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Remarks at "Clustering for 21st Century Prosperity" Event, National Academy of Sciences

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Thursday, February 25, 2010

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Secretary of Commerce Gary Locke
Remarks at “Clustering for 21st Century Prosperity” Event
Washington, D.C.

Good afternoon. It’s terrific to be here with all of you today.

And let me also thank the National Academy of Sciences, and say: “it’s great to see you again”.

I was just here yesterday talking with a group of businesses and university leaders about the urgent need to move great ideas more quickly from university labs into the market place.

And we discussed how government, business and academia can better collaborate and take steps to make our country’s innovation ecosystem more focused and more efficient.

Because we all know that:

America is not lacking for groundbreaking ideas in this country. Nor are we short on smart entrepreneurs willing to take risks.

What we need to do is get better at connecting the great ideas to the great company builders.

And that’s why today’s conference is so important.

Regional Innovation Clusters are a proven commodity that have had great success getting good ideas more quickly into the marketplace.

We know that when you get businesses, government, academia and non-profits situated in one place pulling towards similar goals; that good things happen.

Silicon Valley, the Route 128 corridor in Boston and Research Park in North Carolina are all striking examples of Innovation Clusters done right.

And because we know they work, the burning question then becomes:

How do we create more of them?

The answer to this question isn't just important to me, or to those of you gathered here today.

It’s important to the millions of Americans who—even before this recession began—were falling behind.

Since 2000, most families have seen their wages stagnate or decline, while the necessities of life like health care and tuition skyrocketed.

We can point to a variety of reasons why this has happened – but a prime culprit has been the decline in the type of good, skilled, well paying jobs that once helped America build the strongest middle class in the history of the world.

So, America’s challenge isn't just to emerge from the recent recession.

It is to lay a new foundation for sustainable long-term economic growth.

But how?

To begin with, we've got to start promoting the right kind of risk.

America has always celebrated those pioneers who were willing to mortgage their houses, work 100-hour weeks and throw caution to the wind in the pursuit of an idea.

That story is at the very heart of America’s economic success.

But over the last few years, we fell in love with another type of risk that extolled short-term thinking and speculation.

Instead of working to engineer a breakthrough technology or build a great company; too many of our brightest minds were busy engineering credit default swaps.

America can’t afford to inflate another bubble that enriches a select few while putting everyone else in peril.

We can no longer count on Wall Street’s version of innovation, so called “financial innovations” like credit default swaps, to drive our economy.

We know how that story ends.

Instead, we need to encourage the right kind of risk-taking – the type of risk-taking that allows successful entrepreneurs to build companies and discover breakthrough technologies that allow people around the world to live wealthier, healthier and more productive lives.

Economists actually have names for these types of companies that have a solid foundation and a lot of growth potential.

They’re called “gazelles”

And we know where “gazelles” can thrive.

Their habitat is in science and technology parks, laboratories, business incubators—places where entrepreneurs, scientists, product developers, and venture capitalists are clustered together and can work together.

Places where innovations can not only be developed, but also brought to market. Where new businesses have a chance to grow. Where entrepreneurs—even the ones who at first don’t succeed—have a chance to try, try, and try again.

And where workers have the security of knowing that if one employer closes its doors, another will emerge to take its place.

This is not theoretical stuff. It is happening today. Not just in well-known places like Silicon Valley and the Research Triangle, but in the New Mexico Technology Corridor.

  • At the Arizona Bioscience Park in Tucson.
  • At the Virginia Tech University Institute for Advanced Learning and Research in Danville.
  • And other places, large and small, all around the country.

Despite the difficult job picture, these approaches are working.

They’re getting real results. For all the missed opportunities of the past decade, and for all the challenges of the present moment, there are great American success stories to tell.

And every one of these success stories has a common theme: place matters.

Entrepreneurs and researchers and innovators want to be around each other.

They want to feed off the shared creative energy. They want access to a shared talent pool. They want to build relationships. So if a local community is able to plant that seed—if it’s able to create the climate for innovation and build a critical mass– then private investment will follow.

Innovation will follow. Jobs will follow.

If you think about the iconic areas I mentioned—the Research Triangle, Silicon Valley—they aren’t towns or cities. They’re regions.

That’s why Harvard’s Michael Porter began calling them “regional innovation clusters”—groups of companies, educational institutions, municipalities, sometimes even states, working together to create the best possible climate for business.

They work together because they are stronger that way.

As I mentioned, these innovation hotbeds are not confined to any one part of the country. They’re in Rochester, New York and Dubuque, Iowa. They’re in Saginaw, Michigan and San Jose, California. You can find them all over the map.

And yet: if you took that map and colored in all the established regional clusters, most of the country would still be white space.

So these regional clusters aren’t quite exceptions; but they’re certainly not the rule.

How then, do we change this map? What steps can all stakeholders take to make innovative clusters spring up not just in established regions but in new ones, as well?

First, there must be agreement that encouraging the growth of innovative clusters is a national priority…. That regions are dedicated to creating ecosystems where universities, venture capital, entrepreneurs and skilled workers are all amplifying each other’s talents

At the federal level, President Obama is doing just that.

And at the Commerce Department, the Economic Development Agency is taking the lead.

The President’s 2011 budget includes $75 million for EDA to implement a federal clusters strategy.

Region by region, EDA is helping to speed the transition to a more entrepreneurial, innovation-driven society. In practical terms, that means three things:

  • Fostering regional innovation that builds on an area’s competitive advantages.
  • Encouraging business exports and competitiveness.
  • And doing it in a way that leverages private investment.

Let me underscore how critical it is that regions take a leadership role in this process.

The federal government can facilitate and encourage stakeholders to work together. But regions will know where their unique strengths and abilities lay. And while the federal government can shine a spotlight on the importance of clusters, it can’t replace a region’s knowledge of what it does best.

Take New Orleans and New Mexico for example.

EDA has helped fund the New Orleans Regional Planning Commission in its plan to link new medical research centers and a new bioscience district with Tulane and LSU medical centers.

New Orleans is not merely re-building from Katrina, it’s redeveloping a large portion of the city into a world-class medical corridor.

And in New Mexico, EDA is working with a regional counsel to help create more robust alternative energy production, grow artisanal manufacturing and fund new micro and nano-engineering centers.

The genius of Regional Innovative Clusters is that different parts of the country can leverage their regional strengths to accomplish a common goal: creating well-paying, sustainable jobs, and growing the country’s economy.

And at the end of the day, job growth is the metric that is most important to most Americans.

It's the metric that is most important to the Obama administration.

So, thank you all for being here today and for dedicating your time to addressing Regional Innovative Clusters. This is a key part of our nation’s long-term strategy for economic growth.

And it’s one that I look forward to working with you on for many years to come.

Thank you.