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Economic Gardening: Data and Clustering

The concepts of economic gardening are becoming more influential and pervasive in the economic development field.  A large number of economic gardening projects have sprung up in municipalities all over North America in the past year or so.  Beyond municipal boundaries, initiatives are being announced at regional, state/province and even federal levels that have the stamp of economic gardening on them.  What we’re seeing, in fact, is economic gardening sprawl.

You can see it in Michigan. The state has become a leading proponent of economic gardening, with Governor Rick Snyder enthusiastically cheerleading.  The Michigan Economic Development Corporation (MEDC) has an active economic gardening program and has been pursuing initiatives that, while not carrying the economic gardening label, are closely related to it.

In June MEDC announced the creation of the Pure Michigan Business Connect business-to-business network, which links Michigan companies with collaborators and private sector procurement opportunities.  The B2B portal is free to all Michigan businesses and is part of the comprehensive Business Connect program, which helps small companies expand their supply chain, find new markets and receive business assistance at little or no cost.

The Business Connect program is supported by major businesses in Michigan.  Consumers Energy has awarded 383 multi-year contracts valued at $347 million to Michigan companies by participating in the program, and announced November 3 that it now plans to spend a total of $500 million for the public-private partnership.  DTE Energy, another Business Connect partner, says it has spent more than $597 million with Michigan companies.

The point here is that Michigan is instituting programs incorporating economic gardening principles that enhance the building of industrial clusters – companies, people and supply chains that mutually support an efficient industrial community within a defined geographic area — that can innovate, create jobs and compete on a global scale.

Clusters are not a new idea, of course.  The term was made popular by Harvard professor Michael Porter in his 1990 book, The Competitive Advantage of Nations.  Michigan has had a network of 15 tax-advantaged clusters called SmartZones, designed to incubate technology-based businesses and jobs, since 2000.  But the growing influence of economic gardening concepts has broadened and deepened the meaning of a cluster.

A cluster is no longer just a selling point for attracting new businesses, it is a way to make businesses interconnected, with greater resources to find ways to grow – especially the use of industry databases and Web tools.

National Outcomes

This conceptual marriage is influencing events on a national scale.  In Germany, the Fraunhofer Institute for Chemical Technology has a cluster concept under which universities and industries create partnerships to accelerate product and process commercialization.  Fraunhofer has eight centers in the United States – three  in Michigan – and its clustering concept has formed the basis for a new $1-billion private-public partnership program now being considered by the US government.

The National Network for Manufacturing Innovation, proposed in February 2012 as part of the Obama administration’s fiscal 2013 budget, would be a joint effort between the departments of Defense and Energy, the National Science Foundation and the Commerce Department’s National Institute of Standards and Technology. Its goal would be to revitalize US manufacturing through a network of institutes where researchers, companies and entrepreneurs could jointly develop new manufacturing technologies.

This development is demonstrating how economic gardening is combining with other economic development concepts to influence strategies on a much larger scale than that of the small municipalities where the ideas were first implemented.

Economic gardening and industrial clustering are mutually reinforcing ideas that are strengthening each other.  Blogger Ed Morrison of Purdue University has interpreted the relationship this way:

“Both economic gardening and regional innovation clusters represent a new generation of economic involvement strategies based on open networks . . . economic gardening strategies are a strong complement to strategies supporting regional innovation clusters.”

Back at the community level, the mutually reinforcing combination of economic gardening and industrial clustering has been recognized by the Hampton Roads Partnership, based in Norfolk, Virginia.  Economic Gardening is incorporated within an initiative called Innovate!Hampton Roads.  With financial support from the U.S. Commerce Department’s Economic Development Administration, its mission is to promote local technology-based businesses around Hampton Roads, Virginia, so the region is recognized internationally for clusters of excellence.

In each of the region’s six clusters (modeling and simulation, bioscience, sensors, aerospace, robotics and coastal energy), the Hampton Roads Partnership is applying economic gardening principles using a combination of databases, web marketing, social media and analytical tools to help companies identify markets and growth trends, identify and evaluate new technologies, evaluate competitors, find suppliers and customers, and develop their workforces.

Economic Gardening – Data, Data, Data

Here we see a primary reason behind economic gardening sprawl: its emphasis on data, and the analysis of data, to facilitate the development of clusters and mutually advantageous business relationships of all kinds to build economic strength in a community or region – even a country.

The more comprehensive the data, and the greater the ease with which it can be quickly and accurately analyzed via the web, the greater power will be gained by an economic development organization to implement effective growth strategies.

An example can be seen at the Sacramento Metro Chamber, which is the voice of business for six counties in northern California.  It discovered by means of a data-analysis project that the education industry cluster is vital to the region’s prosperity.  The sector represents about one-fifth of the cluster’s total annual impact of $9.6 billion a year.

The cluster is therefore a focus of the chamber’s Metro Pulse regional business retention and expansion program.  It received international recognition by receiving the BR&E Project/Program Impact Award at the Business Retention & Expansion International Conference at New Orleans in August 2010.

Metro Pulse combines a high-volume business outreach effort with a very large database to help businesses identify challenges and opportunities in sectors such as education, health care and biosciences.  The database is accessed through the ExecutivePulse Business Intelligence System .  As an illustration of the data power now becoming available to EDOs, this system contains 250,000 business retention and expansion profiles.

Access to data such as this forms a critical foundation for the success of economic gardening programs and the strategies they relate to, including cluster development.

There will be an ever-growing need for more and better data in the future for economic development organizations at all geographic levels.  Look for the growth of very large database products, and ever more precise analytical tools, as fundamental resources for economic developers as this decade progresses.

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