The concentration of innovation and high-quality jobs in select locations has become a pressing issue globally. While some major cities have flourished, many regions feel left behind. In the US, UK, Europe, and beyond, addressing these disparities has become a critical challenge.
Since the 2008 financial crisis, widespread dissatisfaction with stagnant economic prospects has fueled dangerous forms of anger in developed nations. This frustration has often led to harmful economic policies such as Brexit or Donald Trump's pledge to deport undocumented immigrants, a move that would shrink the American workforce by 5% and likely cause a similar contraction in the overall economy.
However, there is a more constructive path forward, as demonstrated by the 2022 CHIPS and Science Act. This legislation, which overcame the US Senate's filibuster rule and passed with bipartisan support, aims to boost federal research and science funding, fostering breakthroughs across various sectors. Critically, the act also intends to distribute this support nationwide, creating next-generation technology hubs.
Innovation frequently involves technological breakthroughs, and over the last century, significant advancements like radar, microelectronics, satellites, the internet, and biotechnology have profoundly impacted the global economy. As Jonathan Gruber and Simon Johnson explained in their 2019 book, "Jump-Starting America," the widespread impact of these breakthroughs means that their full benefits, including unanticipated spillovers, do not accrue solely to individual firms or investors.
Furthermore, quantifying the financial returns from transformational breakthroughs is notoriously difficult. Consequently, venture capitalists and established corporations often shy away from the risks inherent in basic scientific research, initial applications, and scaling up in uncharted markets.
Today, the importance of quantum computing is widely acknowledged, yet the US private sector's reluctance to invest poses a significant barrier, creating a risk that other geopolitical actors might surpass America's existing advantages. Similarly, the private sector is hesitant to support the scaling up of biomanufacturing, despite established basic concepts. In the realm of advanced manufacturing, which utilizes digital forms of control for machines across various industrial processes, small and medium-sized enterprises struggle to find and adopt necessary domestic solutions.
The US, UK, France, and many European countries urgently need to invest strategically in key technologies to foster job creation and maintain their competitive edge against increasingly assertive geopolitical rivals. While international competition in the pursuit of innovation increases pressure on individual countries to move quickly, this is generally beneficial, particularly in terms of job creation. As long as these innovations are beneficial â not harmful like tobacco, junk food, or digital advertising â greater competition in the field of invention is likely to drive positive progress.
During the implementation of the CHIPS and Science Act, the US Economic Development Administration designated 31 Tech Hubs across 32 states and Puerto Rico. In early July, the EDA announced $504 million in funding for 12 Regional Technology and Innovation Hubs, aiming to accelerate the growth of innovative industries.
While the success of all these hubs is not guaranteed, pursuing genuine innovation inherently involves risk. Moreover, the current funding level may not be sufficient to generate a significant impact. However, the positive news is that nearly every part of the country is eager to participate, with only four states failing to secure at least a Strategy Development Grant.
As Senator Maria Cantwell of Washington, Chair of the Senate Committee on Commerce, Science, and Transportation, stated regarding the CHIPS and Science Act: "We donât know exactly what innovations will come out of this, but we do know this: America will be more competitive because of it. And...we will be able to grow our economy for the future, because of the investments that weâve made today."
To foster more good jobs, countries should invest in science, facilitate the commercialization of resulting technologies, and create an environment conducive to company formation where these innovations were initially developed. While additional funding and strategic planning are essential, particularly given the constant emergence of new technologies, the CHIPS and Science Act represents a significant step forward. Other nations should take note of this initiative as a model for their own efforts to promote innovation and economic prosperity.
