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Industrial Base Description
Understanding a region’s industrial base is an essential step for crafting an effective economic development strategy. Economic development professionals need to have sound understanding of the key employers in a region, including product and service offerings, business models, and bases for competitive advantage. Since it is very difficult to build an industry from scratch, regions are best served by first trying to build from areas of traditional strength. Cluster analysis can identify regional strengths and weaknesses that do not necessarily come to light using the conventional wisdom of how regional industries are structured.
Industrial Base Metrics
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Specialization by Traded Cluster
The Cluster Mapping Project at the Institute for Strategy and Competitiveness uses county-level data and statistical techniques to identify clusters in regional economies. Professor Michael E. Porter, the leader of the project, defines clusters as geographically concentrated groups of interconnected companies, universities, and related institutions that arise out of linkages across industries. Data is available at the state, economic area, metropolitan area, and inner-city levels. Clusters fall into three categories: traded, local, and natural endowment dependent. Regional wealth is driven by the performance of industries that export goods and services outside of the region, and therefore the traded clusters are of greatest interest to the innovation-based model. The Cluster Mapping Project website (http://data.isc.hbs.edu/isc/index.jsp) is a subscription service, but some data is available free of charge.
Patents in Traded Clusters
The Cluster Mapping Project also offers time-series data on patenting within traded clusters, which is useful for tracking the rate of regional innovation over time. With innovation driving regional competitiveness, traded clusters with sustained growth in patents may be the best targets for economic development initiatives.