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Editor’s View: New Tools for Gauging Area Competitiveness, Site Selection Magazine, May 2003

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all it coincidence, but much attention is being given of late to the importance of competitiveness in the context of economic development, including here at Site Selection. No fewer than three new resources are suddenly at the disposal of corporate real estate executives and others charged with selecting the best location in which to launch a new project; all three are based on states’ or metro areas’ ability to compete for new investment. And compete they do, as the articles in this issue on Hyundai’s selection of Alabama as the location for its $1-billion auto plant and Toyota’s choice of San Antonio, Texas, as the site for a Tundra pickup-truck-manufacturing facility point out.

       
All three tools warrant more in-depth coverage than can be accomplished in this space, but you can read about one of them beginning on page 268. The Site Selection Competitiveness Award was designed to recognize the state-level economic development agency that proved to be the most competitive based on 10 categories, most of which are related to our New Plant database of announced new and expanded facilities. Several of the categories are per capita in nature, giving all states the same shot at winning. This award supplements the annual Governor’s Cup – recognizing the state with the most new and expanded facilities in the previous year as tracked in the New Plant database – and the Top Groups designation (see “Top Groups 2002: Thinking Big” from May 2003), which now is restricted to local, county and regional development groups.

       
Another relatively new tool for gauging a location’s competitiveness is the Metro Area and State Competitiveness Report, 2002 issued by The Beacon Hill Institute at Suffolk University (www.beaconhill.org), in Boston. This report, now in its second year, ranks metro areas and states based on an index of such factors as government and fiscal policy, security, infrastructure, human resources, technology, finance and cost, openness and domestic competition. The winners? The top five most competitive states by this measure are Delaware, Massachusetts, Washington, Colorado and Connecticut. Top metros are Atlanta, Ga.; Austin, Texas; Boston, Mass.; Buffalo, N.Y.; and Charlotte, N.C. You can review the entire report online.

       
The other new resource worth noting is a new economic analysis tool called the Cluster Mapping Project (CMP) developed at Harvard University’s Institute for Strategy and Competitiveness (www.isc.hbs.edu). This tool synthesizes changing economic data and measures of innovation for every region in the U.S. to produce detailed profiles of the overall performance of regions and the strengths and weaknesses of the regions’ clusters of industries. CMP is based on work done at the Institute aimed at finding objective, quantifiable measures to compare regional economies over time and to understand the critical drivers of their prosperity. A large amount of data is accessible online for registered users; more in-depth analysis is available on a subscription basis.

       
Why should corporate real estate managers and development agencies need CMP or other measures of competitiveness? Aren’t the existing site-selection tools enough? Harvard Business School Prof. Michael Porter, head of the Institute for Strategy and Competitiveness, says it best in explaining the rationale for CMP: “The conventional wisdom has been that companies largely determine their own success, and that economic development is the job of the government. But our data provides striking evidence that a company’s local business environment has a powerful influence on its performance, and that boosting a region’s competitiveness requires active cooperation between business, government, universities and an array of other local institutions. Economic development must move beyond tax incentives and improving infrastructure to include boosting innovative capacity and cluster development.”

       
If Site Selection is the bridge between the corporate real estate and economic development fields, then it is only fitting in this annual area developers issue that I encourage corporate readers to look at the other side of the bridge in a new, competitive light.

Till next time,