Regional Innovation Clusters: A Strategic Economic Development Approach

Transcription

1 Regional Innovation Clusters: A Strategic Economic Development Approach

2 The World has Changed Convergence of Complex Challenges Loss of Jobs Growing US Trade Deficit Greater International Competition in manufacturing and service industries Competitive advantages are increasingly tied to human capital and innovation Economic growth is closely related to education/workforce, energy, climate change, environmental, natural resource and geopolitical issues 2

3 Our Policy and Practice Must Change Unprecedented challenges require innovative solutions for creating jobs and promoting regional prosperity. From Silos to Collaboration. Economic and Industry Policy: maintaining a robust economy in which innovative activity thrives and supporting industry development. Regional Policy: building competitive regions by developing skills and initiatives that boost local economic activity Education Policy: identifying skill shortages and training needs for re-skilling or up-skilling and investing in skill development programs. Science and technology policy: supporting collaborative research involving networks with industry and stimulating the commercialization of research. 3

4 Regional Innovation Clusters RICs are a geographically-bounded, active network of similar, synergistic or complementary organizations which leverage their region s unique competitive strengths to create jobs and broader prosperity. 4

5 Why do RICs Matter? They create a transition path from unemployment or underemployment to high-skill jobs. On average, jobs within clusters pay higher wages. Regional industries based on inherent place-based advantages are less susceptible to off-shoring. Create many new job opportunities for American workers. They connect disenfranchised communities to new career and educational opportunities. They stabilize communities by re-purposing idle manufacturing assets, engaging underutilized human capital, and contributing to improvements in the quality of life. 5

6 Regional Innovation Clusters Implies bounded area characterized by inherent social, environmental, economic, and cultural assets Transcends sociopolitical boundaries May include urban & rural 6

7 Regional Innovation Clusters Five Key Components to Consider When Defining Unique Regional Assets What you make, including your existing & prospective industry clusters ECONOMIC BASE ENTRE- PRENEURSHIP Your capacity to create companies wholly new or from existing firms What you do: your workforce skills & human capital base TALENT INNOVATION & IDEAS Your capacity to innovate and generate new ideas Location, Infrastructure, Amenities, Factor Costs, Natural Resources The basic conditions defining the economic milieu of the region 7

8 Regional Innovation Clusters Latin: To make new or renew The value-added commercialization of a new idea that produces new goods, services, and/or processes The recombination of existing goods, services and processes that results in new or renewed goods, services, and/or processes. Because innovation can be widely applied it can occur in both emerging and traditional industries 8

9 Regional Innovation Clusters Presence of spatially proximate organizations that share active commercial interaction channels, specialized infrastructure, labor markets, and services Share a common goal to maximize regional prosperity Link to trans-regional and global networks 9

10 Anatomy of a Cluster Federal Agencies Sources of Capital Labor Organizations Support Industries Workforce Development & Training Driver Industries: Local & State Gov t Suppliers: Customers: Universities Public Infrastructure Nonprofits Community & Technical Colleges 10

11 Federal Role The Federal Government s role is to help self-organizing, bottom-up RIC participants become all they can be. Identify existing NOT creating new RICs Convener of relevant stakeholders Creator of overarching framework to support national networks of clusters Disseminator of information Provider of targeted capital investments 11

12 RICs Are Diverse All parts of the nation Can be in wide array of industries Vary in size, shape, and reach Often cross local, county, and state boundaries Urban and rural 12

13 Are All RICs Worthy of Investment? RICs have different lifecycles and different strategies are required depending on where a RIC is in the lifecycle! Type of Cluster Type of Strategy Declining Define transformation Restructuring Assist businesses in cluster in establishing methods for improving efficiency (i.e. Six Sigma, management and financial processes, etc.) Growing Assist businesses in cluster in identifying new markets Mature Provide businesses in cluster with resources to help spin-off new firms; Help firms identify new opportunities where they can expand 13

14 Best Practices in RIC Management Regionally-Led from existing networks & assets bottom-up approach Involve partnerships between private and public at all levels (i.e. local, regional, state, and Federal) Unique strengths of region are built upon rather than trying to copy other regions (i.e. everyone can t support a biotech cluster) Different strategies are developed for different clusters Well-funded initially and self-sustaining over the long-term Linked with relevant external efforts, including regional economic development partnerships and cluster initiatives in other locations 14

15 Evidence of RIC Results Higher wages for employees Increased numbers of business spin-offs Labor less likely to be outsourced Increase Regional prosperity 15

16 RIC Case Studies 16

17 NC Biotech RIC Located in Research Triangle: Raleigh, Durham, Chapel Hill Centered around RTP, which is comprised of 145 organizations employees Of which 93% engaged in R&D, average salary $56K BLS: Average salary of region $39,056 vs. $32,869 for state 17

18 NC Biotech RIC (cont.) Unique assets: --NC State (agriculture, engineering) --Duke (engineering; biomed; medical center with hospital, clinical, training, research programs) --UNC-Chapel Hill (biomed research, computer science) --111,000 students in region (out of 1.3M population) -- Strong public-private leadership and commitment to infrastructure investment --Raleigh-Durham Airport --Marketing campaign --Financing and building labs --Attracting HHS National Institute for Environmental Health Sciences) 18

19 MN Medical Devices RIC Concentrated in seven-county Twin Cities metro area 455 firms; 29,351 workers Firms in RIC research, develop, and produce everything from catheters & pacemakers to dental instruments, eyeglass lenses, and hearing aids Exported $2.1 billion in 2007 Region accounted for 10.5% of medical device patents between 2002 and 2006 Unique assets: --U of MN (15 th in R&D) --Mayo Clinic --Related clusters (HBS cluster ranking: 11 th in IT, 12 th in health services, 13 th in pharmacy --Venture capital (87% of area total; $33.4M Q1 2008) 19

20 MN Medical Devices RIC (cont.) Source: MN Dept. of Employment and Economic Development 20

21 Midwest Renewable Energy RIC Covers a broad region, including Industrial Mid-west, Great Plains, Dakotas, and northern Texas High growth industry 42% of new generating capacity in 2008 Extra source of income for farmers Jobs created range from production workers in the wind turbine plants with limited education to PhDs designing next generation of wind turbines Unique assets: --Vast, windy open spaces in the Great Plains ideal for wind power generation (all top 10 states for wind capacity in Midwest) --Large pool of workers with required skills (skills similar to those employed in auto manufacturing, metal manufacturing, and machining) --Community college and university programs, certification programs for wind turbine technicians, etc. --Logistical networks in place due to historical manufacturing activity --In Ohio alone, 120 companies in supply chain 21

22 RIC Tools 22

23 From Overview to Implementation: Tools for Developing your RIC Proposal Funding Opportunity requires applicants to provide: Definition of Region Information on Regional Industries Data on Regional Competitive Advantages & Assets SWOT Analysis Proposed Performance Measures 23

24 Tools to Assist in Defining the Region County-to-County Worker Flow Files (Census) -Provides data on commuting patterns; useful for identifying economic region Know Your Region (EDA) -Module 3 of curriculum has section on various ways region can be considered; useful for reference when deciding whether region has been appropriately defined 24

25 Tools to Assist in Measuring Industries Industry Clusters Tool (EDA) -Provides data on number of firms, number of employees, and total wages earned by industry clusters Occupational Clusters Tool (EDA) -Provides information on the number of employees working in a given occupational classification Both Resources available at: 25

26 Tools to Assist in Identifying Competitive Advantage and Regional Assets Illuminate: Guide to Asset Mapping (Council on Competitiveness) -Resource provides step-by-step overview of process of asset mapping Innovation Index (EDA) -Provides information on various inputs that affect innovation potential of a region, including educational attainment, venture capital, patents, etc. Data Browser (EDA) -Provides searchable data for user-defined regions 26

27 Tools to Assist in Conducting a SWOT Analysis Know Your Region (EDA) -Module 4 of curriculum has section on SWOT analysis and important points to consider through this analysis 27

28 Points to Consider for RIC Measurement RICs can take many years to mature, so important to have: Short-term measures Mid-term measures Long-term measures Also need to benchmark current status to allow for effective measurement against outcome measures Process Measures efficiency of program against goals outlined at program Outset. Outcome Measures effectiveness of program against outlined at program outset. 28