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Economic Development As A Triage Activity. Marc Anderberg Director, Applied Research Texas Workforce Commission Annual Workforce Conference Phoenix, AZ April 10-11, 2008. Limitations of Cluster Theory. Scale Limited number of “trophy-size” recruits Competition (86 of 86 MSA for biotech)

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Economic development as a triage activity

Economic DevelopmentAs ATriage Activity

Marc Anderberg

Director, Applied Research

Texas Workforce Commission

Annual Workforce Conference

Phoenix, AZ

April 10-11, 2008

Limitations of cluster theory
Limitations of Cluster Theory

  • Scale

    • Limited number of “trophy-size” recruits

    • Competition (86 of 86 MSA for biotech)

    • Enough to tip the scales???

      • TX Emerging Technology Fund vs San Diego, SD, KS

      • Intangibles (CA, MA, WI, MO referenda)

    • Small businesses and microenterprises

      • Existing scale

      • Job creation

  • Creative Destruction

    • Exploitive vs exploratory innovation

    • Vulnerability

When cluster theory doesn t apply continued
When Cluster TheoryDoesn’t Apply(continued)

  • Regional Differences

    • Inside versus outside the “Texas Triangle”

    • Rural vs metro and suburban counties within same LWDA

  • Migration and aging of the population

    • Talent supply (“Brain Drain”)

      • Critical mass/agglomeration (Jane Jacobs)

      • Theory of the “Creative Class” (Richard Florida)

    • Consumer demands

  • Wealth creation versus job creation

  • “Market Failure”

    • Location – spatial mismatch

    • Equitable distribution


  • Triage concept (remember M*A*S*H)

    • “Walking wounded”

    • Critically injured

    • Beyond hope

Alternatives strengths and opportunities
ALTERNATIVESStrengths and Opportunities

Continue to do what you do best

  • Ag (crops and livestock) and Oil & Gas

  • Diversify and differentiate

  • Capture more of the value added

    • Intermediate vs final demand

    • New markets (niche, international)

    • Quality, branding and marketing

  • Become more efficient

  • Pooling of resources – cooperative

  • Be Opportunistic in “appropriating” cluster language

Alternative strengths and opportunities
ALTERNATIVEStrengths and Opportunities

  • Understand your comparative advantage

  • Differentiate between export industries and population-serving industries

    • Retail is NOT economic development

      • Retail and personal services follow population and income growth

      • Conserve scarce resources for export industry development

        • Resist notion that bidding wars are “business as usual

        • Use information resources and indirect incentives

        • Understand leakage, displacement and import substitution

    • Stimulate population growth

      • Quality of place

        • Enhance natural amenities

        • Market them through tourism and residential relocation

      • Quality of life

        • Cheap land, low crime, low cost of living

        • Market to equity rich-city weary snowbirds

        • Upgrade services (e.g., cure problems like medically-underserved)

Alternatives strengths and opportunities1
ALTERNATIVESStrengths and Opportunities

Footloose industries

Business as a virtual platform

Place still matters

  • Proximity to final consumer

    • I have deployed lots of IT – I just don’t have any knowledge worth transmitting across the globe at the speed of light

    • Knowledge vs Information-based economy

  • Quality of life and quality of place

  • Green Economy & Tradability of Skills

Alternatives strengths and opportunities2
ALTERNATIVESStrengths and Opportunities

Grow your own

  • World class education

    • Foundation

    • Entrepreneurship

    • Stewardship

  • Access to capital (angels, micro-lenders, conventional)

    • Information broker and networking

    • Business plan development (see Dot Com Flame-outs)

    • Tech assistance

      • SCORE, ag extension, MEP, SBDC

      • Incubator, industrial park and exit strategy

  • Scale and expectations

    • IT as enabling rather than as a cluster

      (There are no low tech industries, only low tech firms)

      ― Get the infrastructure right

Alternatives addressing weaknesses
ALTERNATIVESAddressing Weaknesses

  • Base closure and abandoned factories

    • Resources and best practices

    • Recovery, renovation (speed essential)

    • Market spade-ready, finish-out ready

  • Cooperation

    • Rather than competition (bury the hatchet, ford the river Mr. Rhoden presentation)

    • Get a piece of the action

Alternatives when life gives you lemons make lemonade
ALTERNATIVESWhen life gives you lemons, make lemonade

Reversing cluster logic

  • Absence of legacy industry as barrier (Twin Cities)

    • Incremental change rather than breakthroughs

    • Risk-aversion and protectionism

  • Too much is disadvantage

    • Degradation of quality of place & quality of life

      • San Jose, CA migration to Austin, TX

    • Dispersion of vulnerable critical infrastructure

      • Gulf Coast refining vs Arkansas, Oklahoma or inland Texas

Alternatives addressing weaknesses1
ALTERNATIVESAddressing Weaknesses

Public good argument

  • Function of government is to fill gaps where market forces fail

  • Market forces will “take care of” the metro and suburban areas

  • With substantial comparative advantage, they can’t make the “but for” argument to justify financial incentives

  • Rural areas (and inner-city ones) need larger allocations in order to level the playing field

  • Rural areas and inner-cities have a greater need for wealth creation and jobs

  • Productive use of human resources in rural areas and inner-cities achievements decrease “drag” on the system.

Measuring success
Measuring Success

Efficiency, ROI and net job creation are not the only measure

Equitable distribution of cost and benefits

Earmarked funds

  • USDA

    • and HUD

    • and EPA

  • DoD (dual-use) and Homeland Security

  • NSF and Department of Education

  • NIH and HHS

    Special programs

  • Enterprise and Empowerment Zones

  • Community Redevelopment Act

    Reduced vulnerability

  • Diversification of the economic base

  • Dispersion of critical infrastructure

  • Retention of jobs relative to expected loss

  • Stemming the brain drain

    • Expanding the knowledge base

    • Nimble to respond to changing demands

    • Innovation and entrepreneurship are the foundations of wealth creation

Marc anderberg

  • Getting Down to Business: Applied Cluster Theory

  • Economic Development As a Triage Activity (in 2007)

  • Job Chains and Churning

  • Megatrends: An Environ-mental Scan of the Forces Sculpting Texas’ Eco-nomic Landscape (in 2007)

  • Becoming and Employer of Choice: Talent Recruitment and Retention During the Coming Skills Shortage

  • Technology Workers in the New Texas Economy

  • Infusing Strategic Planning with Local Wisdom

  • Bridging the Digital Divide: Under-representation of Women and Minorities in Technology-Intensive Occupations

  • The Emerging Biotechnology Industry

  • The Study of Emerging Occupations

Marc Anderberg

  • Email

    [email protected]

  • Phone

    (512) 491-4803

  • Mail

    Marc Anderberg

    Director of Applied Research

    TWC – LMCI

    9001 N. IH-35, Suite 103A

    Austin, TX 76753h