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Some Impacts of Industry Clusters in Missouri. Dr. Diane Primont Professor of Economics & Associate Director, CEBR email: dprimont@semo.edu 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

Some Impacts of Industry Clusters in Missouri

Dr. Diane Primont

Professor of Economics &

Associate Director, CEBR

email: dprimont@semo.edu

April 11, 2008

introduction
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

two research questions
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”

two research questions4
Two Research Questions

Industry cluster

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

1 are missouri counties converging
1. Are Missouri counties converging?

Statistical Analysis

Conditioning the growth model on:

Rurality

Industry cluster specialization

Graphical evidence

statistical analysis conditioning the growth model
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

statistical analysis conditioning the growth model7
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

graphical evidence of convergence
Graphical evidence of convergence

Pulaski

Oregon

Reynolds

St. Louis County

Cape Girardeau

Shelby

growth by rurality of county
Growth by Rurality of County

Reynolds

Carter

Wayne

Monroe

Scotland

Shelby

conclusions
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
2 industry clusters in missouri
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

measuring specialization
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
measuring specialization13
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.
industry cluster bubble chart
Industry Cluster Bubble Chart

Mature

2

Stars

LQ in 2005

1

-10

10

Transforming

Emerging

0

% Chg. in LQ 2001-2005

Hypothetical Data

industry cluster bubble chart16
Industry Cluster Bubble Chart

Forest &

Wood Products

Biomedical/Biotechnical

Education &

Knowledge

Creation

Energy

industry cluster bubble chart17
Industry Cluster Bubble Chart

Manufacturing

Supercluster

Mining

Chemicals

Glass &

Ceramics

Forest &

Wood

industry cluster bubble chart18
Industry Cluster Bubble Chart

Biomedical/

Biotechnical

Forest &

Wood Products

Transportation and Logistics

Energy

Defense & Security

Business & Financial

industry cluster bubble chart19
Industry Cluster Bubble Chart

Agribusiness

Transportation and Logistics

Biomedical/Biotechnical

Energy

Manufacturing Supercluster

conclusions20
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