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![Page 1: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/1.jpg)
Clusters: Pathways to Prosperity
Neil Reid University of ToledoDept. of Geography & PlanningUrban Affairs Center
Michael C. CarrollBowling Green State UniversityDepartment of EconomicsCenter for Policy Analysis & Public Service
![Page 2: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/2.jpg)
Presentation Outline
• Cluster Basics
• Industrial Foundations of NW Ohio
• Keys to Successful Cluster Building
![Page 3: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/3.jpg)
Cluster Basics
![Page 4: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/4.jpg)
Clusters Defined
• Clusters are geographic concentrations of interconnected companies and institutions in a particular field. Clusters encompass an array of linked industries and other entities important to competition. They include, for example, suppliers of specialized inputs such as components, machinery, and services, and providers of specialized infrastructure. (Porter
1998).
![Page 5: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/5.jpg)
Clusters Defined
• Clusters also often extend downstream to customers and laterally to manufacturers of complementary products and to companies in industries related by skills, technologies, or common inputs. Finally, many clusters include governmental and other institutions - such as universities, think tanks, vocational training providers, and trade associations - that provide specialized training, education, information, research, and technical support (Porter 1998).
![Page 6: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/6.jpg)
Clusters Defined
• Geographically concentrated networks and value chains of suppliers and/or knowledge institutes with the aim of developing innovations. (Hospers and Beugelsdikj, 2002)
![Page 7: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/7.jpg)
Cluster Diagram
Nucleus
![Page 8: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/8.jpg)
Cluster Diagram
Nucleus
S3
S2
S1
S4
S5
![Page 9: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/9.jpg)
Cluster Diagram
Nucleus
C3
S2
S1
S4
S5
S3
C1
C2
C4
C5
![Page 10: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/10.jpg)
Cluster Diagram
Nucleus
C3
S2
S1
S4
S5
S3
C1
C2
C4
C5
G1
U1
![Page 11: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/11.jpg)
Cluster Diagram
Nucleus
C3
S2
S1
S4
S5
S3
C1
C2
C4
C5
G1
U1
![Page 12: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/12.jpg)
Advantages of Clusters
• Participation in a cluster allows firms to operate more productively. They have better access to means needed for carrying out their activities, such as technology, information, inputs, customers, and channels, than they would have when operating in isolation.
![Page 13: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/13.jpg)
Advantages of Clusters
• Easier access will not only enhance the participants’ productivity, but also their ability to innovate.
![Page 14: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/14.jpg)
Advantages of Clusters
• An existing cluster may provide a sound base for new business formation, as its relationships and institutions will confront entrepreneurs with lower barriers of entry than they will meet elsewhere.
![Page 15: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/15.jpg)
Collective Efficiency
• The mere co-location of companies, suppliers, and institutions creates the potential for economic value; it does not necessarily ensure its realization (Porter 1998)
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Collective Efficiency
• Collective Efficiency = the competitive advantage derived from external economies and joint action
• External economies of scale – passive (are incidental and fall into the producer’s lap)
• Joint Action – active (is consciously pursued and requires joint efforts)
• Joint action is necessary for clustered producers to cope with new competitive pressures. (Schmitz and Nadvi, 1999)
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Every Region is Unique
• Every region’s economic structure is unique and . . . . public authorities should pay attention to this uniqueness (Hospers and Beugelsdjik, 2003).
• Successful clusters cannot be created from scratch. There needs to exist a critical mass of enterprises and skills . . . that outside assistance can “hook into” (Schmitz and Nadvi, 1999).
![Page 18: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/18.jpg)
Every Policy is Unique
• Each regional innovation policy and each regional cluster policy is unique. They are the specific responses of each region to the needs of companies and contextual conditions. Moreover, these policies include institutional building as a key factor in ongoing adaptation, innovation and development.
• These policies, therefore, are firmly rooted in their social and cultural context, embedded within their socio-economic and institutional environment. (Diez, 2001).
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Every Policy is Unique
• Cluster policy should spring from and evolve within their own regional situation.
• They should identify the needs of companies and the region, the political and institutional context within which regional policy takes shape, with the aim of achieving a single design.
• The distribution of roles between different institutions, the channels and mechanisms of interaction are specific to their context and cultural environment” (Diez, 2001).
![Page 20: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/20.jpg)
Industrial Foundations of NW Ohio
![Page 21: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/21.jpg)
Unemployment Rate
![Page 22: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/22.jpg)
Total Employment
![Page 23: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/23.jpg)
Total Employment
![Page 24: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/24.jpg)
Total Industries
![Page 25: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/25.jpg)
Methodology
• Output Based
• Spatially Driven
• IMPLAN Production Functions
![Page 26: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/26.jpg)
NW OhioIndustrial Clusters
• Automotive
• Containers
• Transportation and Warehousing
• Fabricated Rubber Parts
• Engineering and Architectural Services
• Petroleum Refining
![Page 27: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/27.jpg)
Auto
0
1,000,000,000
2,000,000,000
3,000,000,000
4,000,000,000
5,000,000,000
6,000,000,000
Monroe
Lucas
Wood
Fulton
Erie
Hanco
ck
Sandusky
Ottawa
![Page 28: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/28.jpg)
Containers
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
Monro
e
Lucas
Wood
Fulton
Erie
Hanco
ck
Sandusk
y
Ottawa
![Page 29: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/29.jpg)
Fabricated Rubber
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
Monro
e
Lucas
Wood
Fulton
Erie
Hanco
ck
Sandusk
y
Ottawa
![Page 30: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/30.jpg)
Motor Freight
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
Monro
e
Lucas
Wood
Fulton
Erie
Hanco
ck
Sandusk
y
Ottawa
![Page 31: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/31.jpg)
Engineering
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
Monroe
LucasW
ood
Fulton
Erie
Hancock
Sandusky
Ottawa
![Page 32: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/32.jpg)
Petroleum
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
Monro
e
Lucas
Wood
Fulton
Erie
Hanco
ck
Sandusk
y
Ottawa
![Page 33: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/33.jpg)
Auto Cluster
Industry Total National
Steel Pipe and Tubes $27,950,014 60%
Blast Furnaces and Steel Mills 26,925,640 8%
Special Dies and Tools & Accessories 24,510,412 62%
Paperboard Containers and Boxes 24,179,072 57%
Legal Services 23,989,134 38%
![Page 34: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/34.jpg)
Keys to Successful Cluster Building
![Page 35: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/35.jpg)
The Philosophy of Cluster Building
• A cluster-based economic development strategy represents a shift away from narrowly focused firm-based strategies to a more holistic approach.
• Requires a new form of economic governance that emphasizes the merging and synthesis of traditionally separate policy fields to form a more systemic and holistic approach to economic development.
• Requires fresh thinking on the part of leaders and the willingness to abandon the traditional categories that drive our thinking about who does what in the economy.
![Page 36: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/36.jpg)
Creation of a Cluster Vision
• Widely anchored vision of the future of the cluster.• Vision should be arrived at through a consensus-
based process.• Vision should be focused, flexible, and capable of
evolving.• Vision should have a regional focus.• Networking, institutional building, and industry
targeting are all outcomes of cluster policy.• Identification of common problems and common
means of resolution can provide a basis of cooperation and networks to emerge.
![Page 37: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/37.jpg)
Organizing the Cluster• Designate authority to a small number of people
to function as cluster drivers • These civic entrepreneurs can come from the
public or private sector• Must have capacity to function as network brokers
between sectors and individual interests.• Broker’s must function as managing unifiers
rather than managing communicators• Active participation of all the regional actors.• Government has an important role to play in
clustering.
![Page 38: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/38.jpg)
Cluster Management
• Clusters often fail to perform to their full potential when there are mismatches between its parts (e.g. a lack of cooperation between firms and universities). One of the objectives of cluster policy is to correct such system failures.
• A fundamental goal of cluster policy is to launch a process of building up collective learning in a bottom-up and interactive fashion. (Landabaso 1995).
![Page 39: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/39.jpg)
Building Clusters With Social Capital
• Must create a framework and forum for interaction between companies, organizations, and public agencies– trust, collaboration, and information and knowledge exchange.
• Social capital – “features of social organization, such as trust, norms, and networks, that can improve the efficiency of society by facilitating coordinated actions” (Putnam et al, 1993)
• Social capital is built through networks and civic engagement. Ease of building depends on initial stock of capital in a society. Is a process that can last centuries.
![Page 40: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/40.jpg)
Building Clusters With Social Capital
• “In our view, the importance of social capital and political institutions in regional clustering cannot be stressed enough. If anything, it is clear that regional success stories cannot be explained by agglomeration economies alone. It will be often the cultural uniqueness of a region, resulting from a specific set of social and political factors, that determines the particular course of regional economic development” (Hospers and Beugelsdjik, 2003).
![Page 41: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/41.jpg)
Social Trust
![Page 42: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/42.jpg)
Inter-Racial Trust
![Page 43: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/43.jpg)
Diversity of Friendships
![Page 44: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/44.jpg)
Cluster Kaizen
• Create resources and capacities that facilitate the transfer of ideas and innovations into new commercial products.
• Joint solutions to joint problems
• Rather than an innovation policy for companies, it is a question of an innovation policy with companies. (Diez, 2001).
![Page 45: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/45.jpg)
Division of Labor
• Different actors identify their core competence areas and use these competencies for cluster development.
• Critical that different actors must see value to own firm if they are to contribute to cluster.
![Page 46: Clusters: Pathways to Prosperity Neil Reid University of Toledo Dept. of Geography & Planning Urban Affairs Center Michael C. Carroll Bowling Green State.](https://reader034.fdocuments.net/reader034/viewer/2022051820/56649e685503460f94b651ff/html5/thumbnails/46.jpg)
Brand Building
• Brand building is essential to strengthen cluster competitiveness.
• Strengthens attraction of the cluster for investment, venture capital, and skilled workers.
• Helps unite actors in a shared purpose and common identity.
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“Strong regions do not develop by chance. As you make your
bed – so you lie on it” (www.telecomcity.org)