Exploring Strategies for Enhancing the Regional Economy

Module Six

Reflecting on the Previous Session

• What did you find most useful or valuable?• What progress have you made since then?• Any questions or clarification needed?

Overview of Module Six

• Identify the economic leaks in the region• Explore basic avenues for strengthening

clusters• Provide an overview of some specific

strategies within each avenue• Select some potential directions for the

region to explore

Import Substitution

Substituting externally produced goods and

services with those that are locally produced,

putting regional money to work in the region.

The Leaky Bucket

The Regional Economy

Purchases of Goods or Services out of the Region

Plugging the Leaks

Regional Demand

Regional Supplier

Outside Supplier

Strengthening Clusters Through Import Substitution

Identify:• Industries that support the cluster• Goods and services being purchased

from outside the region• Capacity for supplying these inputs

regionally• Resources needed to help promote the

creation, expansion, retention or attraction of businesses to supply inputs

Labels

Identify Potential Leakages and Opportunities for New Businesses

Wine

Zero inputs available regionally Small % of inputs available regionallyLarge % of inputs available regionally100% of inputs available regionally

Grapes

Research

IIrrigation

System

Fertilizer

Advertising

Example: Strengthening the Hospital Sector

Growing Your Region’s Cluster

Identify:• Industries composing the cluster• Imports (Leakages)• Regional capacity• Potential growth opportunities• Appropriate response strategies

C.A.R.E for the Cluster

ClusterStrengthening

Creation

Attraction Retention

Expansion

Source: Barta, et al (2010) CARE Model

Creation

Growing new enterprises locally to fill the gaps of goods and services purchased from outside the region

Creation: Providing Regional Support

Community Support Entrepreneurs

Intellectual Stimulation

Access to Capital

Education

Information

Connections & Networks Infrastructure

Services & Amenities

Source: Based on Reynolds, et. al., Small Business Economics 23: 263–284, 2004.

Creation: Sample Strategies

• Regional training

• Business coaching

• Youth entrepreneurship

• Business incubators

Attraction

Attraction seeks to reduce leakages by recruiting into the region firms that can supply missing goods or services that support the cluster.

Attraction: Targeting Effectively

• Past: Blindly attracting industry

• Now: Targeting businesses likely to be successful in the region

Attraction: Location Models

• Analyzes the probability of an industry moving to the region

• Evaluates the region’s ability to respond to industry needs

• Selects industries with the highest likelihood of success

Attraction:Community Business Matching Model

Compatibility Desirability

Community

Business

Assets

Needs Profile

Goals

The Ideal

Source: Cox et al., 2009

Attraction: Targeted Regional Economic Development (TRED)

TRED is:• An economic development strategy• A planning process• Content including data analysis and

interpretation

Source: Goetz, Deller, Harris (2009)

Attraction: Our Region

• Past successes

• Past challenges

• Potential attraction strategies related to regional clusters

Retention & Expansion

Supporting existing businesses within a cluster so that they can survive and thrive is another avenue for stopping or preventing cluster leakages.

Retention & Expansion: Benefits

• Lets businesses know they are valued• Helps solve local business issues• Improves community awareness• Connects businesses to community resources• Creates connections between community

organizations• Fosters job retention & growth

Retention & Expansion Process

• Planning Phase• Action Phase

Recruit volunteer visitors Visit local businesses

• Follow-up Respond to concerns Plan for future

Retention & Expansion:

• What has the region done to support:– Retention of cluster-related firms – Expansion of cluster-related firms

• What are some potential future strategies to support cluster retention and expansion?

Business Network Development

A formal or informal collaboration amongfirms that are part of a value chain

for the purpose of creating a net benefit for all involved

Network Examples

Milwaukee Seven Water Council:Transform the workforce system and create high performance talent pipelines within the region

The Entrepreneurs Network:Promote job growth and business creation

Meta-Business Formation

Strategies for generating revenue that support all local business

Examples:• Local coupons• Local credit/debit cards• Local currency • Business directories• Local stock exchange• Businesses that support other businesses

What’s Next?

• Consider other potential strategies that could be successful in the region

• Further examine the regional data

Final Reflections

What topics did you find most helpful?

What did you find confusing?

What other data do you need?

Other items you want to mention?

Looking Ahead: Module Seven

We will: Examine regional assets Explore the region’s seven

capitals Take an honest look at potential

barriers Take steps to link assets to

your potential regional goals