Dynamic and innovative industry clusters are critical for the success of a regional economy. The industry cluster approach has increasingly generated interest among regional, state and national policy leaders. As an analytic tool, it affords a deeper understanding of the local economic base and offers the chance to deploy resources more strategically. The State and Local Policy Program has conducted regional industry cluster studies throughout Minnesota since 1995, documenting Minnesota’s competitive industry clusters. More recently the program has focused on the role that industry clusters can play in understanding the freight economy and implications for transportation policy.
Transportation Policy and Industry Clusters
Freight transportation plays a considerable role in economic and community life in Minnesota, but exactly how freight transportation ensures the success of these clusters and enhances the competitiveness of the region is not well understood. To maximize this success, MnDOT and other transportation planners need to plan for and respond to the transportation needs of its customers. One aspect of this effort will be to improve knowledge of the characteristics of those industries that make the greatest use of the transportation system, and derive some of the greatest benefits from it. SLPP in collaboration with Claremont Graduate School has developed a interactive National Freight Economy Atlas, which features maps and stories about industry clusters and their supply chains. SLPP has also collaborated with MnDOT interviewing and analyzing the perspectives of manufacturers on Minnesota’s transportation system in Southwest and West Central Minnesota (District 8), West Central Minnesota (District 4), and Northwest Minnesota (District 2).
Industry Cluster Studies
The State and Local Policy Program has conducted numerous studies throughout regions in Minnesota and in each case has made its findings available in these quality reports.
Microeconomics of Competitiveness Course and U.S. Cluster Mapping Website
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 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. SLPP has also been the Midwestern regional partner with Michael Porter’s group in developing the U.S. Cluster Mapping website for the U.S. Economic Development Administration. In 2014 the Humphrey School hosted the launch of the new interactive cluster mapping tool with Michael Porter at a conference Mapping the Midwest’s Future: Regional Innovation Clusters and Competitiveness.
The Minneapolis-St. Paul Regional Cluster Initiative
The Regional Cluster Initiative (RCI) was a collaborative effort to grow, retain, and attract jobs in the Greater Minneapolis-St. Paul region. It represented a major first step in practicing regional economic development utilizing an industry cluster approach. 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.
Minneapolis-St. Paul Regional Cluster Initiative: Providing a Framework for Minnesota's Economic Competitiveness (2012)
CEO to CEO Conversations - Mayors Talk with Business Leaders About Growing Jobs in Minnesota (2011)
Minneapolis-St. Paul Cluster Competitiveness Study (2013)
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 rural knowledge cluster framework builds on Michael Porter's "Diamond of Advantage"—Factor Conditions, (Home) Demand Conditions, Related and Supplier Industries and Industry Strategy and Rivalry—by placing added emphasis on the instrumental role of knowledge as the driver of innovation and competitive advantage.
Understanding Your Industry Cluster
These quantitative and qualitative tools for identifying the key industries in your area 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.
- Quantitative analysis techniques for identifying key industries
- Qualitative approaches to identifying key industries
- Identifying your industry clusters
- Accessing national, state and local economic data
Principles of Economic Development
Economic development is a concept whose definition often depends on who is doing the talking. Economists, elected officials, development professionals, and citizens all are likely to have varying perspectives on the subject. The basic framework begins with the assumption that the object of development is to create wealth, whether on a national, regional, or local level. However, it is here that the many perspectives diverge. As a background, the SLPP developed 10 Principles in Economic Development.