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<br />Industry Cluster Analysis <br />Industry cluster analysis is a common approach used in economic development to evaluate <br />the economic base of a region, usually at the county or multi-county level. Clusters are highly <br />integrated groups of businesses with strong vertical and horizontal linkages. Not only does <br />industry cluster analysis describe the current state, but this technique is often used to <br />identify areas of recruitment opportunity. Industry cluster analysis, however, is a broad <br />concept rather than a precise term. There is not a unified definition of industry clusters or <br />their subcomponents. <br /> <br />In general, a cluster consists offirms and related economi<<:a.etors and institutions that draw <br />productive advantage from their mutual proximity andcgnne(:tions. First, linkages are <br />established in which businesses build relationship~ with existing specialized supplier firms <br />throughout a region. Second, these developingcJusters attract additional supplier firms and <br />supporting business from outside ofthe area. Finally, by creating a criticahnass of <br />production, labor, and information, related manufacturers and supplier firms are attracted to <br />these developing cluster regions to take advantageofJhe exi~~ing human and physical <br />infrastructure. <br /> <br />A comprehensive analysis of industry Cluster fedmiques released by The Brookings Institute <br />(Making Sense of Clqstgts: Regional CoinpetitivenesSand Econoft:!iC [)evelopment, 2006) <br />highlights sevenF~y,ster dri~ers called "micftlfoun~ations"ofclustering: <br /> <br />Table 8: Cluster IndustrY MicrofQundations <br /> <br />LabOr MarT<efPOOIing <br />Supplier SpecializatioTl <br /> <br />Microfoundations Description <br /> <br /> <br />Knowledge Seillovers <br /> <br />Entrepreneurship <br /> <br />Path Dependence and Lock-In <br /> <br />Culture <br /> <br />Local Demand <br /> <br />StrongJrta,rket/supply for the distinctive skilled labor needed <br />Large number of industrial customers in the nearby area <br />create sufficient demand to enable suppliers to acquire and <br />operate expensive specialized machinery <br />Concentration of many people working on a similar set of <br />economic problems produces a widely shared understanding <br />of an industry and its workings <br />Entrepreneurship includes both the willingness of individuals <br />to form new businesses and the willingness of owners of <br />existing businesses to undertake new ideas <br />Set of opportunities available to any particular place will be <br />shaped by the economic activities it has already established <br />Culture may be particularly important in helping local <br />economies and clusters adapt to change over time <br />Demanding local consumers can pressure firms to innovate <br />and to maintain and improve product quality, which in turn <br />improves their competitiveness in other markets <br /> <br />City of La Porte, Texas - Economic&D~~~~ra~~i~~~~~~~~e~tl.J~~~~; ;009-_ <br />