Economic Competitiveness + Industry Clusters

Since 2006, the State and Local Policy Program has taught Microeconomics of Competitiveness: Firms, Clusters and Economic Development (MOC), a course developed by Harvard Business School Professor Michael Porter. The course explores the drivers of economic competitiveness, industry clusters, and wealth creation in regions from the microeconomic perspective.

The industry cluster approach has increasingly generated interest among economic development professionals. As an analytic tool, it affords a deeper understanding of the local economic base and offers the chance to deploy resources more strategically. Below are resources for understanding and using the industry cluster approach.

The Minneapolis-St. Paul Regional Cluster Initiative

The Regional Cluster Initiative (RCI) is a collaborative effort to grow, retain, and attract jobs in the Greater Minneapolis-St. Paul region. It represents a major first step in practicing regional economic development utilizing an industry cluster aproach. RCI's work included:

Ten competitive traded clusters in Minneapolis-St. Paul were identified
Regional mayors selected three clusters for further research, outreach and engagement - Medical Devices, Financial Services, and Distributional Services
Mayors interviewed CEOs to identify strengths/opportunities, and to build private-public relationships
Two areas selected for further action: medical devices cluster and corporate headquarters concentration

The Minneapolis-St. Paul Metropolitan Region and the Minnesota Economy (2012)

CEO to CEO Conversations - Mayors Talk with Business Leaders About Growing Jobs in Minnesota (2011)

Understanding Your Industry Cluster

Below are several different quantitative and qualitative tools for identifying the key industries in your area. These tools will guide you through using online data sources to calculate location quotients and shift share analysis, as well as using qualitative criteria to further analyze key clusters.

Understanding the key industries in your area will allow you to develop improved strategies for economic development, by helping to focus on these dynamic sectors of your economy. The process should take you a few hours, and your results will be similar to what many cities and regions pay private consultants to do.

Industry Cluster Studies

The State and Local Policy Program has conducted numerous studies throughout regions in the state and in each case has made its findings available in these quality reports.

Rural Knowledge Clusters

A number of notable rural success stories suggest the possibility that rural communities can develop their own centers of knowledge-based activity. The State and Local Policy Program has embarked on a series of research projects that examine rural knowledge clusters as a model for innovative, dynamic rural economies.

Microeconomics of Competitiveness Course

Since 2006, the State and Local Policy Program as taught Microeconomics of Competitiveness: Firms, Clusters and Economic Development (MOC), a course developed by Harvard Business School Professor Michael Porter. The course has been offered both as an executive development course for Minnesota Department of Employment and Economic Development (DEED) workforce development staff and as a capstone workshop for Humphrey School graduate students.

In April 2008, Michael Porter spoke by video conference to current and former Minnesota MOC students. The Porter question-and-answer session followed a panel discussion on Minnesota's competitiveness strategy with Burke Murphy, DEED Metro Administrator; Bonnie Elsey, DEED Workforce Development Director; Linda Baer, Senior Vice Chancellor, Minnesota State Colleges and University System; and Dan McElroy, DEED Commissioner.

The course is offered each fall under the title PA 5590: "Economic Competitiveness: Firms, Clusters and Economic Development." The course examines both advanced and developing economies and addresses competitiveness at multiple levels—nations, sub-national units such as states or provinces, particular cluster, and neighboring countries. The course is concerned not only with government policy, but also with the roles that firms, industry, associations, universities, and other institutions play in competitiveness. The course explores not only theory and policy but also the organizational structures, institutional structures, and change processes required for sustained improvements in competitiveness.

The course explores the determinants of national and regional competitiveness building from the perspective of firms, clusters, sub-national units, nations, and groups of neighboring countries. It focuses on the sources of national or regional productivity, which are rooted in the strategies and operating practices of locally based firms, the vitality of clusters, and the quality of the business environment in which competition takes place.

The course is taught using case studies drawn from all major regions of the world, readings, video lectures by Michael Porter that include guest appearances from national, regional, and business leaders involved in the cases studied.

Investing in Innovation

SLPP researchers joined a national team of researchers to investigate the activities and dollars coming to states in support of R&D and innovation for a national study on investments for The Pew Center on the States. This qualitative and quantitative background research produced this document for the National Governors Assocation (NGA), "A Governor's Guide on State Research and Development Funds." This ten-state study, along with four other reports, provided the background research for the NGA report, "Innovation America: Investing in Innovation," 2007.