An industry cluster is a group of firms, related stakeholders, and supportive institutions that gain productive advantages from close geographic proximity and related economies of scale. As groups of related industries grow and develop, clustering can help lower business costs and increase the extent and benefits of specialization. Deeper labor pools, better access to customers and suppliers, knowledge spillovers -- these and other advantages are derived from an environment of balanced competition and collaboration. As a result, specialized industry clusters embedded in metropolitan regions worldwide spur significant economic activity that forges broad economic opportunity and growth. Even in uncertain economic conditions, the competitive advantages of clusters effectively make the case for why a business would choose or need to operate in the Chicago region. A mounting body of research shows that these efficiencies boost a region’s job growth, wages, patenting, and startup activity. In particular, traded clusters -- those selling products and services in markets outside of the region -- have an outsized potential to grow our economy. Traded clusters account for just one-third of the region’s employment but half its income and demonstrate higher rates of productivity, wages, and patenting.
[GRAPHIC TO COME: An illustration will provide information on traded industry clusters and the benefits of cluster initiatives.]
The Chicago region realizes significant economic returns through its diverse areas of strength, with employment concentrations above the national average in the majority of traded clusters. Yet the changing global economy has led to declining employment in almost all traded clusters since 2001. While many factors contribute to industry trends over time, differences between trends here and elsewhere in the U.S. illustrate our region’s relative competitiveness. For example, only a small handful of metropolitan Chicago's traded clusters grew regional employment at or ahead of national averages, most notably Business Services and Medical Devices. The performance of other relatively large clusters has been more mixed, pairing declining employment totals with continued specialization in the national context. Such clusters include Financial Services, Food Processing and Manufacturing, and Metal Manufacturing.
[GRAPHIC TO COME: A series of data charts will show change in metropolitan Chicago’s traded industry clusters between 2001-2017.]
Economic realities are making it increasingly essential that businesses and related public or private institutions work together to support further cluster growth and employment concentration in the region. Regional efforts can address shared, sector-specific challenges like the steepening competition from globalization and the accelerating pace of technological and market changes. Cooperation can also support multiple planning goals like organizing employers and social service providers to implement a regional career pathway system.
The following describes strategies and associated actions to implement this recommendation.