Version 2.4
(November 3, 2006)

OUTLINE OF TRED BOOK

Working title: “Targeting Regional Economic Development”

Stephan Goetz, Steven Deller, and Tom Harris (eds.)

Taylor & Francis Instructions for Authors is available at: http://www.garlandscience.com/pdf/authorinstructions.pdf

Click here for a printable copy

Perspective

Community and regional organizations vested with the promotion of economic growth and development are in constant search for effective tools and methods to advance their efforts.  The interest in cluster developments that has been spurred by the work of Michael Porter has renewed interest in targeted economic development efforts.  There has been a concerted movement away from the old philosophy of “shoot anything that flies and claim anything that lands” to more strategic behavior in identifying the specific types of industry to promote at the local and regional levels.  Policymakers and economic development practitioners are now asking the more focused question; in what types of industry does our region have a competitive advantage? 

 
This edited volume builds on a series of workshops and working papers organized by The Northeastern Regional Center for Rural Development (NERCRD) at the Pennsylvania State University and the Rural Policy Research Center (RUPRI) at the University of Missouri.  Through the coordinated efforts of NERCRD and RUPRI, specifically the Community Policy Analysis Network (CPAN) within RUPRI, a network of university based researchers and Extension education specialists has been developed and provides the foundation of the proposed edited book.

This book follows the spirit and intent of previous efforts of this network of researchers and Extension educators.  This work is best represented by the edited volume:

Johnson, Thomas G. Otto, Daniel, and Deller, Steven C. (eds). 2006. Community Policy Analysis Modeling. Oxford: Blackwell Professional Publishing.

The intended audience for this book is researchers and community development educators located in universities, state agencies, and public policy centers, and economic development practitioners. 


Outline

Targeting Economic Development

Stephan Goetz, Steven Deller, and Tom Harris (eds)

Note: authors in boldface are confirmed or have expressed “strong” interest, or a paper is available.

I. 1.  Introduction and Overview (Stephan J. Goetz, Steven Deller and Tom Harris)

This chapter introduces the book.  Topics covered include: why are we interested in TRED?; a brief overview of how TRED has changed over the years; overview of the national efforts; objectives of the book; and outline of the book with a detailed summary of each chapter.

                  1a. Industry Clusters and Industry Targeting
                       (Martin Shields, David Barkley and Mary Emery) [Chapter]  
        http://www.nercrd.psu.edu/Industry_Targeting/ExtensionPapersandSlides/IndClusterExt.ShieldsBarkleyEmery.pdf
This chapter provides an overview of the industry cluster strategy for regional economic development and the role of industry targeting in helping communities and states identify innovative clusters and design policies for cluster growth. The discussion first defines industry clusters and summarizes advantages and disadvantages to a clustering strategy. Next, the concept of industry targeting is introduced, and industry targeting is applied to industry cluster development, focusing on their role in micropolitan or rural economic development. This is an important distinction as rural areas do not offer the inter-industry networking opportunities (urbanization economies) available in metropolitan areas. Thus, access to cluster-related benefits takes on added importance to micropolitan businesses and communities.

 

II. Policy Background

This section of the book “sets the stage” for why TRED, or industry targeting, is particularly relevant today.  Historical backgrounds provide a foundation for an in-depth discussion of current policy approaches.  Special attention is given to the notion of “cluster development” as advanced by Michael Porter.  The reader is provided with a general appreciation of the tone of current policy debates.

                    2. Historical Description of Economic Development Policy (Steven Deller and Stephan Goetz)
                         [Abstract] [Chapter]

This chapter provides a broad overview of economic development policy ranging from tax incentive programs starting with the Mississippi Balance Agriculture with Industry (BAWI) policies from the Great Depression era and the current competition between the states to the focus on entrepreneurship and business retention and expansion to the current philosophies of collaboration and partnership building within and across communities.  This chapter outlines in detail the “waves” of economic development policies at the state and local level.

                    3. Why is TRED Important in Today’s Policy Setting (Drabenstott) [Chapter]

This chapter reviews the current state of economic development policy and reflects upon the growing interest in regional cluster development, the promotion of innovation and the impact that the Porter approach has had in crafting regional policy.  The focus is on current philosophical thinking and builds on the closing comments of the preceding chapter.

                    4. Overview of the Theory Behind TRED (Steven Deller) [Abstract]

This chapter provides a theoretical overview of the economics behind industrial targeting.  Alternative theories of firm local and expansion decisions are reviewed in a non-technical manner.  Basic distinctions between cost minimization and demand maximization are described with special care to the differences between manufacturing, service and retail types of businesses.  Specific attention is placed on how policies can, or can not, fit into the location and expansion decisions of firms. 

                    5.Porters Cluster Strategy and Industrial Targeting (Douglas Woodward and Paulo Guimaraes)                       [Abstract] [Outline] [Chapter]

Much has been made of the notions of cluster development as advanced by Michael Porter.  The “Porter Approach” has received significant attention in the formulation of state economic development and is only now reaching the community level.  Through the idea of clusters many communities are seeing the value of collaboration and partnership building within and across communities (i.e., the third wave of development).  This chapter provides a critical review of the “Porter Approach” with specific attention to how communities may, or may not, find the approach useful.

                    6. Impact of Agglomerations on the Economy (Todd Gabe) [Abstract] [Outline] [Chapter]

Much of the modern theory of economic growth and development focuses on the role of agglomeration economies, or the role of internal and external economies of scale.  Modern endogenous growth theory, particularly in a spatial setting, predicts that scale economies are a driver of economic growth and development.  For larger metropolitan areas, such economies are inherent to the regional economy.  But for most communities scale works against them.  This chapter reviews the current thinking of agglomerations and how policy at the local level can be affected.

III. Empirical Modeling Approaches

                 
This section of the book provides an in-depth review of the current empirical methods that are used within an industrial targeting framework.  The reader will gain an understanding of the different empirical methods that can be used to work with communities that are interested in industrial targeting.  Sufficient detail is provided that readers will be able to replicate each of the approaches.

                  A.         Probability of Location Model or Attractive Score Models

                 7a. Modeling the Probability of Manufacturing Activity in the Great Plains
                       (John C. Leatherman and Terry L. Kastens) [Abstract] [Outline] [Chapter]

                 7b. Regional Variation in the Location Choice of Goods-and Service-Producing Industries
                       (Hanas A. Cader, John C. Leatherman and John M. Crespi ) [Abstract] [Outline] [Chapter]

In this chapter a probabilistic model for identifying the probability of a specific type of manufacturing activity is presented within a community (county).  Using statistical methods probabilistic models are reported with special attention to how these types of statistical tools can be used to help better understand what drives manufacturing firm local decisions and how communities can craft policies to affect those probabilities.  This chapter will complement the next chapter.

                 8. An Application of a Double Hurdle Firm Location Model:  An Example with the State of Montana
                    (Alison Davis and Tom Harris)

[Abstract] [Outline] [Chapter]

Using the notion of market thresholds this chapter focuses on probabilistic models for predicting the location decisions of manufacturing firms.  In addition to the probabilistic approach the chapter will review simpler more direct methods.  This chapter will complement the previous chapter.

                             
                  B.Use of Input-Output Models for Cluster Targeting

With the continued widespread use of IMPLAN (Impact Analysis for Planning), a modeling system and database that allows for the construction of detailed input-output (IO) models for individual counties or any combination of counties, several applied researchers have developed methods for using IO to undertake industry targeting studies.  This section of the book will review in detail some of the alternative approaches of using IO and IMPLAN in particular for TRED analysis.

                    9. Targeting Industry Clusters for Regional Economic Development: The REDRL Approach                          (David L. Barkley and Mark S. Henry) [Abstract] [Chapter]

In this chapter the authors outline a step-wise process for developing a primary list of industries for targeted cluster development.  The region’s industries must pass five screens to be selected as a targeted cluster: substantial local presence as indicated by number of establishments and employees, industry employment in the region is growing, the region is relatively specialized in the industry (LQ> 1.0), and local employment growth exceeds the national industry average. Next, industry value chains are identified to determine if linked industries are good prospects for targeting. Finally, the identified high potential industry clusters are rated according to workers’ wages, potential future employment growth, import substitution potential, average plant size, and linkages to the local economy.

                   10. Import Substitution and the Analysis of Gaps and                                            
                         Disconnects (Deller)

A central tenet of IO analysis is the identification of inter-industry linkages.  In addition, in the construction of these models detailed estimates of industry imports and exports must be estimated.  By examining these linkages, imports and exports a method for identifying “gaps” and “disconnects” can be developed and applied at the community level.  Gaps exist where firms must import goods and services into the region because they are not available from local suppliers.  Disconnects exist when local suppliers and consumers (businesses) are not connected in the supply chain; goods and services that are imported are actually available from local suppliers.  In the spirit of industry targeting the “gaps” are the potential industry for attention.  In this chapter the author will outline the methods with applications.

                    11. Value Chains and Labor Pool (Feser)

                 Chapter outline to be developed.

                    12. Clusters Between Rural and Urban Areas (Feser) [Abstract]
              
The authors of this chapter argue that understanding the role of clusters in rural economies requires viewing industry clusters on a spatial continuum, from those that are national or even global in scope to those that are highly localized. We use a new rural-urban typology together with a recently developed set of 45 U.S. value chain clusters to operationalize their perspective.  In this chapter the authors will outline their rationale and then provide specific examples.
 
                    13.  Underpinnings for Practical Application (Hughes) [Abstract] [Outline] [Chapter]

Although IMPLAN has seen widespread use throughout the US, the construction of such detailed models requires strong assumptions, both in model construction and database development.  This chapter will focus on the inherent limitations of using IO models built on secondary data.  The author of this chapter will review the strengths and weaknesses of IMPLAN and explore the impact of potential modeling errors on industrial targeting analysis.

                     C.  Incorporating Values of Community
              
One of the limitations to using industry targeting or cluster analysis to help form economic growth and development policies for communities is that the analysis and potential recommendations are sterile and do not reflect the culture or values of the community.  This section of the book will provide two chapters discussing these limitations and offer methods for incorporating community values into the analysis.

                    14.Targeting with the Analytic Hierarchy Process (Thomas G. Johnson and Anna M. Cox)
                          [Abstract] [Chapter]

This chapter provides an update of the journal article published on the same topic.

                    15. Normative versus Positive Targeting (Johnson) [Abstract] [Chapter]

The goal of economic opportunity analyses is to identify sectors which will bring maximum benefits to a particular region using a five step process. These steps include: (1) identifying the region’s preferences for economic, social, environmental and other outcomes; (2) estimating the potential contribution of various industries to the criteria included in the region's preferences; (3) identifying the region’s attractiveness to particular industries; (4) calculating the desirability of the sectors given the region’s preferences; and 5) identifying strategies for increasing the region’s attractiveness to the highest ranked sectors. This chapter will outline this methodology which is based on the experiences gained from several different but related projects.
     
                 
                      16. The Community Business Matching Model: Combining Community and Business Goals and                       Assets to Target Rural Economic Development (Linda J. Cox, Jonathan E. Alevy, Thomas R. Harris,                       Barbara Andreozzi, Joan Wright and George "Buddy" Borden) [Abstract] [Outline] [Chapter]

Community economic development often involves tradeoffs among economic and community goals.  Many issues must be addressed as a community examines the possible tradeoffs.  These issues may be difficult to quantify and discuss because they are complex.  The Community Business Matching model (CBM) provides a framework for communities to examine their goals and identify desirable tradeoffs.  A community can use CBM to prioritize their goals and identify the assets they have to help them achieve their goals.  The CBM fits these goals and assets to business profiles in order to ascertain which economic development prospective reflects the desires of the community.  The two primary indicators of the CBM model are desirability and compatibility.  Desirability measures how likely a business is to meet the goals of the community.  On the other hand, compatibility measures how likely the business is to locate in the community or the extent to which community assets meet the demands of the business.  By simultaneously solving for desirability and compatibility, the community can more effectively target desired business.

IV. Applications and Case Studies

One of the central objectives of this book is to provide the reader with insights into not only the theoretical foundations of targeting as well as empirical methods, but also approaches for using the analysis to affect policy.  The focus of the discussion in this section of the book will highlight methods for working within communities.
                             

                        18. TRED as an Educational Tool (Shields, Leatherman, Deller) [Abstract]
                             
In this chapter the authors outline a community educational program where the TRED analysis serves as a catalyst.  Based on the authors’ experience in designing and delivering educational programs within a university extension setting one potential educational program is outlined.  Using tools from community visioning and economic development strategic planning a method for using the TRED analysis as an educational tool is developed.

                         19. Targeted Industry Analysis in a “Comprehensive” Economic Development Extension Program                                (James R. Nelson, Michael D. Woods, La Dee Homm and Gerald A. Doekson) 

The authors outline a broad framework for working within communities in the area of economic development.  Using the “Blueprints” framework a collection of educational tools is outlined.  Industry targeting and cluster analysis is used as a focal point for a broader discussion of community economic development.                

                          20. A Collection of Case Studies (Harris, Goetz and Deller)

                          1.Building Multifaceted Local Economic Development Programs Around
                             Targeted Regional Economic Development (TRED) ( James R. Nelson, Mike D. Woods and Gerald                             A. Doeksen) [Abstract] [Outline]

This chapter is composed of a collection of specific applications in which TRED analysis has been used within community settings.   Summaries include setting of the analysis, the nature of the analysis, and an overview of the outcomes of the analysis.  **We ask authors to contribute 5-6 “case-studies” of impact analysis…setting, problem asked, analysis conducted, how the analysis was used in the community….then editors will summarize…

V. Conclusions

                          21.  Limitations to TRED (Authors tbd)
                                       
                         22. Conclusion: What have we learned? (Steven Deller, Stephan J. Goetz and Tom Harris)
                                         
In this chapter the editors of the volume will review the intent and objectives of the book and summarize the key findings by objective.  The chapter will also devote considerable attention on outlining future research, policy and educational directions.