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Getting Down to Business

Getting Down to Business. A Practitioner’s Guide to Understanding Clusters-Based Approach to Regional Economic Development and Workforce Preparation. Theories About What Drives Economic Development. Innovation Schumpeter’s Creative Destruction State Science and Technology Institute

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Getting Down to Business

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  1. Getting Down to Business A Practitioner’s Guide to Understanding Clusters-Based Approach to Regional Economic Development and Workforce Preparation

  2. Theories About What Drives Economic Development • Innovation • Schumpeter’s Creative Destruction • State Science and Technology Institute • Entrepreneurship • Kauffman Foundation • Access to Capital • Stages and Source • Availability of Key Human Resources

  3. Role of Geography • Richardo’s Theory of Comparative Advantage • Popularized more recently by Michael Porter • Synergistic Effects of Geographic Proximity

  4. Knowledge Spillovers • Proximity or Research Institutions • Proximity to Sophisticated and Discerning Customers • Proximity to Competitors • Supply Chain Integration • Proximity of Core Industry to Ancillary Industries • Proximity to Specialized Support Industries

  5. Two Approaches • Transactional (Qualitative) • Players • Resources • Communication Flows ? Limitations • Traditional (Quantitative) • Location Quotients • Input/Output (I/O) Models ? Limitations

  6. Sources Basic Sweat Angel Debt Mergers & Subsidies Fire of R&D F & F Venture IPO Acquisitions Bailouts Sales Capital Exploitive and Incremental Off Shored Pirated & or Open Source Formal Unbundled Sales Codified Profit Margin Outsourced Automated Knowledge Tactic Innovation Commercialization Commoditization Abandonment Product Life Cycle

  7. Relevance of Location Over Time Industrial Economy Importance of Location or Geographic Clustering Global Knowledge-Based Economy ? Elapsed time since breakthrough Innovation

  8. The World Is Flat Factors Eroding Importance of Geography • Educational Gains in Emerging Nations • Information Technology • Speed, Bandwidth, Reliability • Cost and Access • Codification and Diffusion of Knowledge • Free Trade • Footloose Capital • Cheaper & Faster Transportation • Beachhead/Foothold in Foreign Markets • Price-Based Competition & Labor Cost Cuts

  9. New Business Model Reduces Importance of Geography Physical Headquarters & Satellite Operations versus Virtual Platform Unbundling of Tasks and Tradability of Skills

  10. Is Geography Making A Comeback? • Backlash on Free Trade • Subsidies and Protectionism • Saturation of Capacity • Talent, IT, Infrastructure, Transportation • Foreign Direct Investment • Revaluation of Currency & Value of Assets • Foreign Foothold in U.S. Markets

  11. Will the Greening of the Economy Make a Difference? • Industry-Based Approach • Firm-Based Approach • Establishment-Based Approach • Occupation-Based Approach • Work Assignment/Duties-Based Approach • Outcomes-Based Approach • Impact on Energy • Net reduction of energy consumption • Reducing dependence on foreign oil • Impact on emissions reduction • Impact on employment • UI benefit recipients • TANF Recipients

  12. Decrease in BBLs Imported Proposal B Increase in CO2 Emissions Decrease in CO2 Emissions Proposal A Increase in BBLs Imported

  13. Marc Anderberg • marc.anderberg@twc.state.tx.us • (512) 491-4803

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