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Industry Clusters and Regional Economic Performance: A Study Across U.S. Metropolitan Statistical Areas

48 Pages Posted: 18 Jan 2016 Last revised: 16 Mar 2017

Timothy F. Slaper

Indiana Business Research Center

Karter Mycroft Harmon

Indiana University - Indiana Business Research Center; Indiana University Bloomington, School of Public & Environmental Affairs (SPEA), Students

Barry Rubin

Indiana University Bloomington - School of Public and Environmental Affairs

Date Written: January 13, 2016

Abstract

Cluster theory provides a framework for analyzing regional industry dynamics. Definitions and categorizations of clusters vary, however, hindering the development of econometric models for cluster analysis. We propose empirical measures relevant to researchers and practitioners for cluster strength/specialization, cluster diversity/diversification and identifying regional growth clusters. The latter measure uses location quotients, shift-share analysis and other criteria to identify robust clusters that are important for thriving regions. These measures are calculated for local and traded clusters using employment data for 366 U.S. metropolitan statistical areas. Additionally, we estimate the relationship of our cluster performance measures to four traditional measures of economic performance: growth in GDP, productivity per employee, compensation per employee and personal income. We find traded cluster strength is positively related to compensation per employee growth and positively related to productivity growth, the latter being consistent with expected Marshall-Arrow-Romer externalities. Traded growth clusters are positively related to GDP growth.

Keywords: Cluster theory, urban economic development, regional analysis, multivariate regression

Suggested Citation

Slaper, Timothy F. and Harmon, Karter Mycroft and Rubin, Barry, Industry Clusters and Regional Economic Performance: A Study Across U.S. Metropolitan Statistical Areas (January 13, 2016). Kelley School of Business Research Paper No. 16-15; Indiana University, Bloomington School of Public & Environmental Affairs Research Paper. Available at SSRN: https://ssrn.com/abstract=2715263 or http://dx.doi.org/10.2139/ssrn.2715263

Timothy Slaper (Contact Author)

Indiana Business Research Center ( email )

100 So. College, Suite 240
Bloomington, IN IN 47404
United States
8128557475 (Phone)

HOME PAGE: http://www.ibrc.indiana.edu/

Karter Harmon

Indiana University - Indiana Business Research Center ( email )

Bloomington, Indianapolis, IN
United States

Indiana University Bloomington, School of Public & Environmental Affairs (SPEA), Students ( email )

1315 E. Tenth St.
Bloomington, IN 47405
United States

Barry Rubin

Indiana University Bloomington - School of Public and Environmental Affairs ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

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