NCRDC and NERDC Webinar TRED powerpoint 11-30-10 and... · 2018-03-06 · The California Wine Cluster Grapestock Barrels Winemaking Equipment State Government Agencies Grape Harvesting

Steven DellerSteven DellerDepartment of Agricultural and Applied Economics

University of Wisconsin‐Madison/Extension

Stephan GoetzDirector, The Northeast Regional Center for Rural Development

Pennsylvania State University

Tom HarrisDirector, University Center for Economic Development

University of Nevada‐RenoUniversity of Nevada‐Reno

Targeted Regional Economic DevelopmentTargeted Regional Economic Development

Targeted Regional Economic Development

Today’s Objectives:y j

Review the notion of cluster development;

The concepts of industrialThe concepts of industrial targeting;

Overview some of the tools at our disposal.


Community and regional organizations vested with the promotion of economic growth and development are constantly searching for effective tools and methods to d h ffadvance their efforts.

The interest in cluster developments that has been spurred by the work of Michael Porter has renewed interest in targeted

i d l t ff teconomic development efforts.


There has been a concerted movement There has been a concerted movement away from the old philosophy of “shoot anything that flies and claim anything that y g y glands” to more strategic behavior in identifying the specific types of industry to promote at the local and regional levels.

Policymakers and economic development Policymakers and economic development practitioners are now asking the more focused question; in what types of industry does ourquestion; in what types of industry does our region have a competitive advantage?


1960s 1980s 1990s1960s

to early

1980s

to mid

1990s

to

1980s 1990s Today

•Attraction• Tax Incentives• Subsidies

•BRE•Business start‐up support

• Targeted Investment •Workforce Development

• Lower production cost

• Targeted Investment

• Infrastructure Investment

•Quality of Life• Local Firm Growth• Local & Regional ProgramsInvestment Programs


What is a cluster?

Porter (2000, p254) “A cluster is a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementaries.”

Rosenfeld (1997, p4) “A cluster is very simply used to represent concentration of firms that areused to represent concentration of firms that are able to produce synergy because of their geographic proximity and interdependence, even g g p p y pthough their scale of employment may not be pronounced or prominent.”


What is a cluster?

Roelandt and Den Hertog (1999, p9) “Clusters can be characterized as networks of producers of t l i d d t fi (i l di i li dstrongly independent firms (including specialized suppliers), linked to each other in a value‐adding production chain ”production chain.

Feser (1998, p20) “Economic clusters are not just ( p ) jrelated and supporting industries and institutions, but rather related and supporting institutions that are more competitive by virtue of their relationships.”


What is a cluster?

Governance

Innovation/learningInter‐firm relationships


The California Wine ClusterGrapestock BarrelsBarrelsBarrels

Winemaking Equipment

State Government AgenciesState Government AgenciesState Government Agencies

Grape HarvestingEquipment

BottlesBottlesBottles

Caps and CorksCaps and CorksCaps and Corks

(e.g. Select Committee on WineProduction and Economy)


(e.g. Select Committee on WineProduction and Economy)Fertilizer, Pesticides,

Herbicides

q p

Irrigation Technology

Public Relations and Advertising



Growers/Vineyards Wineries/ProcessingFacilities

LabelsLabelsLabels

Specialized Publications (e.g. Wine Spectator, Trade

Journal)


Journal)


Journal)

Educational, Research, & trade Organizations (e.g. Wine Institute,

UC Davis, Culinary Institutes)




UC Davis, Culinary Institutes)California

Agricultural Cluster

Tourism Cluster

Food Cluster


Why focus on clusters?

1. Strengthens Localization Economies

2. Facilitates Industrial Reorganization

3 E N t ki A Fi3. Encourages Networking Among Firms

4. Results in Larger Local Economic Impacts

5. Facilitates Entrepreneurial Activity



1. Picking “winners”?

2. “Late comers”?

3 O i li d i th it t i k?3. Overspecialized exposing the community to risk?

4. Regional approach difficult “sell” in a community setting.


Data Analysis

Knowledge

Innovation

Information

Knowledge

Data

Creativity Pyramid (Fig 8.3 p.145 Shaffer, Deller and Marcouiller)


• Mechanism to Stimulate Discussion Data Analysis

• Challenges Local Perceptions

• Identifies Strengths

• Identifies WeaknessesIdentifies Weaknesses

• Identifies Threats

• Identifies Opportunities

• In the end helps you understand what is• In the end, helps you understand what is happening locally…..


Data Analysis

• Looking for Patterns

L ki f C i• Looking for Comparisons

• Looking for Challenges – Surprisesg g p

• Looking over Time

• Looking for Insights, Not Precision

• Many Sources – Formal and Informal


Data Analysis

It is VITAL to keep in mind that undertaking a

TRED analysis is part of a process and is NOT the y p p

foundation of a consultant’s report.

The community discussions that occur as theThe community discussions that occur as the

analysis unfolds can be just as important if not

more so than the analysis itself.


Δ LQ

Strength and Weakness and gGrowing: Potential Cluster

Growing

LQ

Strength and Weakness and gDecliningDeclining


Sources of Employment in Dane County

% of local employment in sector iLQ =

% national employment in sector% national employment in sector




Finance & Insurance


Table 1: Location Quotients for Outagaime WIPercent

Change in LQ Percent of LQ 2005 2001-2005 Employment

Construction 1.518 -3.5% 8.6% Manufacturing 1.055 1.2% 16.1% Retail trade 1.172 -1.1% 13.7% Information 0.518 -5.1% 1.8% Finance and insurance 3.603 13.2% 6.0% Real estate and rental and leasing 0.447 6.7% 2.2% Professional and technical services 1.558 3.5% 4.4%

Management of companies and enterprises 0 206 27 3% 0 9% Management of companies and enterprises 0.206 27.3% 0.9% Administrative and waste services 4.964 -4.6% 6.2% Educational services 0.322 -10.2% 1.5% Health care and social assistance 4.908 -2.6% 8.6% Arts, entertainment, and recreation 0.137 28.7% 1.5%ts, e te ta e t, a d ec eat o 0 3 8 % 5% Accommodation and food services 3.948 1.9% 7.3% Other services, except public administration 0.746 0.5% 5.3% Government and government enterprises 1.687 -2.9% 8.9% Federal, civilian 0.028 15.8% 0.4% Military 0.492 -6.9% 0.4% State government 0.030 -3.8% 0.3% Local government 2.634 -1.1% 7.8%



Can it really be that simple?

NONO


Regional Economic Development Research Laboratory (REDRL) of Clemson University

This approach focuses on identifying industry clusters with

(1) a high potential for prospering in the study area andthe study area and

(2) significant positive economic impacts on the local economy.



Step 1. Identify industry concentrations for which the region has experiencedfor which the region has experienced recent employment growth.

This could be the LQ analysis…..



Step 2. Construct value chains (linkages to input suppliers and product(linkages to input suppliers and product markets) for the industry clusters selected in Step 1, and identify p , yindustries in the value chains with the greatest linkages to the local industry concentrations.



Step 3. Rank the selected industries from Steps 1 and 2 by expectedfrom Steps 1 and 2 by expected economic and fiscal impacts on the local economy.y


Import Substitution

Originally developed as a national economic development tool post‐WWII primarily in Central and South AmericaCentral and South America.

Generally dismissed over time: lack of id f i ifl d l ievidence of success; protections stifled learning

and innovation; “Washington Consensus”

At sub‐national level the notion of Porter’s clusters promotes stronger inter‐industry li k f l th h i tlinkages, for example through import substitutions


Input‐Output Based Models

One approach is to look at imports and exports to follow an import substitution strategy through “gap” and “disconnect” analysis.y

IMPLAN based.



Multi‐step educational process:

1. Identification of general economic trends gusing BEA‐REIS data.

2 Use IMPLAN base report to identify largest2. Use IMPLAN base report to identify largest industries in region.

3 Use IMPLAN to identify import export levels3. Use IMPLAN to identify import‐export levels.

4. Use IMPLAN to focus on group selected core industries.




The California Wine ClusterGrapestock BarrelsBarrelsBarrels

Winemaking Equipment

State Government AgenciesState Government AgenciesState Government Agencies

Grape HarvestingEquipment

BottlesBottlesBottles

Caps and CorksCaps and CorksCaps and Corks



(e.g. Select Committee on WineProduction and Economy)Fertilizer, Pesticides,

Herbicides

q p

Irrigation Technology




Growers/Vineyards Wineries/ProcessingFacilities

LabelsLabelsLabels


Journal)


Journal)


Journal)






UC Davis, Culinary Institutes)California

Agricultural Cluster

Tourism Cluster

Food Cluster


Community-Business Matching (CBM) ModelUniversity of Neveda Reno WRDCUniversity of Neveda-Reno, WRDC

A community can use CBM to prioritize their goals and identify the assets they have to help them achieve their goals.

The CBM fits these goals and assets to business profiles in order to assist inbusiness profiles in order to assist in development decisions that reflect the desires of community members.y


Community-Business Matching (CBM) Model

• Involvement of community leaders is crucial

• It is important to incorporate environmental and social aspects of economic developmentp p

Environmental It is more

EconomicSocial

than just “jobs, jobs, jobs”EconomicSocial jobs



• Desirability measures how likely abusiness is to meet community goals.

• Compatibility measures how likely thebusiness is to locate-start-expand in thebusiness is to locate start expand in the community.







In short run, communities can attempt to attract investment in highly “Compatible”attract investment in highly Compatible sectors

“Desirability” score equips the community with negotiation power

In long run, an examination of the components of the “Compatibility” scores cancomponents of the Compatibility scores can reveal “assets” for investment.

Targeted Regional Economic Developmenthtt // bl /h l /d f/l hthttp://www.bls.gov/help/def/lq.htm


Targeted Regional Economic Developmenthttp://nercrd psu edu/TRED/index htmlhttp://nercrd.psu.edu/TRED/index.html

Targeted Regional Economic Developmenthttp://www.headwaterseconomics.org/eps/

Targeted Regional Economic Developmenthttp://www.bea.gov/regional/reis/



In the end, Targeted Regional Economic , g gDevelopment (TRED) is as much a learning process as it is technical analysis.

The analysis serves as the foundation for a broader community discussion.

The end goal is to help local citizens better understand their local and regional geconomy.


TTHANKHANK YOUYOU FORFOR YOURYOUR TIMETIME ANDAND ATTENTIONATTENTION……

WWOULDOULD YOUYOU LIKELIKE TOTO HAVEHAVE MOREMORE WEBINARSWEBINARS ONON

THETHE DETAILSDETAILS OFOF DIFFERENTDIFFERENT EMPIRICALEMPIRICAL METHODSMETHODS??

NCRDC and NERDC Webinar TRED powerpoint 11-30-10 and... · 2018-03-06 · The California Wine Cluster Grapestock Barrels Winemaking Equipment State Government Agencies Grape Harvesting

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