This is the upshot of my new study1 with my Martin Prosperity Institute (MPI) colleagues Roger Martin, Melissa Pogue, and Charlotta Mellander, which was published as part of a special journal issue in honor of the 25th anniversary of Michael Porter’s landmark book, The Competitive Advantage of Nations. Porter is known for his research on the role of clusters of firms in economic development. Our study brings together Porter’s seminal work on industrial clusters with my research on the clustering of talent and occupations. While Porter’s work distinguishes between more locally-oriented and traded industries that export goods and services outside of their immediate geographic areas, my work distinguishes between creative, knowledge-based occupations in science, technology, design, and entertainment and routine occupations in manufacturing and services.
The chart below shows how we marry these two approaches, combining them to generate four distinct occupational-industrial categories: creative occupations in traded industries (which we call creative-in-traded), creative occupations in local industries (creative-in-local), routine occupations in traded industries (routine-in-traded), and routine occupations in local industries (routine-in-local). Our analysis examines the role of these four types of industries in innovation, economic growth, and inequality across some 260 metro areas that account for more than three-quarters of the U.S. population.
- 1. Roger Martin (Martin Prosperity Institute, Rotman School of Management, University of Toronto, Toronto, Canada), Richard Florida (Martin Prosperity Institute, Rotman School of Management, University of Toronto, Toronto, Canada), Melissa Pogue (Martin Prosperity Institute, Rotman School of Management, University of Toronto, Toronto, Canada), Charlotta Mellander (Jönköping International Business School, Jönköping University, Jönköping, Sweden)
Abstract: Purpose – This paper aims to marry Michael Porter’s industrial cluster theory of traded and local clusters to Richard Florida’s occupational approach of creative and routine workers to gain a better understanding of the process of economic development. Design/methodology/approach – Combining these two approaches, four major industrial-occupational categories are identified. The shares of US employment in each – creative-in-traded, creative-in-local, routine-in-traded and routine-in-local – are calculated, and a correlation analysis is used to examine the relationship of each to regional economic development indicators. Findings – Economic growth and development is positively related to employment in the creative-in-traded category. While metros with a higher share of creative-in-traded employment enjoy higher wages and incomes overall, these benefits are not experienced by all worker categories. The share of creative-in-traded employment is also positively and significantly associated with higher inequality. After accounting for higher median housing costs, routine workers in both traded and local industries are found to be relatively worse off in metros with high shares of creative-in-traded employment, on average. Originality/value – The research is among the first to systematically marry the industry and occupational approaches to clusters and economic development.
Publisher:Emerald Group Publishing Limited