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Report: Tech Industry Clusters Help Build Regional Economies

Pins on a map (CJ Sorg/Flickr)A new report from the Brookings Institution, a public policy research institute in Washington, D.C., urges the nation’s governors to create innovative new businesses in their states by building on current clusters of enterprises rather than trying to steal companies from other states. The report says this strategy, documented with examples of science and technology-based industries, not only generates more organic employment growth, it also has a smaller price tag than the usual tax credits, training programs, and physical infrastructure improvements.

The Brookings report defines industry clusters as “geographic concentrations of companies, suppliers, coordinating entities, and institutions like universities or community colleges.” The clusters, says Brookings, create synergies and efficiencies from the proximity of the participants, which encourages neighboring enterprises to complete transactions, share ideas, start new enterprises, and create jobs.

The report outlines a strategy for states to mount an industry-cluster program …

  1. Use data and analysis to identify potential clusters and track performance, including market analysis and performance measures to highlight gaps or deficiencies that may need remedial work.
  2. Provide modest grants to support cluster initiatives, such as planning and start up or technical assistance grants. for feasibility studies, and to get new initiatives off the ground.
  3. Offer larger competitive program grants for training, R&D, technology transfer and adoption, and marketing to fill gaps or correct deficiencies identified earlier.
  4. Connect and align current economic development programs and initiatives to support industry clusters, such as workforce training or seed capital investments.

The report lists several current regional industry clusters as models for other states including industries based on scientific discoveries. These examples of industry clusters include life sciences in Indiana, advanced automotive batteries in Michigan, nanotechnology in upstate New York, and polymers in northeast Ohio.

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Photo: C.J. Sorg/Flickr

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