PCRD

EDA Reauthorization and Regional Innovation

Recent Congressional testimony by Jonathan Sallet argues for a new focus for the Economic Development Administration. He believes the new mantra should be around regional innovation clusters and the agency should be renamed to the Economic Renewal Administration. More information here.

Creating Your Own Regional Talent Advantage

PCRD staff member Christine Nolan recently attended the C2ER (Council for Community and Economic Research - formerly ACCRA) conference in Atlanta, GA, giving a presentation on one of PCRD’s newest grants – Rural Economic Development Policy:  Crossing the Next Rural Frontier – as part of a panel on cluster models and their use. 

The overall theme of the conference was Creating Your Own Regional Talent Advantage, and the conference organizers at C2ER took full advantage of the recent upsurge of interest in research into human capital and its role in creating economic development and advantage in a global knowledge economy. The program ranged from the workforce in 2020 to the impact of young professionals programs, migrating graduates, measuring K-12  school success, and the utility of occupational cluster models in conjunction with industry cluster models. 

Ms. Nolan’s discussion covered the topic of identifying and analyzing occupational clusters, as well as industry clusters, with an eye to discovering linkages that lead to “hot spots” of innovation and knowledge across the United States.  Other panel members included Rich Bryden of the Institute for Strategy and Competitiveness at the Harvard Business School, and Ed Feser of the Department of Urban and Regional Planning at the University of Illinois at Urbana-Champaign.

C2ER has now posted all available presentations from the conference to its website. To see the Nolan and Bryden presentations click on “Cluster Models”  in the presentations listed for Thursday, May 15th. 

The PCRD grant’s principal funder is the US Department of Commerce’s Economic Development Administration, and the research team includes experts from Indiana University’s Indiana Business Research Center (IBRC); Strategic Development Group Inc. (SDG) located in Bloomington, Indiana; the Rural Policy Research Institute (RUPRI) at the University of Missouri and Economic Modeling Specialists Inc. (EMSI) of Moscow, Idaho.

The Creative Food Economy

This paper had been around a couple of years but I just recently ran across it. It contends that the faster growing part of the food economy is among Small and Medium Enterprises (SME) and defines the Creative Food Economy as those SMEs focusing on specialty, organic, and ethnic foods. The following is an abstract of the research conducted by Betsy Donald and Alison Blay-Palmer.

The food industry has always been a major generator of economic activity in the Greater Toronto Area. However, recently the innovative and creative elements of the industry have changed. Since the mid-1990s, the fastest growing segment within the industry has been small and medium-sized enterprises (SMEs). The specialty, ethnic, and organic SMEs (hereinafter referred to as the ‘creative-food’ industry) appear to be particularly innovative as they respond to consumer demand for local, fresh, ethnic, and fusion cuisine.

On the basis of sixty-five interviews with food producers, processors, restaurateurs, food media, non-government organizations, government, and private sector agencies, it is suggested that this creative-food sector is thriving despite existing public policies that bias toward large-scale, industrialized agri-food firms in the region. As such, a disconnect currently exists between, on the one hand, the traditional agrifood paradigm that the government regulatory environment is promoting and, on the other hand, the locally consumer-driven food cluster that is emerging.

Public policies of multiculturalism and education have done more to facilitate the unprecedented growth of this creative subcomponent of the food sector than have explicit public food-policy initiatives. However, there is still room for policy initiatives that advance the development of this dynamic sector, especially in the area of supportive infrastructure, access to health-based ethnically appropriate food, food education, and fair labour standards. Contrary to a widely held view, the creative-food industry is not just about promoting exclusive foods for the pleasure of urban elite. Rather, it offers an opportunity for a more socially inclusive and sustainable urban development model. The findings also have implications for multilevel governance in cluster formation and policy, future research on food, as well as for theories on innovation, urban creativity, and governance.

The article is available through the Environment and Planning Journal (see here).

Using Industry Clusters to Drive Entrepreneurship

Most of us know about crafting economic development strategies around a region's
"Star Clusters" - those that are big and growing, but what can/should we do with the emerging clusters - those that are smaller but also showing great potential for growth? How about focusing entrepreneurship efforts within these areas?

The North Central Indiana WIRED region is considering a business plan competition focused on these growing industry clusters. The bubble chart in this post depicts these areas - in the lower right quadrant. They include Business & Financial Services, Information Technology & Telecommunications, Arts & Entertainment, Defense and Security, Transportation & Logistics, and Apparel and Textiles. This is another example of how a great tool like regional clusters can focus programming.

WIRED Region Industry Clusters & Airports

Here is another map produced for the WIRED region. It shows two important attributes of the region - industry clusters by size (number of establishments) and location of public airports. No great insights yet, just one more tool to inform the process.

Accelerating Regional Economic Growth by Reducing Healthcare and Energy Costs

Ask manufacturing CFO's about the financial concerns that keep them up at night and they will tell you that the costs of energy and healthcare top the list. A recent Bank of America report (available here) outlines these and other findings related to corporate leaders' perceptions of the manufacturing industry. North Central Indiana, through its WIRED initiative has set its sites on becoming a region where these two costs of doing business are significantly less than they are in other regions. They will accomplish this by linking area small and medium-sized advanced manufacturing firms with innovations from Purdue University. Here's how.

Healthcare Cost - The inability of employers to control healthcare costs is well-documented and motivates the exporting of jobs and the reduction or elimination of employer healthcare insurance programs. To address this issue, Purdue University is developing and delivering a program for small and medium-sized advanced manufacturing firms to control and/or reduce expenses related to healthcare costs and, in turn, increase manufacturers’ competitiveness. The program involves training and technical assistance related to a broad range of factors affecting the cost of healthcare including:

• Employee Health Improvement Programs
• Employee Incentives
• On-site clinics
• Prescription Management
• Disease Management
• Dental/Vision correlation to health
• Price Transparency
• Consumer-Driven Plans
• Wellness Incentives
• Profit Sharing and how it relates to insurance claims
• Supplemental insurance programs

A pilot program has been launched that includes 14 small to mid-size advanced manufacturing firms all within the same industry cluster. By focusing these efforts within a single cluster, the opportunities will emerge to identify and meet additional common needs and take advantage of common opportunities.

The program represents a great example of university-industry innovation transfer. Purdue resources engaged in this effort include the Technical Assistance Program, the Manufacturing Extension Partnership, School of Nursing, School of Pharmacy and Pharmaceutical Studies, and the Regenstrief Center for Healthcare Engineering at Discovery Park.

Energy Costs - Although this initiative has not been green-lighted yet, the concept is spot on and if successful, would be ground-breaking. Here's how this one would work. Like the healthcare cost effort, this initiative would again involve the transfer of university-developed innovations to area industry. This time the innovations involve technologies, technical assistance, and training related to increasing energy efficiency through a systematic approach to energy management.  This initiative will involve a pilot group of 28 energy-intensive firms (again in the same industry cluster) that will receive on-site training, in-plant mentoring by industry experts, and off-site workshops instructed by U.S. Department of Energy-qualified instructors.  Each employee who attends the off-site workshop will receive an Energy Efficiency Practitioner certification from Purdue University. Purdue resources in this effort include the Technical Assistance Program and the Energy Center at Discovery Park.

Here's the kicker on this energy project - the anticipated metrics. Over the eighteen months of this proposed initiative, it's estimated that on average, each company will identify $25,000 in potential energy savings by the end of the initiative.  Additionally, those same companies will report energy savings in excess of $1,000,000 by December 2009 as well as an additional $2,000,000 in economic impact that they had not foreseen. If something like this works, industry will be waiting in line to do business in North Central Indiana. Less money spent on emergy means greater productivity, more jobs to keep pace, and regional economic growth.

Both of these initiatives illustrate great examples of innovation-based economic development that will lead to high-performance workers, high-perfomance firms, and a high-performance regional economy.

Industry Clusters: Everything Old...

I spent most of the week in Philadelphia. What a great, historic city. I had a little bit of time to walk around and while on 2nd Street I took notice of the remarkable concentration of restaurant supply and other restaurant and bar-related businesses, all within just a couple city blocks. Some of them were highly specialized, like Mr. Bar Stool! What do you know, an industry cluster right there in the heart of one of our oldest U.S. cities. There are actually lots of urban business districts like this one.  In most cases, they sort of emerged and evolved organically. Close proximity enabled the development of dense networks - social and economic. Connections occurred via the city sidewalks and the corner cafes.

Those of us working with regional economies can learn a few things by looking at these early examples of industry clusters. How do we facilitate these same sort of networks to develop when the scale is a multi-county region instead of a few city blocks? We've got a different sort of infrastructure to work with - interstates, the Internet. It seems like old-fashioned proximity might be our biggest challenge. Instead of a corner cafe where relationships are made and deals are brokered over a cup of Joe, we've got regional landscapes dotted with dozens of espresso bar drive-thrus. Among other things, we've got to create the regional civic space where these relationships can occur.      

Regional Industry Clusters and Rural America

Hot off the presses is our new report called, Unlocking Rural Competitiveness: The Role of Regional Clusters. This was a collaboration of PCRD and the Indiana Business Research Center (IBRC) at Indiana University and funded by the U. S. Economic Development Administration (EDA). The result is a model that can be used by America's rural regions to help them understand how to maximize their regional economic advantages. A very extensive companion website is available (here) with lots of tools and data including some fascinating GIS maps that show the distribution of key industry clusters across the U.S. If you want to go straight to the full report (277 pages) go here. You can also get the press release here from Inside Indiana Business