By Haas Center on April 10, 2019
One method of looking at a local economy is to examine the local industries. And one method of looking at local industries is to examine them as industry clusters. An industry cluster is a group of businesses and economic actors in the same area and that gain a productive advantage from this grouping. Cluster analysis can help diagnose a region’s economic strengths and challenges and aid in identifying realistic ways to help shape that region’s economic future.
There are many tools available that allow the user to perform a cluster analysis. One, from EMSI, allows clusters to be compared to each other within the region on five categories: Gross Regional Product (GRP), job growth, regional specialization, earnings and regional competitiveness. The tool also allows for the user to place weights on these categories to make one or more of them less or more important in the analysis. By varying the importance of these categories, an analyst can identify the critical players under each – i.e., which cluster is currently contributing at high levels to the economy versus which is growing faster.
The table illustrates the top 5 industry clusters in the Pensacola MSA when more importance is placed on each of the individual categories in turn.
When the categories are considered together and the highest level of importance is given to GRP, Growth and Earnings, the top 5 industry clusters in Pensacola utilizing these criteria are:
Cluster analysis should be repeated on a regular basis in order to monitor the cluster’s development. This can aid significantly in planning activities to support development, such as providing specialized workforce training or infrastructure improvements. Supporting industry clusters is one way a region can aid in maintaining a healthy economy.