Week of December 31, 2001
Snapshot from the Field
Economic Success Rooted inBy JACK LYNE
Public-Private Regional Efforts
Site Selection Executive Editor of Interactive Publishing
WASHINGTON, D.C. -- Cluster and high tech:
'Traded Industries' Are 'Dynamic Core'
Michael Porter, the Harvard University professor who authored the report, called the research "unprecedented in its scope and reliance on previously unavailable data." The study employed Porter's definition of a cluster: "a geographic concentration of competing and cooperating companies, suppliers, service providers, and associated institutions."
Clusters of Innovation found that regional economies are composed of three types of industries: "traded, resource-driven and local."
Local industries account for the majority of employment in regional economies, the study found. However, "the dynamic core of a regional economy," it said, rests in traded industries like business services, financial services, education and knowledge creation, transportation and logistics, and hospitality and tourism. "Higher wages in traded clusters tended to pull up wages in local clusters."
The study contains numerous implications for economic development strategy. Michigan Gov. John Engler, chair of the National Governors Assn., called the report "a valuable road map for state economic development strategies that can create globally competitive states in the 21st century."
But the states won't be strategizing by themselves. At least not if they're following the Clusters of Innovation playbook. The study's overarching theme in that area is that that economic competitiveness is firmly rooted in public- and private-sector efforts that are focused on regions.
"The real locus for competitiveness and innovation in the United States is regional, not in Washington," said Porter. "National policies contribute to the overall environment for innovation, but success in innovation is heavily influenced by local conditions."
Political Jurisdictions Are
The national report - which excludes the five regional reports - alone covers 132 pages. COC Chairman Raymond Gilmartin, who is chairman, president and CEO of Merck & Co., called the study "perhaps the most ambitious project in the nearly 20-year history of the Council on Competitiveness."
Here's a brief look at a few of the other findings from the ambitious and voluminous Clusters of Innovation study:
Many boundaries not drawn to best effect: The study found that turf wars are antithetical to competitive strength. "Regions have a tendency to follow political jurisdictions and omit important surrounding areas and assets," it contends. "A broader, geographic definition widens opportunities and brings constituencies together."
It's Not About Just Growth: The study also runs counter to the many economic development strategies that trumpet job and population increases as the ultimate measures of success. "The economic goal for regions should be a high and rising standard of living," according to Clusters of Innovation.
Business Is the Critical PlayerAnchor Companies' 'Disproportionate Role': "The study particularly emphasizes "anchor companies' disproportionate role . . . in seeding cluster development." Says the study, "Anchor companies support cluster development by acting as magnets for other major companies; organizing other companies in the cluster for collective action; supporting projects that improve the local quality of life; and producing numerous spin-out companies, which strengthen key elements of the cluster."
What Government Should Do . . . : Federal, state, and regional and local governments should reshape policy to reflect regional economies' importance, the study contends. The study's many recommended changes in policy include:
Those, again, are only a few of the findings from the very extensive Clusters of Innovation study. The entire study, including the national summary and the five regional reports, is available online in Adobe format at the COC Web site.
©2002 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.