U.S. Regional Cluster Mapping - Council for Community ... · The EDA Sponsored U.S. Cluster Mapping Project EDA Cluster Mapping Project Research Action • New interface; focus on

1 Copyright 2012 © Professor Michael E. Porter

Rich Bryden

Director of Information Products

Institute for Strategy and Competitiveness

Harvard Business School

www.isc.hbs.edu

U.S. Regional Cluster Mapping Current Research and Tools for Practice

C2ER Webinar

October 25, 2012

http://www.isc.hbs.edu/


Macroeconomic Competitiveness

Microeconomic Competitiveness

Sophistication

of Company

Operations and

Strategy

Quality of the

Regional

Business

Environment

Monetary and

Fiscal Policies

Social

Infrastructure

and Political

Institutions

State of Cluster

Development

Endowments

A critical mass of

interconnected firms and

associated institutions in

particular fields, linked by

commonalities and

complementarities.

What Determines Competitiveness?

“The Determinants of National Competitiveness,” Delgado, Ketels, Porter, Stern, NBER working paper, June 2012

3 Copyright 2012 © Professor Michael E. Porter 20120602 – Michigan State Competitiveness – Rich Bryden

Massachusetts Medical Devices Cluster

4 Copyright 2011 © Professor Michael E. Porter 2011 – State Competitiveness – Rich Bryden

The Evolution of Regional Economies San Diego

U.S.

Military

Communications

Equipment

Sporting

Equipment

Analytical Instruments

Power Generation

Aerospace Vehicles

and Defense

Transportation

and Logistics

Information Technology

1910 1930 1950 1990 1970

Bioscience

Research

Centers

Climate

and

Geography

Hospitality and Tourism

Medical Devices

Biotech / Pharmaceuticals

Education and

Knowledge Creation

5 NGA 2011 – Wisconsin – Rich Bryden Copyright © 2011 Professor Michael E. Porter

Composition of Regional Economies, United States

Local Clusters

• Serve almost

exclusively the

local market

• Not exposed to

cross-regional

competition for

employment

71.7% of

employment

61.8% of income

3.5% of patents

27.4% of

employment

37.3% of income

96.4% of patents

Traded Clusters

• Serve markets in other

regions and countries

• Free to choose location

• Exposed to competition

from other regions

Source: Michael E. Porter, Economic Performance of Regions, Regional Studies (2003); Updated

via Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School

Resource-based Clusters

• Location determined by

resource availability

• <1% of income,

employment, and patents in

the U.S.


Furniture Building

Fixtures,

Equipment &

Services

Fishing &

Fishing

Products

Hospitality

& Tourism Agricultural

Products

Transportation

& Logistics

Composition of the Economy Linkages Across Clusters

Plastics

Oil &

Gas

Chemical

Products

Biopharma-

ceuticals

Power

Generation

Aerospace

Vehicles &

Defense

Lightning &

Electrical

Equipment

Financial

Services

Publishing

& Printing

Entertainment

Information

Tech.

Communi-

cations

Equipment

Aerospace

Engines

Business

Services

Distribution

Services

Forest

Products

Heavy

Construction

Services

Construction

Materials

Prefabricated

Enclosures

Heavy

Machinery

Sporting

& Recreation

Goods

Automotive

Production

Technology Motor Driven

Products

Mining & Metal

Manufacturing

Jewelry &

Precious

Metals

Textiles

Footwear

Processed

Food

Tobacco

Medical

Devices

Analytical

Instruments Education &

Knowledge

Creation

Note: Clusters with overlapping borders or identical shading have at least 20% overlap

(by number of industries) in both directions.

Apparel

Leather &

Related

Products


Clusters and Regional Prosperity Recent Findings

Drivers of Regional Job Growth, Wages, Patenting, New Business Formation, and Success of Startups

• Specialization in strong clusters

• Breadth of position within each cluster

• Positions in related clusters

• Presence of a region‘s clusters in neighboring regions

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.


Clusters and Economic Outcomes: Entrepreneurship The Evidence

New Industries (+) New Business Formation (+)

Survial Rates

of New Businesses (+)

Job Growth

In New Businesses (+)

The stronger the cluster, the more

likely new industries within the cluster

are to emerge

The stronger the

cluster, the more

dynamic is the

process of new

business formation

The stronger

the cluster, the

higher the job

growth in new

businesses

The stronger the

cluster , the higher

the survial rate of

new businesses

Source: Porter, The Economic Performance of Regions, Regional Studies, 2003; Delgado/Porter/Stern, Clusters and Entrepreneurship, Journal of Economic Geography,

2010; Delgado/bPorter/Stern, Clusters, Convergence, and Economic Performance, mimeo., 2010.

CLUSTER


Cluster Efforts Enhancing Competitiveness:

The Case for Action

• Agglomeration largely driven by business environment conditions and

‘automatic’ cluster effects in a market process

BUT

• Exploitation of localized spill-overs not automatic

• Exploration of opportunities for joint action not automatic

• Cluster efforts enable locations to benefit more from what they have


Cluster Efforts Enhancing Competiveness Creating Positive Feed-Back Loops

Clusters as Tool

Better Actions More Impact

Cluster initiatives provide a

platform to discuss

necessary improvements in

competitiveness at the level

where firms compete

The organization of

economic policies around

clusters leverages positive

spill-overs and mobilizes

private sector co-investment


The EDA Sponsored U.S. Cluster Mapping Project

EDA Cluster

Mapping

Project

Research

Action

• New interface; focus on

engagement and learning

• New tools

• New project and community content

• Step change in scope and quality of

public and private efforts

• Better cluster data

• New regional data

• New cluster initiative data

• More on cluster pathways

• Next phase of comprehensive, action-

oriented analysis


U.S. EDA-sponsored Cluster Mapping

Project Partners

Policy and Impact Study: Mobilizing Oregon Clusters

Liz Redman

Oregon Business Council

Lessons Learned About Cluster Development: #1

Involve private sector leadership

• Engage business leaders and industry membership groups to inform the vision for economic development and respond to regional challenges.


Recognize the value of all clusters

• Focus on traded-sector

• Encourage self-identification

• Geography, sector, workforce, inputs, management processes, suppliers, and customer base all serve as cluster linkages


Keep the network open

• Participation open to all

• Emerging and experienced clusters included

• A shared resource base helps mobilize resources


Diversify funding sources and maximize operational

efficiency

• Mix of public, private & philanthropic funding

• In-kind contributions from participants

• Small operating budget and staff


Align staff characteristics with responsibilities

• Serving as connective tissue requires “salespeople” and “networkers”

• Recognize that value is perceived but hard to quantify


New website rollout

• Minimally viable demonstration now available

• Alpha in November

• Beta and Gold “1.0” iterations by April

www.clustermapping.us

20 Copyright © 2012 Professor Michael E. Porter 2012 State and Metro Competitiveness – Rich Bryden

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

-0.8% -0.6% -0.4% -0.2% 0.0% 0.2% 0.4%

Change in Milwaukee share of National Employment, 2000 to 2010

Mil

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Cluster Composition of the Milwaukee Metro Economy

Milwaukee Overall Share of US

Traded Employment: 0.76%

Overall change in the Milwaukee Share

of US Traded Employment: -0.05%

Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.

Added Jobs

Lost Jobs

Employment

2000-2010

Medical Devices

(2.74%, + 1.27%)

Footwear

(3.28%, +0.75%) Production

Technology

Heavy Machinery

Lighting and Electrical Equipment

Metal Manufacturing

Sporting, Recreational

and Children's Goods

(-1.16%)

Power Generation and

Transmission

Motor Driven

Products

Automotive

Financial Services

Processed Food

Chemical

Products

Plastics

Publishing

and Printing

Analytical

Instruments

Business Services

Education and Knowledge

Creation

Distribution Services

Entertainment

Prefabricated

Enclosures

Aerospace

Engines

Communications

Equipment

Construction

Materials

Apparel Textiles

Information

Technology

Biopharmaceuticals

Building Fixtures, Equipment and Services

Hospitality and Tourism Transportation and Logistics

Leather and Related Products Forest Products

Heavy Construction Services

Agricultural Products Furniture Jewelry and Precious Metals


Milwaukee Metro Job Creation in Traded Clusters 2000-2010

Jo

b C

reati

on

, 2000

-2010

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-10,000

-5,000

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5,000

10,000E

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Net traded job creation,

2000-2010:

- 41,197

Indicates expected job creation

given growth in subclusters nationally.*

Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director. * Percent change in national benchmark times starting regional employment. Overall traded job creation in this region, if it matched national benchmarks, would be -38,544.


0 20,000 40,000 60,000 80,000 100,000 120,000

ApparelFootwear

Fishing and Fishing ProductsPrefabricated Enclosures

Leather and Related ProductsAerospace Engines

TobaccoAerospace Vehicles and Defense

Power Generation and TransmissionOil and Gas Products and Services

EntertainmentHospitality and Tourism

TextilesFurniture

Construction MaterialsChemical Products

Education and Knowledge CreationProcessed Food

Communications EquipmentTransportation and Logistics

Publishing and PrintingMedical Devices

BiopharmaceuticalsAgricultural Products

PlasticsBuilding Fixtures, Equipment and

Jewelry and Precious MetalsLighting and Electrical Equipment

Motor Driven ProductsSporting, Recreational and

Analytical InstrumentsForest Products

Metal ManufacturingAutomotive

Distribution ServicesHeavy Construction Services

Business ServicesProduction TechnologyInformation Technology

Heavy MachineryFinancial Services

Milwaukee Metro Wages in Traded Clusters vs. National Benchmarks

Wages, 2010

Milwaukee average

traded wage: $53,271

Note: Wages are not available in all clusters due to data suppression to protect confidentiality.

Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.

U.S. average

traded wage: $60,502

l Indicates average

national wage in

the traded cluster


New Directions for the Website

2. Community 1. Engaging &

Educating


BEA Economic Regions

Economic Area definitions from U.S. Bureau of Economic Analysis

Boston Economic Area

Hartford Economic Area

Albany Economic Area

New York Economic Area

NY

PA

NJ

CT

VT

NH

MA

RI

3. Customize

Regions


Regions with high cluster specialization and high share of US employment (LQ>1.3 and top 10 employment)

Automotive Cluster Specialization by Economic Area

Detroit-Warren-Flint, MI

(LQ=6.51, Share=13.8%)

Adjacent EAs

tend to specialize in

the same cluster

Regions with high cluster specialization and moderate share (LQ>1.3 and cluster employment > 1000)

4. Macro View

of Clusters


5. New

Analyses


6. New

Data



www.clustermapping.us

U.S. Regional Cluster Mapping - Council for Community ... · The EDA Sponsored U.S. Cluster Mapping Project EDA Cluster Mapping Project Research Action • New interface; focus on

Documents