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Cluster Analysis in Southeast Missouri-Plotting the Road to Economic Development

Diane Primont, PhD Bruce Domazlicky, PhD Center for Economic & Business Research cebr@semo.edu http://www6.semo.edu/cebr. Cluster Analysis in Southeast Missouri-Plotting the Road to Economic Development. Economic Development-The Dream. Nissan Manufacturing Facility, Smyrna, TN.

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Cluster Analysis in Southeast Missouri-Plotting the Road to Economic Development

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  1. Diane Primont, PhD Bruce Domazlicky, PhD Center for Economic & Business Research cebr@semo.edu http://www6.semo.edu/cebr Cluster Analysis in Southeast Missouri-Plotting the Road to Economic Development

  2. Economic Development-The Dream Nissan Manufacturing Facility, Smyrna, TN

  3. Economic Development-The Reality? M T Industrial Park

  4. One Size Does Not FiT All

  5. Export-Orientation Region R.O.W.

  6. Global Economy Competitive Advantages are not Forever Develop Region Based on its Strengths Cluster Analysis

  7. Political Boundaries Are Unimportant to Most Firms Political Boundaries Not Very Important to People, Either Access to Labor, Raw Materials, Inputs, Transportation, Markets Are the Keys Counties Need to Cooperate, Not Compete with each Other Multiregional Approach

  8. Geographic concentration of interconnected companies and institutions in a particular field • A cluster includes • the core or driver industries • upstream industries (suppliers) • downstream industries (customers) • other institutions (such as, agricultural extension, research labs, trade associations, and so on) What is an industry cluster?

  9. Definitions are adopted from Indiana Business Research Center, work done with • Center for Regional Development at Purdue University and Strategic Development Group • under grant from EDA Industry Cluster Definitions

  10. Example: Biomedical/Biotechnical Support Industries: Scientific R&D Customers: Health and personal care stores; Doctors’ offices; Hospitals Suppliers: Laboratory apparatus and furniture Mfg Driver Industries: Pharmaceuticals and Medicines Mfg Medical Instruments/ Equipment/Supplies Mfg Infrastructure: Waste management and remediation

  11. Example: Forest & Wood Products Support Industries: Forestry Support Services; Custom Architectural Services Customers: Manufac. Homes; Mobile Homes; Wholesale/ Retail Suppliers: Logging; Sawmills; Sawmill & Woodwork Machinery Driver Industries: Window & Door Mfg Furniture Mfg Container Mfg Paper Products Mfg Millwork

  12. Industry clusters create a competitive advantage for the region. • The competitive advantage derives from four factors: • Factor conditions • Demand conditions • Related and supporting industries • Firm strategy, structure, and rivalry Why are Industry Clusters Important?

  13. The Southeast Missouri Region Source: www.oseda.missouri.edu/modot/rpc/

  14. The Bootheel Missouri Region Source: www.oseda.missouri.edu/modot/rpc/

  15. Used to measure the extent of a region’s specialization or concentration in an industry cluster The location quotient (LQ) is: Employment data for 2001 and 2006 from Minnesota IMPLAN Group Location Quotients Fraction of region’s employment in industry cluster LQ = Fraction of nation’s employment in industry cluster

  16. If the region employs 15% of its workforce in the industry cluster, while the nation employs 10% then • LQ = 0.15 / 0.10 = • Since LQ exceeds one • the fraction of the workforce employed in the region’s cluster exceeds the fraction employed in the cluster at the national level • the region specializes in the cluster Example: Location Quotients 1.5

  17. Bubble chart is a three dimensional display • LQ in 2006 (vertical axis) • % Change in LQ 2001-2006 (horizontal axis) • Employment in 2006 (size of bubble) Industry Cluster Bubble Chart

  18. Industry Cluster Bubble Chart Hypothetical Data Mature 5 Star LQ in 2006 1 -10 10 Transforming Emerging 0 % chg in LQ 2001-2006

  19. Industry Cluster Bubble Chart • Four Quadrants • Northwest: Mature clusters • Specialization and slow or declining growth • Northeast: Star clusters • Specialization and fast growth • Southeast: Emerging clusters • Not specialized, but fast growth • Southwest: Transforming clusters • Not specialized and slow or declining growth

  20. Mature Star Agribusiness Apparel & Textiles Forest & Wood Energy Transportation & Logistics Biomedical Arts, etc. Transforming Education & Knowledge Emerging

  21. Mature Star Transportation Equip Mfg Mining Transportation & Logistics Agribusiness Advanced Materials Education & Knowledge Defense & Security IT Biomedical Business & Financial Transforming Emerging

  22. Each county is unique in its industry cluster specialization. Each county specializes in at least four industry clusters. All counties share a cluster specialization with one or more other counties. Industry Clusters in the theRegions and Counties

  23. Star Mature Electric. Equip. Mfg. Transforming Emerging

  24. Star Mature Fab. Metal Mfg. Mining Chemicals Education & Knowledge Forest & Wood Transportation & Logistics Transp. Equip. Mfg. Business & Financial Energy Transforming Emerging

  25. LQ Analysis Summary • Mature Clusters • Agribusiness, Food Processing, & Technology; Glass & Ceramics; Biomedical/Biotechnical • Star Clusters • Mining; Chemicals & Chemical Based Products; Electrical Equipment, Appliance & Component Manufacturing; Forest & Wood Products; Fabricated Metal Product Manufacturing; Transportation and Logistics • Emerging Clusters • Transportation Equipment Manufacturing; Energy Industry Clusters in the Southeast Missouri Region

  26. Prim Metal Mfg. Forest & Wood Transp. Equip. Mfg. Agribusiness Transportation & Logistics Energy Elec Equip Mfg Education & Knowledge Business & Financial Defense & Security

  27. LQ Analysis Summary • Mature Clusters • Electrical Equipment, Appliance & Component Manufacturing; Mining • Star Clusters • Primary Metal Manufacturing; Agribusiness, Food Processing, & Technology; Transportation Equipment Manufacturing; Forest & Wood Products; Transportation and Logistics • Emerging Clusters • Advanced Materials; Education & Knowledge Creation; Biomedical/Biotechnical; Fabricated Metal Product Manufacturing; Arts, Entertainment, Recreation & Visitor Industries; Defense & Security Industry Clusters in the Bootheel Missouri Region

  28. Shift-Share Analysis A technique used by regional economists to study the growth /decline of a region. Growth is decomposed into its constituent parts.

  29. National Growth Sector or Cluster Growth Share Component (Competitive Shift) Shift-Share Components

  30. Employment, 2001: 80 Employment, 2006: 335 Increase: 255 National Growth Rate, 2001-2006: 3.5% Net Cluster Growth Rate, 2001-2006: 17.2% (Cluster growth rate – national growth rate) Defense/Security: Mississippi County

  31. Growth Due to National Growth: 3 (0.035 x 80) Net Growth Due to Cluster Growth: 14 (0.172 x 80) Regional Component: 239 (255-3-14) Why such a large competitive shift? Shift-Share Analysis: Mississippi County

  32. 7-County SE Missouri Region

  33. Bootheel Region

  34. Thanks for Your Interest! Any Questions?

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