REGIONAL ECONOMIC ANALYSIS TOOLS FOR THE STATE OF INGENUITY REGION

ACaseStudyPreparedforNorthernIllinoisUniversity’sExecutiveEducationSeries

RegionalEconomicDevelopmentLeadership

CoursePSPA692:ToolsforRegionalEconomicDevelopment

Dr.BrianRichard,Instructor

January2014

ThisreportwaspreparedbyNorthernIllinoisUniversity’sCenterforGovernmentalStudiesunderaward06‐79‐05547fromtheEconomicDevelopmentAdministration,U.S.DepartmentofCommerce.Thestatements,findings,conclusionsandrecommendationsarethoseoftheauthor(s)anddonotnecessarilyreflecttheviews,opinions,orpoliciesoftheEconomicDevelopmentAdministrationortheU.S.DepartmentofCommerceortheofficersand/ortrusteesofNorthernIllinoisUniversity.

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TheStateofIngenuity(SOI)regionincludingsixcountiesinIllinoisandWisconsin(figure1)hassufferedfrombothnaturaldisasterssuchasfloodingandfromseriouseconomicsetbacksintheGreatRecessionthatclosedoneautomobilefactoryandcausedseriouscutbacksinanother.Whilesomeemploymenthasreturned,itisimportantthateffortscontinuetorevitalizeandtransformtheeconomicbaseforlong‐termprosperity.Thiscasestudyfocusesonanalyticaltechniquestoguidelocaleconomicdevelopmentpractices.

Figure1.StateofIngenuityRegion

Regionaleconomicdevelopmentis“aprocessinwhichlocalgovernmentsorcommunitybasedorganizationsengagetostimulateormaintainbusinessactivityand/oremployment.Theprincipalgoaloflocaleconomicdevelopmentistostimulateemploymentopportunitiesinsectorsthatimprovethecommunityusingexistinghuman,naturalandinstitutionalresources”(BlakelyandBradshaw,2002,p.xvi).

EconomicDevelopmentStrategy

Priortothemid‐1970s,thefocusofeconomicdevelopmentpracticewasoncomparativeadvantage(Stimson,Stough,andRoberts,2006,p.15).Thegoalwastoachievethelowestproductioncostsrelativetocompetitors.Duringthe1980s,competitiveadvantagestrategybecamemoreprevalent.Here,thefocuswasonvaluefactors:efficiency,performance,qualityoflife,humanandsocialcapital.However,manyregionscontinuedtoemploycomparativeadvantagestrategies,sellingtheirregionsasthelowestcostalternative.

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Increasedconcernsaboutenvironmentalquality,socialequity,andcompetitivepressureshavemorerecentlyledtostrategiesbasedon‘collaborativeadvantage’(Stimson,Stough,andRoberts,2006,p.16).Theseeffortsarecharacterizedbycollaborationamongbusinesses,governmentsandcommunities,focusingonindustryclusters,andsmartinfrastructure.Increasingly,economicdevelopmenteffortsareregional,crossingpoliticalborders.

Regardlessofaregionsapproachtoeconomicdevelopment,theeffortswillbemoreeffectiveiftheyaregroundedinasolidunderstandingofthemakeupanddynamicsofthelocaleconomy.ThiscasestudyusestheSOIregiontodemonstrateanalyticaltoolsandtechniquesforprovidingthatunderstanding.Thenextsectiondiscussessomeofthetheorybehindthepracticeofeconomicdevelopmentandanalysisofregionaleconomies.Followingthat,severalanalyticaltechniquesareusedtoanalyzetheSOIregion.

EconomicDevelopmentTheory

Neo‐classicalgrowthmodelspredictedincomeconvergencebetweenregions.Theassumptionwasthatproductionwouldmovefromhighcost‐highincomeregionstolowercostregions.Thismovementwouldreducecostsinthehighincomeregionsasfewerscarceresources(includinglabor)wereutilized.

However,thisviewofregionaleconomiesdidn’tholduptorealworldobservation.Highandlowincomeregionstendedtoremainthatway.Theseobservationsledtothedevelopment,beginninginthe1950s,ofpolarizationtheories.Thesetheoriespositthatvariationsinproductionfactors,imperfectmarkets,externalities,andeconomiesofscaleleadtothedevelopmentofleadingandlaggingregions.Emergingtheoriesincludednewgrowththeory,growthpoles,accumulatedcausation,andeconomicbasetheory(Stimson,Stough,andRoberts,2006,pp.18‐22).

NewGrowthTheoryincorporatedtechnologicalprogressasanendogenousfactorinlongtermgrowth(Stimson,Stough,andRoberts,2006,p.19).Thiscontrastedwithneo‐classicaltheorywhichassumedthegrowthratewasdrivenbyexogenousfactors.Inadditiontoviewingtechnologyasanendogenousfactor,itrecognizedthatpositiveagglomerationeffectsleadtoconcentrationsofactivityinaregionthroughself‐reinforcingeffectsthatattractnewinvestment.

Growthpoletheorysuggeststhateconomicdevelopmentstrategyshouldfocusonaspecificsector(Stimson,Stough,andRoberts,2006,p.20).Thatsectoristhe‘growthpole’,oracorebasicindustryandleadstobroadergrowththroughlinkageswithothersectors.Criticismsofthegrowthpolestrategyclaimthatbenefitsaccrueinitiallytothegrowthpolesectorattheexpenseofothersectors.However,EDstrategiesbasedonthistheorycontinuetobepopular(i.e.targetedindustrystrategies).

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Accumulativecausationemphasizesthewaymoredevelopedlocationsattractfinancialandhumancapitaltoaccumulatecompetitiveadvantageoverotherlocations(Stimson,Stough,andRoberts,2006,p.21).Backwardeffectspreventdisadvantagedlocationsfromdevelopingtheinternalcapacitytocompeteandprosper.Theresultisself‐reinforcingdeclineorcontinuedgrowth.

EconomicBaseTheory(sometimescalledExportBaseTheory)assumesthatregionaleconomiesarecomposedoftwocomponents,basicandnon‐basic(Stimson,Stough,andRoberts,2006,p.19).Thebasiccomponentproducesgoodsandservicesthatareexportedoutoftheregion(orproductsthatwouldotherwisebeimportedforlocalconsumption).Thenon‐basiccomponentservestheneedsoflocals.Theeconomyisdrivenbybasicactivity.Economicdevelopmentoccursthroughtheexpansionoftheeconomicbase.

Basicactivityhasamultipliereffect.Astheeconomicbasegrows(moregoodsandservicesareproducedforexport),additionalnon‐basicactivityisneededtosupportthebasicactivity.Theexportingfirmpurchasesinputsandsupportservicesinthelocaleconomy.Employeesattheexportingfirmpurchasegoodsandservices.Bothofthesefactorscreateadditionalemploymentandincomeintheregion.

TheoryintoPractice

Economicdevelopmentstrategiesandactivitiesarejustifiedbasedoneconomicbase,growthpole,and/oraccumulativecausationtheories(Stimson,Stough,andRoberts,2006,p.22).Theseactivitiesarebasedontheassumptionthatbenefitsfromincreasedeconomicoutputandtaxrevenueswilloutweighthecostsassociatedwithincentivesandsubsidies.Policiesandactivitiestypicallyfocusonthreeareas:businessattraction,businessretentionandexpansion,andbusinesscreation.

Businessattractionactivitiesareanattempttogrowtheeconomicbaseofaregion.Theseeffortscanrangefrombroad‘smokestackchasing’tomoretargetedapproaches.Porter(1990)criticizesdirectincentivesandsubsidiesasdestructive–a‘zerosumgame’,Rather,hesuggeststhatinvestinginspecializedtraining,clusterspecificinfrastructure,andimprovingthebusinessclimatecanimproveboththelocalandnationaleconomies.

Businessretentioneffortsarefocusedonretainingthelocaleconomicbase.Traditionally,incentivesandsubsidieshavenotbeenavailableforexistingbusinesses.However,itisbecomingmorecommonforregionstomaketheseavailableforretentionefforts.Workingwithexistingfirmstomakethemmorecompetitivesometimesleadstoreducedemployment.ThisledWard(2006)tosuggestthebusinessretentionandexpansionshouldreallybetermed“businessretentionandcontraction”.

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Thegoalofbusinesscreationeffortsistoexpandtheeconomicbasebygrowingnewfirms.Entrepreneurshipsupportpoliciesaimtosupportor‘incubate’localcompanies.Thesearebecomingamoreprominentpartofregionaleconomicdevelopmenteffortsastheeconomybecomesmoreinformation‐intensiveorknowledgebased.

Inadditiontoaddingtotheeconomicbase,eachofthesepolicyareasmayfocusonimportsubstitution.Theseeffortsattempttoexpandlocalproductionofintermediategoods&servicesthatarecurrentlybeingimportedasinputsintoadevelopedcoreexportbase.Likeexpandingtheeconomicbase,importsubstitutionhasamultipliereffect.

Insummary,economicbasetheoryisbehindmanyregionaleconomicdevelopmentpoliciesandpractices.Becauseitiseasytoconceptualize,practicesthatarerationalizedbasedoneconomicbasetheoryreceivestrongercommunitysupport.Linkingagroupofinterrelatedprojectsindifferentpartsofaregionmaydriveeconomicbasedevelopmentindecentralizedruralregions.

RegionalAnalysistoGuideEconomicDevelopmentPractice

Thereareanumberofdatasourcesandanalyticaltechniquesthatcanbeusedtorefinethepracticeofregionaleconomicdevelopment.Someusethemostrecentavailabledataandprovidea‘snapshot’ofeconomicconditions.Othersusetrenddatatoanalyzechangeswithintheregionaleconomyovertime.

EmploymentData

Whilecommutingdataprovidesindicatorsofregionalintegration,itdoesn’tprovideanyinformationaboutthetypeofeconomicactivityexistentinaregion.Employmentandearningbysectordataareavailableatthecountylevel.Theseprovideimportantinformationaboutthestructureoftheregionaleconomy.ThesedataareavailablefromtheU.S.CensusBureau,BureauofEconomicAnalysis,stateemploymentorworkforceagencies,amongothersources.

CountyBusinessPatterns(U.S.CensusBureau)providescountylevelemployment,earnings,andnumbersofestablishmentsbyNorthAmericanIndustryClassificationSystem(NAICS)code.Thesedataarecollectedandreportedbyplaceofbusiness,meaningthattheyrepresentemployersinacounty,ratherthanthehomelocationsoftheworkers.Thedataexcludemostgovernmentactivity,althoughgovernmenthospitalsareincluded.

SectoraldatafortheSOIregionisdisplayedinTable7.WinnebagoCountyisthelargestemploymentcenterintheSOIregion,accountingforoveronethirdofallemploymentintheregion.Manufacturingisthelargestsectorintheregion,followedbyhealthcareandsocialassistance.

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Table7.SOIRegionEmployment,Payroll,andEstablishmentsbySector

Source:CensusBureau,2011CountyBusinessPatternsnd:Datanotdisclosedtoavoidrevealingproprietaryinformation.

Whilethissnapshotprovidesinsightintothemakeupoftheregionaleconomy,atrendanalysisprovidesadeeperunderstandingofchangestotheeconomicstructure.Figure2displaystrendsinimportantemploymentsectorsinWinnebagoCounty.Manufacturingsawadeclineofalmost50percentbetween1998and2010beforepickingupslightlyin2011.Healthcareandsocialassistancesawaslowbutsteadyincrease.Transportationandwarehousing,whilebeingarelativelysmallsector,alsosawanincreasebetween1998and2011.Othersectorsremainedfairlystable.

NAICScodedescription Winnebago Boone Kenosha Racine Rock Walworth TOTAL

Totalforallsectors 116,861 12,250 46,682 66,884 49,944 32,700 325,321Agriculture,forestry,fishingandhunting nd nd nd nd nd ndMining,quarrying,andoilandgasextraction 24 nd nd nd nd ndUtilities nd 674 nd nd 257 ndConstruction 3,140 5,815 1,508 2,044 2,169 1,135 15,811Manufacturing 23,179 236 5,327 14,394 7,886 8,062 59,084Wholesaletrade 4,404 1,330 2,429 2,948 3,067 1,495 15,673Retailtrade 14,648 437 8,740 8,481 8,638 4,516 45,460Transportationandwarehousing 5,472 101 2,014 2,007 1,842 876 12,312Information 1,946 223 327 535 832 301 4,164Financeandinsurance 4,109 56 960 1,852 1,675 834 9,486Realestateandrentalandleasing 1,497 nd 463 418 345 286Professional,scientific,andtechnicalservices 3,906 nd 1,516 2,333 1,095 935Managementofcompaniesandenterprises 800 nd 953 5,697 882 ndAdmin,support,wastemgmtandremediationsvcs 11,009 nd 2,892 4,641 2,734 2,301Educationalservices 1,996 844 nd 730 nd 307Healthcareandsocialassistance 20,326 79 8,954 10,739 8,625 3,831 52,554Arts,entertainment,andrecreation 1,609 660 1,155 744 808 741 5,717Accommodationandfoodservices 10,082 607 5,184 5,731 5,172 5,302 32,078Otherservices(exceptpublicadministration) 7,785 nd 2,199 3,396 2,097 1,454 16,931

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Figure2.WinnebagoCountySectoralEmploymentLevels,1998‐2011

Source:CensusBureau,CountyBusinessPatterns

AnothersourceofcountylevelsectoraldataistheBureauofEconomicAnalysis(BEA),partoftheU.S.DepartmentofCommerce.Priorto2011,BEAprovidedemploymentandincomedatabysector.However,duetorecentfederalbudgetcuts,onlyincomebysectoriscurrentlyavailable.AnadvantageofBEAoverCountyBusinessPatternsisthatBEAdataarereleasedsooner,makingmorerecentdataavailable.

Figure3displaysearningsbysector(inflationadjustedto2012dollars)forWinnebagoCounty.AstrikingdifferencebetweentheemploymentdatainFigure2andtheearningsdatainFigure3isinthemanufacturingsector.Manufacturingearningsdidnotdeclinebyaslargeapercentageasemployment.Thisindicatesthattheremainingmanufacturingjobsarehigherskill,higherwage.TheaddeddetailinthemanufacturingsectorshowsthatthemajorityofmanufacturingactivityinWinnebagoCountyisintheproductionofdurablegoods.Theadditionofthemorerecentdatashowthattheslightrecoveryinmanufacturingextendedatleastthrough2012.

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Figure3.WinnebagoCountySectoralEarningsLevels,2001‐2012

Source:BEA:CA05NEarningsbyNAICSindustry

MeasuresofRelativeImportance

Whilethemeasuresofindustrysizepresentedaboveareusefulforgaininganinitialunderstandingofaregionaleconomy,theyarenotveryusefulforplanningpurposes.Withoutcomparisonstootherregionstheycannotbeusedtodeterminestrengthsandweaknesses.Locationquotientanalysisisatechniquethatcomparesthesectorsofaregionaleconomytoareferenceregion,typicallyalargerstateornationaleconomy.

LocationQuotients(LQs)measuretherelativeimportanceofasectorcomparedtoitsimportanceinalargerregion(Stimson,Stough,andRoberts,2006,pp.107‐108).Itiscomputedastheratioofthepercentageoflocalemploymentinagivensectortothepercentageofstate(ornational)employmentinthatsector:

state

state

local

local

LQ

empl totalemplsector

empl totalemplsector

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AnLQof1indicatesthatthesectorhasthesameconcentrationasthereferenceregion.Forexample,ifaregionhad10percentoftotalemploymentinmanufacturingandthereferenceregionhad10percentmanufacturingemployment,theLQwouldbe1.Iftheregionhad20percentemploymentinmanufacturing,theLQwouldbe2.Inotherwords,anLQof2indicatesthatthesectoristwiceasconcentratedinthelocalregionascomparedtothelargerreferenceregion.Sectoralearnings(i.e.theBEAdatapresentedabove)canalsobeusedinplaceofemploymenttocalculateLQs.

Table8displaysWinnebagoCountylocationquotients.Manufacturinghasthehighestrelativeconcentrationinthecounty,at1.85timesthestateaverage.OtherServices1alsohasahighconcentrationasindicatedbyanLQof1.4.Thisisasectorthatmightbeexpectedtobestronginanurbancentersurroundedbyruralareas.Noothersectorhasasignificantlystrongconcentration.

SeveralsectorshaveLQssignificantlybelow1.Wholesaletrade,finance&insurance,professional,technical,&scientificservices,managementofcompanies,andeducationalservicesallhavelowconcentrationsinWinnebagoCounty.Theconcentrationoftransportationandwarehousinggrewsignificantlybetween1998and2011.

Table8.WinnebagoCountyLocationQuotients

Source:CensusBureau,CountyBusinessPatterns

1OtherServices(NAICS81)includesawiderangeofservicesincludingauto,computer,electronics,appliance,furnitureandshoerepair,hairsalons,funeralhomesandcivic,business,andprofessionalorganizations.

1998LQ 2011LQTotal 1.00 1.00Construction 0.82 0.75Manufacturing 1.78 1.85Wholesaletrade 0.79 0.63Retailtrade 1.03 1.06Transportation&warehousing 0.53 1.06Information 0.55 0.71Finance&insurance 0.54 0.60Realestate&rental&leasing 0.60 0.89Professional,scientific&technicalservices 0.61 0.49Managementofcompanies&enterprises 0.29 0.20Admin,support,wastemgt,remediationservices 0.88 1.01Educationalservices 0.43 0.55Healthcareandsocialassistance 1.05 1.16Arts,entertainment&recreation 0.93Accommodation&foodservices 0.99 0.95Otherservices(exceptpublicadministration) 1.41 1.40

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Largerregionstendtohavemoremoderateindustryconcentrations.ThisistrueoftheSOIregionwhencomparedtoWinnebagoCounty.Table9displayslocationquotientsforeachcountyalongwiththeoverallregion2.Inthebroaderregion,manufacturingcontinuestobethemostconcentratedindustry,ledbyhighconcentrationsinWinnebago,Boone,RacineandWalworthcounties.Retailtradealsohasarelativelyhighlevelofconcentrationintheregion.

Table9.SOIRegion2011LocationQuotients

Source:CensusBureau,CountyBusinessPatterns

MeasuresofChangeinSize

EmploymentlevelsandtrendsaswellasanindustryconcentrationmeasurehavegiveninsightintothedynamicsoftheSOIregioneconomy.Shiftshareanalysisprovidesdeeperinsightintothefactorscontributingtosectoralemploymentchangesovertime.Shiftshareanalysisdecomposesregionalgrowthintothreecomponents(Stimson,Stough,andRoberts,2006,pp.114‐115):

NationalShare(NS):changeattributabletooverallnationaltrends IndustrialMix(IM):changeattributabletotheindustrialcompositionoftheregion RegionalShift(RS):changeattributabletoregionalcompetitiveness

Itiscalculatedasfollows:

2ThereferenceregionchangesfromTable8(Illinois)toTable9(thetwostateareaofIllinois/Wisconsin)causingWinnebagoCountyLQsindiffersomewhatbetweenthetables.

NAICScodedescription Winnebago Boone Kenosha Racine Rock Walworth TOTAL

Totalforallsectors 1.0 1.0 1.0 1.0 1.0 1.0 1.0Construction 0.7 1.5 0.9 0.8 1.2 1.0 0.9Manufacturing 1.5 3.6 0.9 1.7 1.2 1.9 1.5Wholesaletrade 0.7 0.3 0.9 0.8 1.1 0.8 0.8Retailtrade 1.0 0.9 1.6 1.1 1.4 1.1 1.2Transportationandwarehousing 1.1 0.8 1.0 0.7 0.9 0.6 0.9Information 0.7 0.4 0.3 0.3 0.7 0.4 0.5Financeandinsurance 0.6 0.3 0.3 0.5 0.6 0.4 0.5Realestateandrentalandleasing 1.0 nd 0.8 0.5 0.5 0.7Professional,scientific,andtechnicalservices 0.5 nd 0.5 0.6 0.4 0.5Managementofcompaniesandenterprises 0.2 nd 0.6 2.7 0.6 ndAdmin,support,wastemgmtandremediationsvcs 1.2 nd 0.8 0.9 0.7 0.9Educationalservices 0.6 nd nd 0.4 nd 0.3Healthcareandsocialassistance 1.1 0.4 1.2 1.0 1.1 0.8 1.1Arts,entertainment,andrecreation 0.9 0.4 1.6 0.7 1.0 1.5 1.0Accommodationandfoodservices 0.9 0.6 1.2 0.9 1.1 1.8 1.1Otherservices(exceptpublicadministration) 1.4 1.1 1.0 1.1 0.9 0.9 1.1

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ei=employmentinsectori

G=overallnationalgrowthrate

Gi=nationalgrowthrateinsectori

gi=regionalgrowthrateinsectori

Table10displaystheresultsoftheshiftshareanalysisfortheSOIregionusingemploymentchangebetween1998and2011.Employmentinallsectorsfellbyjustunder39,000duringthisperiod.Thenationalshare(NS)foreachsectorsimplyequalsthe1998employmentinthatsectortimesthenationalgrowthrate.Nationalemploymentgrowthduringthisperiodwasabout4.9percent.Formanufacturing,1998employmentwas106,280.Multiplyingthisbythenationalgrowthrateyields5,218.Ifthemanufacturingsectorgrewatthesamerateastheoverallnationaleconomy,itwouldhaveadded5,218jobsoverthisperiod.

Theindustrymix(IM)foreachsectorequals1998employmenttimesthedifferencebetweenthenationalsectoralgrowthrateandtheoverallnationalgrowthrate.Thenationalmanufacturingsectordeclinedbyover35percentbetween1998and2011.Thedifferencebetweenthemanufacturinggrowthrateandtheoverallgrowthrateequatestoabouta40percentdecline(‐35.2–4.9=‐40.1).1998employmentof106,280multipliedby‐40.1percentequalsadeclineof42,607jobs.Thisisthedeclineinregionalemploymentthatisattributedtothenationalweaknessinthemanufacturingsector.

Theregionalshift(RS)componentequals1998employmenttimesthedifferenceinregionalandnationalgrowthratesineachsector.Manufacturingdeclinedbyabout44.4percentintheSOIregion.Subtractingthisfromthenationaldeclineof35.2percentyields‐9.2percent.1998employmentof106,280multipliedby‐9.2percentequalsadeclineof9,807jobs.Thisisthedeclineinmanufacturingemploymentattributabletolocalregionalcompetitiveness.

Analystsshouldusecautionwheninterpretingtheseresults,especiallywhenbroadsectordefinitionsareused.Manufacturingincludesdozensofsubsectors.ThelocalweaknessindicatedbythenegativeRScomponentmayreflectweaknessinspecificsubsectorswhileothersubsectorsarestrong.Forexample,aGeneralMotorsassemblyplantinJanesville

)(

)(

)(

1,

1,

1,

iitii

itii

tii

iiii

GgeRS

GGeIM

GeNS

where

RSIMNSe

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(RockCounty,WI)closedin2008andaChryslerplantinBelvidere(BooneCounty,IL)sawsignificantfluctuationsinemployment.

Table10.ShiftShareAnalysisfortheSOIRegion,1998‐2011

Source:AnalysisofdatafromCensusBureau,CountyBusinessPatterns

Theregionalshare(RS)componentisthemostimportantwheninterpretingtheresultsofshiftshareanalysis.Itindicatestheregionalperformanceofeachsectorrelativetonationaltrends.Forexample,theconstructionsectorremainedessentiallyflatbetween1998and2011(grewbyjust40jobs).Thenationalconstructionsectoremploymentfellbyover10percentoverthatperiod.Thus,theRScomponentshowedastrongincrease.Inotherwords,localstrengthintheconstructionsectorovercamenationalweakness.

Transportationandwarehousingsawnationalgrowthofalmost19percent.ThestrengthofthatsectorintheSOIregionallowedemploymentgrowthtobeevenstronger,reflectedinthehighRScomponentinthatsector.Over2,000ofthe3,600jobgainsareattributedtothestrengthofthatsectorinthelocalarea.

Healthcareandsocialassistancesawthelargestoverallemploymentgainsofanysectorintheregion.However,thatgrowthwasattributabletonationaltrends.Ifthatsectorhadbeenabletogrowatthenationalratetherewouldhavebeenover3,000additionaljobsontopofthe10,000thatweregainedintheregion.Accommodationandfoodservicesalsoshowedasimilarpattern.Localgrowthwasmuchslowerthanthenationalrates.

Summary

TheSOIregioncontinuestobearegionheavilydependentonmanufacturingemployment.Manufacturingemploymentisalmosttwiceasconcentratedintheregioncomparedwith

NAICScodedescription NS IM RS TotalChange

Totalforallsectors 14,302 ‐29,930 ‐23,338 ‐38,965Construction 774 ‐2,426 1,692 40Manufacturing 5,218 ‐42,607 ‐9,807 ‐47,196Wholesaletrade 951 ‐1,802 ‐2,848 ‐3,699Retailtrade 2,298 ‐793 ‐2,842 ‐1,337Transportationandwarehousing 426 1,188 2,018 3,632Information 262 ‐297 ‐1,143 ‐1,178Financeandinsurance 615 ‐362 ‐3,285 ‐3,032Healthcareandsocialassistance 2,078 11,156 ‐3,013 10,221Arts,entertainment,andrecreation 156 687 1,689 2,532Accommodationandfoodservices 1,523 5,328 ‐5,799 1,052

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IllinoisandWisconsin.Thismakesitvulnerabletothenationaldeclineinmanufacturingemploymentsincethe1990’s.

Veryfewindustrysectorsintheregionexperiencedsignificantgrowthrelativetonationaltrends.Transportationandwarehousingshowedthemostsignificantstrengthbetween1998and2011,almostdoublinginrelativeconcentration.Constructionandarts,entertainmentandrecreationalsoshowedstrength.

UnderstandingthesestrengthsandweaknesseswillguidetheprocessfordeterminingimportantindustryclustersintheSOIregion.Thecompanioncasestudy,“ClusterandValueChainAnalysisfortheSOIRegion”willinvestigatetheseclusters.ItexaminestheindustriesingreaterdetailandexploreslinkagesbetweenindustrysectorsandcountieswithintheSOIregion.

REFERENCES

Blakely,EdwardJ.andTedK.Bradshaw(2002).PlanningLocalEconomicDevelopment.ThousandOaks,CA:SagePublications

Porter,Michael(1990).TheCompetitiveAdvantageofNations.NewYork:TheFreePress.

Stimson,RobertJ.,RogerR.Stough,andBrianH.Roberts(2006).RegionalEconomicDevelopment:AnalysisandPlanningStrategy.NewYork:Springer.

Ward,WilliamA.(2006)."ManufacturingJobs2005‐2010:Medium‐TermStrategiesforLong‐TermRealities".EconomicDevelopmentJournal,5(1):7‐15(WinterQuarter2006).