight. Federal and private investment in innovation in smaller cities will alleviate the burden on local governments and small businesses working to solve problems.

The Tech Hubs and Recompete programs will serve as a case study for how large-scale federal investment can empower smaller cities to lift the national economy and improve local socioeconomic conditions.


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