Edward J. Feser

Clusters and Economic Development Outcomes An Analysis of the Link Between Clustering and Industry Growth

Much of the existing empirical research on industry clusters focuses on the detection of clusters for economic development purposes. There are comparatively few studies that relate identified clusters to business and industry growth or that trace changes in designated clusters over time. This article seeks to better understand the link between industry clustering and regional economic outcomes. In a comprehensive study sponsored by the Appalachian Regional Commission and released in 2002, the authors identified technology-based clusters within and on the border of the Appalachian region. The Appalachian technology clusters constituted subregional concentrations of related industrial, research and development, and university-based strengths as of the middle to late 1990s. In this article, the authors investigate how the industries in the identified clusters fared over the subsequent several years in terms of employment and new business formation. They find evidence that clustering is associated with new business formation for selected technology industries but not with employment growth.

Urban Containment and Central-City Revitalization

Abstract Planners throughout the 20th century have advocated containment of urban sprawl through a variety of means. Urban containment is incorporated into the growth management programs of several states, and growth management policies exist in at least 95 metropolitan areas. One objective of containment is to concentrate development within areas that are already urbanized, particularly in central cities. In this article, we examine the effects of the first round of urban containment programs (adopted prior to 1985) on the amount of development activity taking place in central cities and on the ratio of central-city to metropolitan-area development activity. Our findings indicate that central cities in contained metropolitan areas are attracting more development activity than cenral cities in uncontained areas. However, suburban areas in both contained and uncontained metropolitan areas continue to grow. We surmise that containment shifts development from exurban and rural areas to suburban and urban ones because of containment boundaries. One potential limitation of our ordinary least squares (OLS) regression modeling is that the relationship between containment and development activity may be multidirectional. That is, since central cities in metropolitan areas with higher growth rates in previous years are more likely to adopt policies to constrain future growth, containment programs may affect and be affected by the rate of central-city residential construction activity.1 Although we control for this fact to some degree by restricting our definition of the presence of urban containment to those metropolitan areas that adopted policies prior to the study period, any correlation between lagged construction rates and current construction rates would reintroduce the problem.

A test for the coincident economic and spatial clustering of business enterprises

Abstract. This paper uses input-output data combined with point process modeling techniques to test whether enterprises linked within nominal buyer-supplier chains have a greater propensity to cluster in space than manufacturing enterprises in general. The methodology controls for the general tendency of firms to seek locations in concentrated agglomerations and isolates the influence of firm interdependence on spatial clustering. Our findings suggest that there is indeed an association between economic linkages and geographic clustering in our study area, but only for some types of economic clusters, mainly those that are comprised mainly of more knowledge-based or technology-intensive sectors. In general, we endeavor to show that spatial analytical methods hold considerable promise for conducting rigorous tests of industrial location questions.

A flexible test for agglomeration economies in two US manufacturing industries

This paper uses the inverse input demand function framework of Kim (1992) to test for economies of industry and urban size in two U.S. manufacturing sectors of differing technology intensity: farm and garden machinery (SIC 352) and measuring and controlling devices (SIC 382). The inverse input demand framework permits the estimation of the production function jointly with a set of cost shares without the imposition of prior economic restrictions. Tests using plant-level data suggest the presence of population scale (urbanization) economies in the moderate- to low-technology farm and garden machinery sector and industry scale (localization) economies in the higher technology measuring and controlling devices sector. The efficiency and generality of the inverse input demand approach are particularly appropriate for micro-level studies of agglomeration economies where prior assumptions regarding homogeneity and homotheticity are less appropriate.

Innovation system effects on technological adoption in a regional value chain

This paper examines the technology adoption rates of a sample of enterprises that are nominally members of the transportation equipment value chain. We utilize the regional innovation system (RIS) concept to identify and test key regional and corporate influences on technology adoption. Using data collected from a detailed survey instrument, our analysis considers adoption rates during the very period in which production equipment technologies are known to have grown very suddenly, i.e. the fourth quarter of 1994. Our findings indicate that the most important RIS factors are related to worker training and information spillover effects between proximate firms. In the main, our findings are supportive of policies that work indirectly through the market structure of regional economies and a firms value-chain, as opposed to directly through regional technology agencies.

Agglomeration, Enterprise Size, and Productivity

Much research on agglomeration economies, and particularly recent work that builds on Marshall’s concept of the industrial district, postulates that benefits derived from proximity between businesses are strongest for small enterprises (Humphrey 1995, Sweeney and Feser 1998). With internal economies a function of the shape of the average cost curve and level of production, and external economies in shifts of that curve, a small firm enjoying external economies characteristic of industrial districts (or complexes or simply urbanized areas) may face the same average costs as the larger firm producing a higher volume of output (Oughton and Whittam 1997; Carlsson 1996; Humphrey 1995). Thus we observe the seeming paradox of large firms that enjoy internal economies of scale co-existing with smaller enterprises that should, by all accounts, be operating below minimum efficient scale. With the Birch-inspired debate on the relative job- and innovation-generating capacity of small and large firms abating (Ettlinger 1997), research on the small firm sector has shifted to an examination of the business strategies and sources of competitiveness of small enterprises (e.g., Pratten 1991, Nooteboom 1993). Technological external scale economies are a key feature of this research (Oughton and Whittam 1997).

Book Review: Clusters and your economy: An illustrated introductionCortrightJ.LangkildeL.RussellM.WallaceA.MudronB. (2014). Clusters and your economy: An illustrated introduction. Portland, OR: Impresa Incorporated & the University of South Denmark. 28 pp.

momentum would seem to justify this present comic book mode for the purposes of further accelerating the widespread dissemination of knowledge about cluster development. Yet, I wonder if the production team has thoroughly identified in advance the most receptive target audience(s) for this comic book? Might not the graphic treatment of the clusters concept be perceived by some academic-based target groups to underestimate their intelligence? Or perhaps patronizing? Is the intellectual significance of cluster concept debased by its delivery in an “entertaining performance” rather than an “erudite expository” format? Finally, is there perhaps an unexamined cross-cultural faux pas lurking in this particular comic book production that might prove too embarrassing and inappropriate for successful mass distribution in the United States? One need only consult the popular online “Urban Dictionary” by searching “cluster” to envision an unintended comical outcome for the dissemination of this comic book in America. “Clustering” in the urban workplace at present has several incompatible emerging denotations. “Agglomerations and Your Economy” might prove to be a safer title.