1. Diane Primont, PhD Bruce Domazlicky, PhD Center for Economic & Business Research cebr@semo.edu http://www6.semo.edu/cebr

2. Nissan Manufacturing Facility, Smyrna, TN

3. M T Industrial Park

5. Region R.O.W.

6.  Global Economy  Competitive Advantages are not Forever  Develop Region Based on its Strengths

7.  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

8.  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)

9.  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

10. Industry Clusters Definitions 1. Advanced Materials 2. Agribusiness, Food Processing & Technology 3. Apparel & Textiles 4. Arts, Entertainment, Recreation & Visitor Industries 5. Biomedical/Biotechnical (Life Sciences) 6. Business & Financial Services 7. Chemicals & Chemical Based Products 8. Defense & Security 9. Education & Knowledge Creation 10. Energy (Fossil & Renewable) 11. Forest & Wood Products 12. Glass & Ceramics 13. Information Technology & Telecommunications 14. Transportation & Logistics 15. Primary Metal Mfg 16. Fabricated Metal Product Mfg 17. Machinery Mfg 18. Computer & Electronic Product Mfg 19. Electrical Equipment, Appliance & Component Mfg 20. Transportation Equipment Mfg 21. Mining 22. Printing & Publishing

11. Driver Industries: Pharmaceuticals and Medicines Mfg Medical 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

12. Driver Industries: Window & Door Mfg Furniture Mfg Container Mfg Paper Products Mfg Millwork Customers: Manufac. Homes; Mobile Homes; Wholesale/ Retail Suppliers: Logging; Sawmills; Sawmill & Woodwork Machinery Support Industries: Forestry Support Services; Custom Architectural Services

13.  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

14. Source: www.oseda.missouri.edu/modot/rpc/

16.  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 cluster Fraction of nation’s employment in industry cluster

17.  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

18.  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)

19. LQ in 2006 % chg in LQ 2001-2006 1 0 5 10-10 Star EmergingTransforming Mature Hypothetical Data

20.  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

21. Energy Agribusiness Biomedical Education & Knowledge Apparel & Textiles Forest & Wood Transportation & Logistics Arts, etc. MatureStar Transforming Emerging

22. Business & Financial Agribusiness Advanced Materials Biomedical Education & Knowledge Transportation & Logistics IT Defense & Security Mining Transportation Equip Mfg Mature Star TransformingEmerging

23.  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.

24. Electric. Equip. Mfg. Mature Star TransformingEmerging

25. Chemicals Mining Forest & Wood Transp. Equip. Mfg. Energy Transportation & Logistics Fab. Metal Mfg. Education & Knowledge Business & Financial Mature Star TransformingEmerging

26. 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

27. Elec Equip Mfg Forest & Wood Transp. Equip. Mfg. Energy Transportation & Logistics Prim Metal Mfg. Education & Knowledge Business & Financial Defense & Security Agribusiness

28. 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

29. A technique used by regional economists to study the growth /decline of a region. Growth is decomposed into its constituent parts.

30.  National Growth  Sector or Cluster Growth  Share Component (Competitive Shift)

31.  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)

32.  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?

33. StarsTE, 2006Change, 2001-2006 NationalClusterRegion Mining 1,5069550-70116 Chemicals 3,62361594-294815 Electrical Equipment 5764694-25491 Forest/ Wood 3,51394121-250223 Fab. Metals 1,441-351-13581 Trans./ Logistics 3,9283311279194

34. StarsTE, 2006Change, 2001-2006 NationalClusterRegion Agribusiness 10,810-210391-790189 Forest/ Wood 3,642475112-232595 Primary Metals 1,806-15169-415195 Transport./ Logistics 4,2401,0911128971 Transport. Eq. Mfg. 2,44092054-1761,042

35. Thanks for Your Interest!