Diane Primont, PhDBruce Domazlicky, PhDCenter for Economic & Business [email protected]://www6.semo.edu/cebr
Nissan Manufacturing Facility, Smyrna, TN
M T Industrial Park
Region
R.O.W.
Global Economy Competitive Advantages are not Forever Develop Region Based on its Strengths
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
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)
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 Clusters Definitions1. Advanced Materials2. Agribusiness, Food Processing & Technology3. Apparel & Textiles4. Arts, Entertainment, Recreation & Visitor Industries5. Biomedical/Biotechnical (Life Sciences)6. Business & Financial Services 7. Chemicals & Chemical Based Products8. Defense & Security9. Education & Knowledge Creation
10. Energy (Fossil & Renewable)11. Forest & Wood Products12. Glass & Ceramics13. Information Technology & Telecommunications14. Transportation & Logistics15. Primary Metal Mfg16. Fabricated Metal Product Mfg17. Machinery Mfg18. Computer & Electronic Product Mfg19. Electrical Equipment, Appliance & Component Mfg20. Transportation Equipment Mfg21. Mining22. Printing & Publishing
Driver Industries:Pharmaceuticals and Medicines
MfgMedical Instruments/
Equipment/Supplies Mfg
Customers:
Health and personal
care stores;
Doctors’ offices;
Hospitals
Suppliers:
Laboratory
apparatus and
furniture Mfg
Support Industries:
Scientific R&D
Infrastructure:
Waste management
and remediation
Driver Industries:Window & Door Mfg
Furniture Mfg Container Mfg
Paper Products MfgMillwork
Customers:
Manufac. Homes;Mobile Homes;
Wholesale/Retail
Suppliers:
Logging; Sawmills; Sawmill
& Woodwor
k Machiner
y
Support Industries:
Forestry Support Services;Custom
Architectural Services
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
Source: www.oseda.missouri.edu/modot/rpc/
Source: www.oseda.missouri.edu/modot/rpc/
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
LQ =Fraction of region’s employment in industry clusterFraction of nation’s employment in industry cluster
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
1.5
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)
LQ in
20
06
% chg in LQ 2001-2006
1
0
5
10-10
Star
EmergingTransforming
Mature
Hypothetical Data
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
Madison County, MissouriIndustry Clusters
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
-150 -100 -50 0 50 100 150 200
% chg in LQ 2001-2006
LQ
in 2
006
Energy
Agribusiness
Biomedical
Education & Knowledge
Apparel & Textiles
Forest & Wood
Transportation & Logistics
Arts, etc.
Mature Star
Transforming Emerging
Business & Financial
AgribusinessAdvanced Materials
Biomedical
Education & Knowledge
Transportation & Logistics
ITDefense &Security
MiningTransportation Equip Mfg
Mature Star
Transforming Emerging
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.
Southeast Missouri Regional Planning Commission: Industry Clusters
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
-200 -100 0 100 200 300 400 500 600 700
% chg in LQ 2001-2006
LQ
in 2
006 Electric. Equip. Mfg.
Mature Star
Transforming Emerging
Southeast Missouri Regional Planning Commission: Industry Clusters
(excluding Electrical Equipment Mfg.)
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
-60 -40 -20 0 20 40
% chg in LQ 2001-2006
LQ
in 2
006
Chemicals
Mining
Forest & Wood
Transp.Equip. Mfg.Energy
Transportation & Logistics
Fab. MetalMfg.
Education &Knowledge
Business & Financial
Mature Star
Transforming Emerging
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
Elec EquipMfg
Forest & Wood Transp.Equip. Mfg.
Energy
Transportation & Logistics
Prim MetalMfg.
Education &KnowledgeBusiness & Financial Defense & Security
Agribusiness
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
A technique used by regional economists to study the growth /decline of a region. Growth is decomposed into its constituent parts.
National Growth Sector or Cluster Growth Share Component (Competitive Shift)
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)
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?
Stars TE, 2006 Change, 2001-2006
National Cluster Region
Mining 1,506 95 50 -70 116
Chemicals 3,623 615 94 -294 815
Electrical Equipment
576 469 4 -25 491
Forest/Wood
3,513 94 121 -250 223
Fab. Metals 1,441 -3 51 -135 81
Trans./Logistics
3,928 331 127 9 194
Stars TE, 2006 Change, 2001-2006
National Cluster Region
Agribusiness 10,810 -210 391 -790 189
Forest/Wood
3,642 475 112 -232 595
PrimaryMetals
1,806 -151 69 -415 195
Transport./Logistics
4,240 1,091 112 8 971
Transport. Eq. Mfg.
2,440 920 54 -176 1,042
Thanks for Your Interest!