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Cluster Analysis in Missouri’S Bootheel-A tool for Economic Development

Diane Primont, PhD Bruce Domazlicky, PhD Center for Economic & Business Research cebr@semo.edu http://www6.semo.edu/cebr. Cluster Analysis in Missouri’S Bootheel-A tool for Economic Development. The views expressed in this presentation are those of the authors and do

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Cluster Analysis in Missouri’S Bootheel-A tool for 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 Missouri’S Bootheel-A tool for Economic Development

  2. The views expressed in this presentation are those of the authors and do not necessarily reflect the views of Southeast Missouri State University or the Economic Development Administration.

  3. Major New Employer-200 Employees Typically Manufacturing: High-Paying Jobs Population Increases New Housing Construction Tax Base Increases Attracts Additional Firms and Population in a Virtuous Circle of Economic Growth Economic Development-The Dream

  4. Industrial Park that Largely Sits Empty Growth is Slow and Uncoordinated Little Thought Given to the Interdependencies between Firms Inadequate Recognition of the Region’s Competitive Advantages Go-It-Alone Philosophy: Other regions are Competitors Economic Development-The Reality?

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

  6. Global Economy Technological Change: Innovate or Perish Competitive Advantages are not Forever Develop Region Based on its Competitive Strengths Multiregional Approach May Often Be Necessary 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. 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?

  12. 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 2007 from Minnesota IMPLAN Group Location Quotients Fraction of region’s employment in industry cluster LQ = Fraction of nation’s employment in industry cluster

  13. 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

  14. Bubble chart is a three dimensional display • LQ in 2007 (vertical axis) • % Change in LQ 2001-2007 (horizontal axis) • Employment in 2007 (size of bubble) Industry Cluster Bubble Chart

  15. Industry Cluster Bubble Chart Hypothetical Data Mature 5 Star LQ in 2007 1 -10 10 Transforming Emerging 0 % chg in LQ 2001-2007

  16. Industry Cluster Bubble Chart Hypothetical Data Mature 5 Star LQ in 2007 1 -10 10 Transforming Emerging 0 % chg in LQ 2001-2007

  17. Industry Cluster Bubble Chart Hypothetical Data Mature 5 Star LQ in 2007 1 -10 10 Transforming Emerging 0 % chg in LQ 2001-2007

  18. 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

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

  20. Mature

  21. LQ Analysis Summary • Mature Clusters • Electrical Equipment Manufacturing; Glass & Ceramics • Star Clusters • Primary Metal Manufacturing; Agribusiness; Forest & Wood Products; Transportation Equipment Manufacturing; Transportation and Logistics • Emerging Clusters • Advanced Materials; Biomedical/Biotechnical; Fabricated Metal Product Manufacturing; Defense & Security Industry Clusters in the Bootheel Missouri Region

  22. Uses of LQ Analysis Picture of regional economy Choosing clusters to target LQ and its change Employment size Ability to create jobs Ability to generate tax revenues Availability of federal and state funding/grants Ability to sustain economic stability of region

  23. Clusters and Economic Development

  24. “Clusters arise because they increase the productivity with whichcompanies can compete. The development and upgrading ofclusters is an important agenda for governments, companies andother institutions.” Institute for Strategy and Competitiveness, Harvard Business School “…economic development leaders are urged to think of their future target industry as a portfolio containing a mix of industries that helpgrow and diversify the region’s economy over time.” Don Iannone & Associates

  25. North Carolina’s research Triangle Austin’s Information Technology Cluster Connecticut’s Insurance & Finance Markets Hollywood’s Film Industry Silicon Valley in California Carpets in Northern Georgia Examples of Clusters

  26. Build on the unique strengths of their regions Go beyond analysis and engage in dialogue with cluster members Develop different strategies for different clusters Foster an environment that helps new clusters to emerge and existing ones to grow rather than creating a cluster from scratch What Makes Clusters initiatives Successful?

  27. Business leaders University representatives Economic developers Chambers of commerce Support groups: law, marketing, etc. Building a Cluster team

  28. Catalog the cluster: identify firms and interrelationships Craft a vision of what the cluster can become in the next 10 years Identify opportunities for growing the cluster Identify opportunities for more synergy within the cluster Identify needs: labor force, resources, etc. Activities of a Cluster Group

  29. Co-Inform to identify cluster members Co-Learn: training programs Co-Market: promote the cluster’s products Co-Purchase: strengthen buyer-supplier linkages Co-Produce: produce a product together or conduct R & D crucial to the cluster Co-Build economic foundations Cluster Projects

  30. Thanks for your attention Any Questions?

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