Brookings Examines Potential Impact of Federal Public-Private Economic Development

Fostering regional innovation is imperative to strengthening our national economy and crafting public-private partnerships (PPPs) are a key strategy for catalyzing regional economic growth. While states should continue to lead regional innovation efforts, the federal government can play a critical supporting role. The Brookings Institution proposes the establishment of a PPP unit within the White House to coordinate Federal assistance. Examples of effective federal-regional PPP units already are active within the Department of Transportation and the White House Startup America Initiative.

Policymakers know that state and local governments hampered by fiscal constraints face a serious challenge in providing necessary investments in innovation. But while the importance of PPPs in fostering regional innovation has been discussed at length, the appropriate role of the federal government in leading and/or supporting regional innovation has not. As part of its "Remaking Federalism" project the Brookings Institution has released a series of proposed legislation to enhance federal support for regional innovation. One proposal calls for establishing a PPP unit within the White House Office of Management and Budget that would work with local and state governments to streamline procurement, provide legal counsel, share best practices, assist with policy formulation, and provide technical assistance.

Examples of state and local initiatives, along with case studies from other developed countries, demonstrate that PPPs that are designed and implemented correctly can significantly increase investment and returns on public projects. And examples of federal-regional PPP service delivery already exist:

The White House already is working directly with a national network of universities, corporations, foundations, and entrepreneurs through its Startup America Initiative, in concert with the private sector's Startup America Partnership to foster state-based economic innovation across the country. And the Department of Transportation's Office of Innovative Program Delivery provides case studies and best practices, helps public project sponsors evaluate financing alternatives, and provides technical assistance for state and local policymakers who are in the process of structuring PPP proposals.

But while federal-regional PPP support can be an effective tool for promoting regional innovation, Brookings Senior Fellows Emilia Istrate and Robert Puentes argue that it is imperative that federal PPP services are streamlined and centralized to provide efficient and effective service delivery to state and local policymakers. They proposes a "cut to invest" strategy for federal innovation programming, recommending that PPP support be consolidated into one nimble White House office that can assist all departments of the federal government with leveraging private sector financial resources and expertise, and assisting state policymakers with meeting project delivery goals.

PPPs are not a cure-all for cash-strapped local and regional governments. But PPPs are essential to fostering regional innovation and the federal government has an essential role to play in supporting those efforts. The Brookings Institution experts note that this policy proposal can be achieved through executive order.