Some impacts of industry clusters in missouri
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Some Impacts of Industry Clusters in Missouri. Dr. Diane Primont Professor of Economics & Associate Director, CEBR email: [email protected] April 11, 2008. Introduction. Economists and Economic Developers often focus on causes of disparities in economic growth rates Why?

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Some impacts of industry clusters in missouri l.jpg

Some Impacts of Industry Clusters in Missouri

Dr. Diane Primont

Professor of Economics &

Associate Director, CEBR

email: [email protected]

April 11, 2008


Introduction l.jpg
Introduction

Economists and Economic Developers often focus on causes of disparities in economic growth rates

Why?

Even small differences in growth rates can lead to ever larger disparities over time, due to compounding


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Two Research Questions

Are disparities in economic performance among counties increasing or diminishing?

“Convergence”

How is this performance effected by the presence and extent of industry clusters?

“Industry Clusters”


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Two Research Questions

Industry cluster

a group of businesses linked by common supply chains, labor needs, technologies, or customers


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1. Are Missouri counties converging?

Statistical Analysis

Conditioning the growth model on:

Rurality

Industry cluster specialization

Graphical evidence


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Statistical Analysis: Conditioning the growth model

  • Conditional Growth Model

    Growth in real per capita income 2000-2005 depends on

    • Real per capita income in 2000 (lnpcinc2000)

    • Index of relative rurality (lnirr)

    • Industry cluster specialization (specialization)

      1 if county specializes in one or more industry clusters; 0 otherwise


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Statistical Analysis: Conditioning the growth model

grpcinc | Coef. Std. Err. t P>|t|

-------------------------------------------------------------

lnpcinc2000 | -.2204 .0342 -6.34 0.000

lnirr | -.0437 .0150 -2.91 0.004

specialize | .0208 .0096 2.16 0.033

constant | 2.0510 .3149 6.51 0.000

-------------------------------------------------------------R-squared = 0.3005

Adj R-squared = 0.2816


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Graphical evidence of convergence

Pulaski

Oregon

Reynolds

St. Louis County

Cape Girardeau

Shelby


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Growth by Rurality of County

Reynolds

Carter

Wayne

Monroe

Scotland

Shelby


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Conclusions

  • The conditional growth model

    • suggests that Missouri counties are converging

    • rural counties tend to grow more slowly – will fall further and further behind

    • counties that specialize in one or more industry clusters tend to grow more quickly


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2. Industry Clusters in Missouri

Measuring specialization

Location Quotient

Specialization in Industries

Industry cluster bubble charts

Northeast and South Central Missouri

Southeast Missouri and the Bootheel


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Measuring Specialization

  • Location Quotient

    • Ratio of the proportion of a region’s employment in an industry to that of the nation as a whole

    • LQ = (EX/ET)/(NX/NT)

      • EX is region’s employment industry x

      • ET is region’s total employment

      • NXis national employment in industry x

      • NTis total national employment


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Measuring Specialization

  • LQ = 1: the region’s activity in the industry cluster is similar to the nation as a whole.

  • LQ < 1: the region’s activity in the industry is unspecialized.

  • LQ > 1: the region’s activity in the industry exceeds that of the nation as a whole.

    • The greater LQ exceeds 1, the more specialized the region is in the industry cluster.



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Industry Cluster Bubble Chart

Mature

2

Stars

LQ in 2005

1

-10

10

Transforming

Emerging

0

% Chg. in LQ 2001-2005

Hypothetical Data


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Industry Cluster Bubble Chart

Forest &

Wood Products

Biomedical/Biotechnical

Education &

Knowledge

Creation

Energy


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Industry Cluster Bubble Chart

Manufacturing

Supercluster

Mining

Chemicals

Glass &

Ceramics

Forest &

Wood


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Industry Cluster Bubble Chart

Biomedical/

Biotechnical

Forest &

Wood Products

Transportation and Logistics

Energy

Defense & Security

Business & Financial


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Industry Cluster Bubble Chart

Agribusiness

Transportation and Logistics

Biomedical/Biotechnical

Energy

Manufacturing Supercluster


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Conclusions

  • Achieving high economic growth is a challenge for any county or region, but particularly for rural counties

  • Regions with a greater number of “mature,”“star,” and “emerging” industry clusters tend to grow faster

    • May be useful to target these industries for further development


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