ClusterMapping

1. ClusterMapping.us C2ER 52nd Annual Conference Regions and Communities in Transition: Recognizing Economic Turning Points Skirvin Hilton Oklahoma City Oklahoma City, OK June 7, 2012 Samantha ZyontzResearch Manager, Cluster Mapping ProjectInstitute for Strategy and Competitiveness Harvard Business School www.isc.hbs.edu

2. Agenda • Why Consider Regional Clusters? • Understanding Your Region and Clusters • Vision for ClusterMapping.us through March 2013 • Additional Resources

3. Clusters and Competitiveness Cluster: A geographic concentration of related companies and associated institutions in a particular field, linked by spillovers and complementarities • Competitiveness is driven by the strength of the cluster, not only the strength of individual companies Local Externalities Productivity • Specialized skill pool • Specialized suppliers • Specialized infrastructure • Specialized institutions • Knowledge spillovers • Competitive pressure Innovation New Business Formation

4. The Diamond Behind the Cluster Context for Firm Strategy and Rivalry • Localrules and incentives that encourage investment and productivity • e.g. salaries, incentives for capital investments, intellectual property protection, corporate governance standards • Open and vigorous local competition • Openness to foreign competition • Competition laws Factor (Input) Conditions Demand Conditions • Access to high quality business inputs • Human resources • Capital availability • Physical infrastructure • Administrative and information infrastructure (e.g., registration, permitting, transparency) • Scientific and technological infrastructure • Efficient access to natural endowments • Sophisticatedanddemandinglocal customers and needs • e.g., Strict quality, safety, and environmental standards • Consumer protection laws Related and Supporting Industries • Availability and depth of suppliersandsupporting industries • Many things matter for competitiveness • Successful economic development is a process of successive upgrading, in which the business environment improves to enable increasingly sophisticated ways of competing

5. Strong Clusters Drive Regional Performace • Specialization in strong clusters • Breadth of industries within each cluster • Strength in related clusters • Presence of a region‘s clusters in neighboring regions • Job growth • Higherwages • Higher patenting rates • Greater new business formation, growth and survival Not significant • Positions in “high-tech“ versus other clusters Source: Porter, The Economic Performance of Regions, Regional Studies, 2003; Delgado/Porter/Stern, Clusters and Entrepreneurship, Journal of Economic Geography, 2010; Delgado/Porter/Stern, Clusters, Convergence, and Economic Performance, mimeo., 2010.

6. Clusters as a Tool For Economic Policy A forumfor collaboration betweentheprivate sector, trade associations, government, educational, and research institutions Brings together firms of all sizes, including SME’s Creates a mechanism for constructive business-government dialog A tool to identify problems and action recommendations A vehicle for investments that strengthen multiple firms/institutions simultaneously Fosters greater competition rather than distorting the market

7. Agenda • Why Consider Regional Clusters? • Understanding Your Region and Clusters • Vision for ClusterMapping.us through March 2013 • Additional Resources

8. Composition of the EconomyLinkages Across Clusters Fishing & Fishing Products Textiles Entertainment Prefabricated Enclosures Hospitality & Tourism Agricultural Products Furniture Processed Food Transportation & Logistics Building Fixtures, Equipment & Services Construction Materials Aerospace Vehicles & Defense Information Tech. DistributionServices Jewelry & Precious Metals Heavy Construction Services Lightning & Electrical Equipment Analytical Instruments Business Services Education & Knowledge Creation Power Generation Forest Products Medical Devices Communi- cations Equipment Publishing & Printing Biopharma- ceuticals Financial Services Heavy Machinery Production Technology Motor Driven Products Chemical Products Tobacco Oil & Gas Apparel Mining & Metal Manufacturing Automotive Plastics Aerospace Engines Footwear Leather & Related Products Sporting & Recreation Goods Note: Clusters with overlapping borders or identical shading have at least 20% overlap (by number of industries) in both directions.

9. ClusterMapping.usToday

10. Specialization of Regional Economies Denver, CO Business Services Medical Devices Entertainment Oil and Gas Products and Services Chicago, IL-IN-WI Metal Manufacturing Lighting and Electrical Equipment Production Technology Plastics Pittsburgh, PA Education and Knowledge Creation Metal Manufacturing Chemical Products Power Generation and Transmission Boston, MA-NH Analytical Instruments Education and Knowledge Creation Medical Devices Financial Services Seattle, WA Aerospace Vehicles and Defense Information Technology Entertainment Fishing and Fishing Products New York, NY-NJ-CT-PAFinancial ServicesBiopharmaceuticals Jewelry and Precious Metals Publishing and Printing San Jose-San Francisco, CA Business Services Information Technology Agricultural Products Communications Equipment Biopharmaceuticals Los Angeles, CA Entertainment Apparel Distribution Services Hospitality and Tourism Raleigh-Durham, NC Education and Knowledge Creation Biopharmaceuticals Communications Equipment Textiles San Diego, CA Medical Devices Analytical Instruments Hospitality and Tourism Education and Knowledge Creation Dallas Aerospace Vehicles and Defense Oil and Gas Products and Services Information Technology Transportation and Logistics Houston, TX Oil and Gas Products and Services Chemical Products Heavy Construction Services Transportation and Logistics Atlanta, GA Transportation and Logistics Textiles Motor Driven Products Construction Materials Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.

12. Traded Cluster Composition of the Oklahoma Economy Overall change in the Oklahoma Share of US Traded Employment: 0.17% Oil and Gas Products and Services Oklahoma national employment share, 2009 Motor Driven Products Heavy Construction Services Heavy Machinery Production Technology Employment 1998-2009 Entertainment Leather and Related Products Added Jobs Transportation and Logistics Oklahoma Overall Share of US Traded Employment: 1.16% Lost Jobs Change in Oklahoma share of National Employment, 1998 to 2009 Employees 6,600 = Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.

13. Traded Cluster Composition of the Oklahoma Economy (continued) Overall change in the Oklahoma Share of US Traded Employment: 0.17% Metal Manufacturing Power Generation and Transmission Processed Food Analytical Instruments Aerospace Vehicles and Defense Building Fixtures, Equipment and Services Oklahoma Overall Share of US Traded Employment: 1.16% Forest Products Prefabricated Enclosures Construction Materials Business Services Automotive Oklahoma national employment share, 2009 Hospitality and Tourism Plastics Information Technology Financial Services Education and Knowledge Creation Chemical Products Sporting, Recreational and Children’s Goods Lighting and Electrical Equipment Aerospace Engines Agricultural Products Distribution Services Communications Equipment Publishing and Printing Furniture Employment 1998-2009 Apparel Medical Devices Jewelry and Precious Metals Added Jobs Textiles Biopharmaceuticals Lost Jobs Change in Oklahoma share of National Employment, 1998 to 2009 Employees 8,000 = Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.

14. Oklahoma Job Creation in Traded Clusters 1998 to 2009 Net traded job creation, 1998 to 2009:+41,215 Job Creation, 1998 to 2009 • Indicates expected job creation given national cluster growth.* * Percent change in national benchmark times starting regional employment. Overall traded job creation in the state, if it matched national benchmarks, would be -12,223 Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.

15. Oklahoma Wages in Traded Clusters vs. National Benchmarks l Indicates average national wage in the traded cluster Oklahoma average traded wage: $44,376 U.S. averagetraded wage: $56,906 Wages, 2009 Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.

17. Agenda • Why Consider Regional Clusters? • Understanding Your Region and Clusters • Vision for ClusterMapping.us through March 2013 • Additional Resources

18. New Directions 1. Engaging &Educating 2. Community

19. 3. CustomizeRegions BEA Economic Regions VT Albany Economic Area NH Boston Economic Area NY MA RI CT PA Hartford Economic Area NJ New York Economic Area Economic Area definitions from U.S. Bureau of Economic Analysis

20. 4. Macro Viewof Clusters Wired Magazine

21. Agenda • Why Consider Regional Clusters? • Understanding Your Region and Clusters • Vision for ClusterMapping.us through March 2013 • Additional Resources

22. Additional Cluster Resources Institute for Strategy and Competitiveness: http://www.isc.hbs.edu/ STATSAmerica: http://www.statsamerica.org/ European Cluster Observatory: http://www.clusterobservatory.eu/ TCI Network: http://www.tci-network.org/

23. The TCI conference is a global and inspiring platform for fast exchange of patterns and ideas on competitiveness, clusters and innovation. Hosts: Basque Government and Orkestra-Basque Institute of Competitiveness Venues: San Sebastian & Bilbao Why the Basque Country? With strong tradition of more than 2 decades on cluster and competitiveness policy and practice, participants will learn from first hand experience and results. Who will attend? Practitioners on clusters, competitiveness and economic development at firm, city, regional and national level. Business leaders, cluster managers and facilitators, economic development practitioners, policy makers, government officials, researchers, analysts, consultants, development agency teams. www.tci2012.com

24. Appendix

25. Massachusetts Medical Devices Cluster A geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities

26. The Composition of Regional EconomiesUnited States Traded Local NaturalResource-Driven 27.4% 0.3% $57,706 135.2% 3.7% 144.1 21.5 590 677 71.7% 1.5% $36,911 86.5% 2.7% 79.3 0.3 241 352 0.9% 0.5% $40,142 94.1% 2.4% 140.1 1.6 48 43 Share of Employment Employment Growth Rate Average Wage Relative Wage Wage Growth Rate Relative Productivity Patents per 10,000 Employees Number of SIC IndustriesNumber of NAICS Industries Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.

29. The TCI conference is a global and inspiring platform for fast exchange of patterns and ideas on competitiveness, clusters and innovation.

30. 4 days of stimulating learning, networking and connecting with people from over 50 countries

31. Contact Christian Ketels President cketels@tci-network.org Patricia Valdenebro General Manager pvaldenebro@tci-network.org