Clustering for Growth

Michael Porter, founder of the ICIC, kicked off today’s schedule with a talk about cluster-based economic development, and how these strategies can spur economic and job growth in inner cities.

Inner Cities have particular characteristics, and strategies for economic development need to reflect this. In particular, he pointed out that higher poverty rates are common (31% compared to 9% for the United States as a whole), that inner city residents often may not be able to access jobs across the region, and that inner city development needs to respect and be tailored to the particular skills and experiences of residents in the inner city. Despite the growth that many cities have experienced, in the last 10 years 82% of inner cities have performed worse than their region as a whole.

One of the key distinctions Dr. Porter talked about is that between local clusters and trading clusters. Local clusters, as the name implies, exist primarily to serve the local market (i.e. Retail, health). Trading clusters aim to serve national and international markets (i.e. Life sciences, transportation and logistics). Local clusters have demonstrated more growth, in particular in inner cities.

Clusters work best when they build on existing groups of businesses, not when a city attempts to build them from scratch. Adapting this for inner cities, it strikes me that a successful inner-city cluster and growth would build on the following

• Existing businesses (particularly small, locally-owned businesses)
• Underutilized (or unused) skills of inner city residents
• Gaps in the local and regional marketplace that align with inner-city businesses and skills of residents
• Businesses and clusters of businesses that can concentrate jobs and economic activity in the inner city area.

What can your region build upon in the inner city to start developing a cluster? This question is the starting point for spurring more inner city economic growth.

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