The mission of the Economic Development Administration (EDA) is to lead the federal economic development agenda by promoting innovation and competitiveness, preparing American regions for growth and success in the worldwide economy. The agency has a competitive grant process and has established the following investment priorities as criteria: collaborative regional innovation, public/private partnerships, national strategic priorities, global competitiveness, environmentally sustainable development, and economically distressed and underserved communities.

Q&A with Chad Paul, President and Chief Executive Officer of the Ben Franklin Technology Partners of Northeastern Pennsylvania

Chad Paul has more than 35 years of entrepreneurial business experience and has started, secured investments for, or facilitated the merger of nearly two dozen companies. He is President and Chief Executive Officer of the Ben Franklin Technology Partners of Northeastern Pennsylvania, an organization that invests in early-stage technology firms and established manufacturers and has received international recognition as a model economic development program. Paul founded Chadwick Telephone while still in graduate school, and built the company from a start-up to a significant multi-state corporation. Paul serves as a Director of National Penn Bancshares and as Chairman of the Achievement Foundation, a national organization that awards college scholarships to students who have participated in U.S. Junior Achievement Programs. He earned his BS in Economics and MBA from Lehigh University.

Q: Ben Franklin Technology Partners (BFTP) is one of the nation's longest-running technology-based economic development programs -- providing both early-stage and established companies with funding, business and technical expertise and access to a network of innovative, expert resources. What are some of the organization's accomplishments that advance the region's economic ecosystem?

A: The Ben Franklin Technology Partners of Northeastern Pennsylvania, which owns and operates Ben Franklin TechVentures® (BFTV), is a state-funded, technology-based economic development organization that serves 21 counties in northeastern Pennsylvania. Ben Franklin Technology Partners is widely viewed as one of the most successful technology-based economic development initiatives in the world. In 2008, the statewide program won the EDA's Excellence in Technology-led Economic Development Award. The International Economic Development Council (IEDC) named the statewide Ben Franklin Technology Partners as the winner in Excellence in Technology-Based Economic Development for its Overall Body of Work, 1983-2008. But the most important measure of Ben Franklin's success is in the companies, products, and employees that have flourished with its help. Ben Franklin has worked with hundreds of early-stage firms at their most vulnerable times, positioning them for success.

The Ben Franklin Technology Partners significantly increases the success rate of the highest-potential early-stage technology companies. We provide start-ups with access to seed capital, business and technical expertise, and a proven network of expert resources. Our job is to identify and evaluate opportunities, to select the most promising ones, and to provide client companies with crucial resources to increase their chances of success in today's highly competitive marketplace.

A long-range independent study by the Pennsylvania Economy League showed that BFTP statewide boosted the Gross State Product by $9.3 billion from 2002 through 2006, and provided more than $517 million in additional tax revenues as a direct result of its work. In 1989 through 2008, Ben Franklin created or retained more than 50,000 highly paid, sustainable Pennsylvania jobs, as well as developed hundreds of new companies and new technology-based products and processes. Ben Franklin delivers $3.50 of incremental tax revenue to Pennsylvania for every dollar of state investment in the program.

Last year, in northeastern Pennsylvania alone, the companies in the BFTP/NEP portfolio raised more than $137 million in follow-on funding. BFTP Northeast has achieved the following results:

Q: In 2009, Ben Franklin Technology Partners of Northeastern Pennsylvania was awarded a $6 million American Recovery and Reinvestment Act grant from EDA to expand the TechVentures incubator in Lehigh Valley – which was recently selected as one of the "10 Startup Incubators You Need to Watch" by Inc.com - and to support more innovative research and cutting-edge ideas. How many jobs will be created and what is the status of this effort?

A: Ben Franklin TechVentures® (BFTV), owned and operated by BFTP, has graduated 48 successful early-stage technology companies that together gross more than $408 million in annual revenue and have created 4,500 jobs. Twenty-six early-stage firms, employing 146 people, are currently located in Ben Franklin TechVentures. Ben Franklin TechVentures2, the essential 47,000-square-foot expansion of the original building that will open in Autumn 2011, will advance BFTP's ability to provide early-stage companies with reduced operating costs, business assistance, and the synergy of a business incubator. The new facility will allow BFTP to accommodate technology-based start-up companies that create as many as 200 jobs and retain 100 more in the first three years.

Q: The work being done at BFTP is enhancing innovation clusters in Pennsylvania and helping to create the jobs of the future. Identify best practices to spur job and economic growth that can be replicated in other regions.

A: The financial investment Ben Franklin provides is typically what initially draws early-stage companies to Ben Franklin. But the business development assistance and access to a proven network of support are also key benefits. The BFTP staff applies years of experience in advising and supporting early-stage technology firms, and links entrepreneurial clients to strategic consultants who help them:

• Develop a sound business plan
• Devise a plan to protect intellectual property
• Evaluate financial systems
• Identify and focus target markets and chief competitors
• Identify and successfully present to follow-on funders

Ben Franklin TechVentures brings together entrepreneurs, Ben Franklin staff, and Lehigh University faculty and students to accelerate the growth of the region's technology economy. The Ben Franklin team will continue to provide TechVentures resident companies with management guidance, business planning, strategic planning, and marketing counsel; connections to angel investors and venture capitalists; and assistance in preparing and perfecting funding presentations. The facility provides an entrepreneurial culture that fuels innovation and creates highly paid, sustainable technology jobs.

Q: Nearly 60 million Americans live in rural areas. President Obama has tasked U.S. Department of Agriculture Secretary Tom Vilsack with leading the White House Rural Council to support efforts to build economic growth and improve the quality of life in rural America, which accounts for just over 20% of the population. What role is the Delta Regional Authority playing?

A: The Delta is home to nearly 10 million people and 75% of Delta Counties and parishes are rural. The Delta Regional Authority believes that Rural America’s success determines the Delta’s success.

As an active participant in the White House Rural Council, we are hosting a number of White House Rural Council meetings for the public in our region to seek input on ways federal, state and local officials can help improve economic conditions and create jobs in Rural America. It is my belief that the Delta Regional Authority is an advocate for the families and businesses of the Delta and that the White House Rural Council meetings will give voice to innovative economic development strategies that boost small business growth. A recent study shows that life expectancy for men and women in the Delta region, is years behind the national average. The disparities between the Delta region and the nation as a whole are stark. With the Delta Regional Authority’s investments in the health and economic prosperity of our largely rural region, we helped create and retain nearly 50,000 jobs. By keeping the spotlight on rural America’s strengths as well as needs, we can coordinate federal resources and maximize investments across agencies.

Q: Based on the work of the Delta Regional Authority, what are some of the challenges and opportunities for small business development in the areas the organization represents?

A: The Delta is a place where daily life remains a struggle for many. Some communities depend on the Delta Regional Authority to improve basic infrastructure in order to attract business and industry and improve quality of life. 17,000 families have received sewer or clean water service because of our investments in basic infrastructure. Some communities face historic difficulty gaining access to capital and the Delta Regional Authority supports the expansion of innovative solutions like CDFI funded programs and microenterprise development organizations that provide credit and services to small businesses lacking access to loans from commercial sources.

I witnessed the significant damage caused by this spring’s severe storms and floods to Delta families and businesses. As we begin the long road to recovery from these events, I am committed to supporting a coordinated response to help businesses reopen and families rebuild.

The Delta Regional Authority has advocated for the expansion of technical assistance for federal resources. In addition to moving our application process online for added convenience, we are working with several federal partners to expand technical assistance so that every Delta community has the same opportunity to access federal resources.

Advancing Regional Innovation Clusters to Spur Job Growth

By Michael M. Crow, president of Arizona State University and a member of the U.S. Commerce Department’s National Advisory Council on Innovation and Entrepreneurship

Economic development strategies sometimes fail to recognize the important correlation between regional innovation cluster and jobs growth. Potential synergies remain unrealized because of the lack of coordination and collaboration between public and private sectors, and between the federal government, regional enterprises, and academic institutions. In a well-known example of successful innovation clustering previously profiled by the Economic Development Administration, boat makers from Maine traveled to Shanghai for the China International Boat Show in an effort to open up new markets. As reported in the Brookings Institution white paper “Clusters and Competitiveness” (April 2008), their 2007 trip was made possible by a $15 million federal grant awarded to North Star Alliance, a regional cluster initiative program organized by the state of Maine. The North Star Alliance brought together the local industry group, Maine Boat Builders, Inc., the University of Maine’s Advanced Engineered Wood Composites Center, state marine and composites trade associations, and various economic development and investment organizations. If we are to leverage regional innovation clusters to staunch the bleeding of middle-income jobs, the degree of coordination and planning exhibited by North Star Alliance could well serve as a model for industry clusters across the country.

The Great Recession accelerated trends threatening a vast swathe of the employment sector underway for nearly three decades, as shown by MIT economist David Autor in a 2010 white paper on the polarization of employment opportunities from the Center for American Progress and Brookings Institution. From 2007 through 2009, employment in high-skill, high-wage jobs remained stable while low-skill, low-wage jobs even showed slight gains. Meanwhile, middle-skill, middle-wage jobs such as those in sales, office and administrative, production, and operations saw job losses of 7–17 percent of total employment in those sectors. With the nascent economic recovery sputtering and jobs creation lagging, we must regard every economic development strategy as a workforce recovery effort.

The degree of “perpetual innovation” necessary for a robust economic recovery requires the cumulative impact of regional innovation clusters, the persistence of which may appear counterintuitive in this era of globalization. A valuable overview of the role of clusters in building economic competitiveness is to be found in an article by Michael E. Porter, which appeared in Harvard Business Review (November-December 1998). While advances in communication and transportation that contributed to globalization might lead observers to expect geographic dispersion of industries, Porter points out, we witness instead the persistent agglomeration of related institutions and organizations. These agglomerations encompass a diversity of actors: manufacturers of complimentary products, suppliers of specialized inputs, universities providing industry-specific R&D and education, vocational schools, and government agencies promoting specialized training, information, and infrastructure. While each cluster is unique and undoubtedly requires a customized policy approach, the most effective clusters work because they promote the right mix of cooperation and competition. In optimally structured clusters, companies can tap into large pools of information, suppliers, and skilled employees. Repeated interactions among cluster participants foster trust and long term-relationships leading to more collaboration and innovation than might have occurred in a more geographically diffuse industry. Furthermore, clusters are strengthened by lateral competition among companies occupying the same space in a supply chain.

As president of a large public university committed to academic enterprise and regional economic development, I would like to emphasize that the presence of a research university in a cluster is the keystone of the knowledge creation network driving discovery and innovation. I have observed firsthand the critical importance of regional innovation clusters to job growth. From my perspective, there are a number of key factors essential to their successful implementation. First, it is important to rally around and leverage local expertise and existing strengths. In Arizona, for example, we enjoy more than three hundred days of sunshine every year, providing us with the potential to become the unrivalled global leader in solar energy. But in order to become the Silicon Valley of the solar power industry, Arizonans will have to discard outmoded laissez faire attitudes and embrace an ambitious new mindset matched with commensurately robust public engagement. Our success will require a hybrid public-private partnership model and policy-driven market approach. In order to build a successful regional innovation cluster capable of generating jobs, regional planning must dovetail with strategic investments in infrastructure focused on positioning Arizona as the epicenter of the solar industry.

Second, after identifying a particular cluster, it is imperative to clarify expectations for outcomes. Today, an outcome is often equated with dollars spent, with the assumption that investment will automatically produce positive outcomes. We need new analytical tools to measure outcomes as well as their economic impact. Third, clusters require group problem-solving. We need to bring together industry experts, private foundations, universities, and all levels of government in order to leverage success. Finally, robust public engagement is vital. We will make only incremental progress if we are timid and set incremental goals. Any standard approach to economic development that is not somewhat regionalized or localized is not likely to succeed. Customization comes through the establishment of new kinds of innovation clusters guided by new tools and outcome measures. In order to advance regional innovation clusters that spur innovation, spark the formation of new firms, and contribute to workforce development, we must encourage innovation driven by outcomes.