In his State of the Union address, President Obama announced the creation of a “National Export Initiative,” as part of an ambitious goal of doubling exports in five years. (The real value of exports typically double every 13 years, and a five-year doubling hasn’t happened since the years immediately following World War II, an anomalous period to be sure). However, he was not clear on how this initiative will differ from long-standing export promotion activities--many of which are handled by the International Trade Administration (ITA), the Department of Agriculture, and the Export-Import Bank, as a previous post discussed.

For the fiscal year 2011 budget, the administration has proposed to increase funding to ITA by 20 percent to $534 million. Of this, according to the more detailed appendix, they call for no less than $258 million to go directly towards export promotion through the Foreign Commerce Service. That would be only a very modest increase from 2009 and 2010 when the amounts were $248 million and $253 million respectively. But the Department of Commerce has now posted what is presumably the preferred allocation: They are calling for $321 million to be spent on trade promotion--which would be an increase of almost a quarter--and the addition of 97 full-time employees.

The new Commerce document also provides some much-needed elaboration on what the National Export Initiative (NEI) would involve. The NEI would reportedly increase the overseas presence of Commercial Service liaisons, support legal challenges to trade violations, boost public-private partnerships, and provide market intelligence.

From its opening pages, the Obama administration’s FY2011 budget request adopts a stance that pervades this blog. Declares the document: “We need to recognize that competitive, high-performing regional economies are essential to a strong national economy.” (See page 20 of the federal budget.)

In line with this recognition, the new budget unveils not one, but several proposals to support regional industry or innovation “clusters” through multiple federal departments. Clusters, as we have noted previously, are a fundamental fact of national economies, and a critical enhancer of regional economic performance. However, as we have also noted, the U.S. lags other nations in providing support to these “bottom-up,” region-based systems of business development, innovation, and talent matching. And so the 2011 budget seeks to change that by applying cluster approaches across multiple segments of the federal delivery system--rather than anchoring it in a single agency. 

Along these lines, the administration’s new approach marks a welcome advance over last year’s initial budget request. Last year, the administration seemed to regard “clusters” as a discrete single program to be implemented by only the Economic Development Administration (EDA)--and so took its lumps en route to obtaining only a small portion of its request. This year’s budget, by contrast, treats regional industry networks as more of an operating paradigm for multiple activities, and as more a means to the important end of linking and aligning multiple federal interventions to maximize their impact in support of regional prosperity. (See page 22 of the federal budget.)

With a House-Senate “conference” committee soon to decide whether to create a truly valuable regional industry clusters initiative, misconceptions linger. Some rurally oriented conferees fear that cluster strategies pertain exclusively to urban development and leave rural America out. Others fret that cluster initiatives point exclusively toward high technology growth. However, none of the doubters need worry. As it happens, the sort of cluster program being entertained by the Commerce-Justice-Science (CJS) conference would be completely agnostic about geography and equally friendly to all sectors, so long as they promised growth.  What is more, it turns out that rural thinkers and doers are actually out front in recognizing the importance of regional cluster initiatives and federal programs for advancing them.

It’s true that cluster discussions--with their focus on spatial concentrations of related industry activity--have a cosmopolitan, high-tech feel. The Silicon Valley technology industry, after all, remains perhaps the most famous example of a cluster and clusters have naturally been equated with cities as cities are by nature agglomerations of economic activity. Likewise, the concept’s original author, Harvard Business School professor Michael Porter, has frequently discussed the powerful dynamism of such big-metro innovation communities as Boston’s biotech cluster, Hollywood’s movie cluster, New York’s finance center, and Milan’s fashion concentration.

And yet, as it happens, the cluster concept has strong rural and low-tech groundings. Porter himself has dwelt on the cluster structure of northern California’s wine cluster, which is populated by hundreds of wineries, thousands of independent grape growers, and myriad suppliers of grape stock, manufacturers of irrigation and harvesting equipment, producers of barrels, designers of bottle labels, and specialist marketers as well as the viticulture program of the University of California at Davis. Likewise, rurally oriented scholars like Stuart Rosenfeld have for more than two decades been producing authoritative reports on rural industry clusters, ranging from auto manufacturing in Northern Alabama to artisan cheesemaking in Vermont, log home production in the Bitterroot Valley of Montana, and wind energy in the Texas Panhandle. And for that matter economists at the Department of Agriculture (USDA) have conducted research important for the whole field suggesting that rural manufacturing clusters raise workers’ earnings substantially, and as much as do metropolitan clusters. In this regard, the vision of heightened economic collaboration and cooperation within distinct lines of work and industry has long appealed to rural thinkers.

After ten months of waiting, USAID finally has a new chief: Rajiv Shah, currently the agriculture department’s top scientist. Directing the country’s principal agency for administering foreign aid is a heady position for someone who is all of 36. And it’s going to be a difficult one. Shah is stepping into the middle of a struggle that has been quietly simmering for years in Washington.

It's been a long year--Barack Obama has faced, in rough order, John McCain, global financial collapse, Mahmoud Ahmadinejad, the Blue Dogs, the Progressive Caucus, the Gang of Six, Glenn Beck, Representative Joe Wilson (R-Hissy), and the third of Republicans convinced he was born somewhere else. Of course, minus the birth certificates, roughly the same has been true for Hu Jintao and Nicolas Sarkozy, for Angela Merkel and Manmohan Singh. That's what politics is--a series of challenges, which are rarely won or lost completely. You get part of what you wanted (everyone with health insurance), and maybe you leave other stuff for another day (the public option). That's why we call politics the pursuit of the possible.