Economic Growth and Job Creation: The Case for Clusters

The word “cluster” often comes up in the world of Economic Development in the context of promoting job creation and economic growth. A cluster is a group of firms, and related economic actors and institutions. They are located near one another and draw productive advantage from their mutual proximity and connections. Clusters enable a region to build on its unique strengths and boost economic development and competitiveness in the process.

Should we still care about clusters?

You might have heard the perspective that in today’s connected, high-speed, globalized world location is no longer an important source of competitive advantage. Open global markets, rapid transportation, and high-speed communications should allow any company to source anything from any place at any time, right?

Not so much! In practice, physical location matters…big time. Physical presence improves an organization’s capacity for informal learning, acquisition of know-how, and building trust through social, professional or trade, and business situations. There is no substitute for being there. The more complex, knowledge-based, and dynamic the world economy becomes, the more this is true. Competitive advantage lies increasingly in local things – knowledge, relationships, and motivation–that distant rivals cannot replicate.

And clusters enhance competitiveness through increasing productivity, stimulating innovative new partnerships, presenting opportunities for entrepreneurial activity and producing a concentration of talent and technology that can support centres of excellence.

This advantage then becomes an incentive for similar industries and suppliers to those industries to develop or relocate to a region. And the cycle of goodness gains more momentum and grows exponentially.

Cluster power-up

There is no denying that building strong clusters yields real benefits. For example, clusters create a ripple effect when employees are hired. The impact varies depending on the industry, however, there is a multiplier effect of cluster job creation. When employees are hired in a certain cluster, many other jobs are created in the region.

It’s time to power-up! But where do you start? You need quick and easy access to data that will help you formulate your winning cluster strategy.

There’s a whole lot more to clusters than job creation. Clusters lead to knowledge spillover between companies that inevitably drive innovation, yield higher productivity, and wages, and often lead to new industry emergence. When we think of the IT cluster in Silicon Valley, or the Michigan Battery cluster, the most notable outcome is innovation. Why does this matter? Because these clusters become great conduits for a start-up ecosystem and serve a dual role of driving investment attraction and supporting a winning BRE strategy.

Gazelle.ai – just what the doctor ordered

Gazelle.ai is a full-featured Investment Attraction platform, but one of its key functionalities is its ability to map out clusters and track supply chains. All you need are NAICS codes and Gazelle.ai does the rest. By flagging suppliers and buyers of your targeted industries, it becomes easy to identify new niche sub-sectors to pursue, based on your region’s strengths. Gazelle.ai can then dig into each sub-sector providing you with much-needed analysis like:

  • Is this a growing sub-sector?
  • Who are the biggest players?
  • What are the key factors in strengthening this cluster?

Let Gazelle.ai paint a clear picture of your region’s cluster landscape and give you a competitive edge.

 

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