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Developing Cluster Strategies for Your Region

Developing Cluster Strategies for Your Region. Lee Munnich State and Local Policy Program Humphrey Institute of Public Affairs University of Minnesota April 3, 2002. State and Local Policy Program. Overview. State and Local Policy Program

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Developing Cluster Strategies for Your Region

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  1. Developing Cluster Strategies for Your Region Lee Munnich State and Local Policy Program Humphrey Institute of Public Affairs University of Minnesota April 3, 2002 State and Local Policy Program

  2. Overview • State and Local Policy Program • Economic development strategies and the knowledge economy • Why are industry clusters important? • Role of industry clusters in metropolitan economic development. • How can the public and private sectors in metropolitan areas use the cluster concept to work together to structure successful economic development efforts?

  3. State and Local Policy Program • Applied research center of the Humphrey Institute of Public Affairs, University of Minnesota • Founded in 1991 • Focus areas on economic development, sustainable transportation, telecommunications, and local governance

  4. SLPP Economic Development Projects • Economic Development Strategy Summit (1992) and Innovations in Economic Development Conference (1997) • Economic Development Strategy Workshop • Emerging Principles in Economic Development: A Benchmarking Tool • Regional Industry Cluster Studies • Understanding Your Economy Web Site • www.hhh.umn.edu/Centers/SLP/

  5. State and Local Economic Development Strategies • 1980s: Discovering the World • 1990s: Discovering the Workforce and the IT Revolution • 2000s: Discovering the Knowledge Economy

  6. “The Knowledge Economy” • Knowledge Economy = Innovation • Innovation requires knowledge about technologies, processes, markets, etc., that make it work • Associated with “high tech” because shorter product cycles have demanded continuous innovation • In today’s economy, innovation is survival, no matter what your product or service line is. • The economic development challenge:providing a fertile environment for innovation

  7. Knowledge Innovation Clusters

  8. What matters in the “knowledge economy” • Competitive advantage matters • History matters • Institutions matter

  9. Competitive Advantage • Michael Porter, Competitive Advantage of Nations (1991) • “Diamond of advantage” drives innovation: • Factor conditions • Demand conditions • Related and supporting industries • Firm strategy, structure, and rivalry

  10. History • Knowledge is path dependent – the new knowledge you create is directly related to the knowledge you already possess • Specialization is prevalent in high-tech economies (Cortright) • Specialization is prevalent in high-innovation economies

  11. Institutions • Formal and informal institutions • Formal • Educational – universities, tech colleges • Civic – trade associations • Government – technology transfer • Informal • Social capital • Entrepreneurship

  12. What are Industry Clusters? (Porter) • Geographic concentrations of competing, complementary, or interdependent firms • Common needs for talent, technology, and infrastructure • Dynamic, changing as the industries themselves or external conditions change • Centered on firms that sell outside the local, state, national market • Driving forces in a national, regional, state or metropolitan economy

  13. Michael Porter’s“Diamond of Advantage” Chance Government

  14. Why are clusters important? • Common understanding of the dynamic competitive forces affecting your local economy • Organizational tool for economic development, workforce development and community development strategies in a knowledge economy • Continuous improvement of programs and services based on an industry cluster approach • Effective linkages among private, public and non-profit stakeholders for long-term sustainable development

  15. SLPP Regional Industry Cluster Studies: Purpose Strengthen economic competitiveness and increase economic opportunities by • Identifying successful industry clusters; • Examining the competitive advantage of these industries using Michael Porter’s framework; • Bringing communities, businesses and economic development professionals together to discuss these clusters and the “regional economy; • Developing recommendations for action based on the industry cluster analysis.

  16. SLPP Regional Industry Cluster Studies: Analysis and Selection • Analysis: • Location Quotients • Shift-Share • Selection Criteria: • Is the industry competitive? • Is there evidence of “clustering”? • Are the jobs good jobs (wages, etc)? • Is the industry sustainable in long-term? • If an emerging cluster, are there growth prospects?

  17. Twin Cities Industry Clusters • Medical Devices • Printing and Publishing • Information Technology • Metals and Metalworking • Financial Services • Professional Services • Arts/Leisure Source; Metro Council/Humphrey Institute, Twin Cities Industry Cluster Study (1995)

  18. Twin Cities Competitive Advantages • Major corporations: 3M, Medtronic, General Mills/Pillsbury, Target, Best Buy, Northwest Airlines, West Publishing, Wells Fargo, US Bank, etc. • Balanced mix of competitive industry clusters • Competitive network of suppliers driven by demanding corporate customers • University of Minnesota • Entrepreneurial environment • High skilled workforce • Attractive quality of life

  19. Rural Knowledge Clusters • Mankato: Wireless technologies • Thief River Falls/NW Minnesota:Recreational transportation equipment • Alexandria:Automation and motion control technologies

  20. Role of Industry Clusters in Metropolitan Economic Development • Core of a competitive regional economy driven by productivity improvement and innovation • Comprehensive strategy for a global knowledge-based economy. • Organizing tool for regional economic development, workforce development and community development efforts. • Strategy for improving productive capacity of disadvantaged populations, unemployed, and underemployed workers. • Customer-driven approach, based on effective partnerships among key stakeholders, measuring results and continuous learning.

  21. How can the public and private sectors in metropolitan areas use the cluster concept to work together to structure successful economic development efforts?

  22. A Common Vision • Based on a common understanding of how industry clusters are a competitive force in the regional economy • Involving all key regional stakeholders • Driving force for action on strategic problems affecting the future of the regional economy

  23. Developing Cluster Strategies for Your Region Lee Munnich State and Local Policy Program Humphrey Institute of Public Affairs University of Minnesota April 3, 2002 State and Local Policy Program

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