Sponsored by Oregon Business

Economix: Tom Potiowsky on economic clusters

| Print |  Email
Archives - December 2007
Saturday, December 01, 2007


{safe_alt_text} BY TOM POTIOWSKY

With the holidays rapidly upon us, my wife and I are reviewing recipes. We have our favorite standbys for turkey, stuffing, appetizers and desserts. We are always on the prowl for new dishes to try out on unsuspecting guests.

The world, too, is always searching for the best recipes for economic development. Literally hundreds of local economic development departments throughout the country start each day trying to figure out the right recipe for success. On the Economic Development Directory website, Oregon has 19 listings that cover the state and represent only a handful of the agencies devoted to economic development.

Many attempts to find the right economic development plan have been met with mixed success, but the focus today is quite clear. With the likes of Richard Florida and Michael Porter as champions, we have the creative class and economic clusters. These two ingredients dominate the plans of economic development offices across the United States and in Oregon. And the hot economic cluster of the day for Oregon is sustainability. To this we add innovation and measurement tools like indicators, benchmarks and dashboards to gauge the progress over time. But have we finally found the perfect recipe?

Economists generally acknowledge the efficiencies of the market system. Any talk of economic clusters and creative class is fine as long as government is not trying to direct the action. Markets will find their most efficient use of resources. Let the markets do the cooking; no recipe is needed.

So what is Oregon to do? Are economic clusters and the creative class the right ingredients for economic development? Should the market be left on its own to move resources to their greatest return?

Porter describes economic clusters as: “…geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions (for example, universities, standards agreements, and trade associations) in particular fields that compete but also cooperate.” It’s an obfuscated sentence that would make Alan Greenspan proud, but dig underneath it and you find some truth.

There is much to like about leveraging what an area already has in terms of clusters and avoiding the costly and risky route of forming a new one. For Oregon, the sustainability cluster seems like a natural fit. The state is attracting people to move here, including the “creative class.” Highly educated and talented individuals are the seeds for future entrepreneurs and civic leaders.  

What about the market forces that are efficient in moving around scarce resources? This is where the proponents of economic development need to keep in mind the powers of the market. Policies need to be aligned with market returns in mind. We may want more green building industries in Oregon, but we need to document that they are economically viable and then direct policies that complement the market forces. Top on my list would be investment tax credits to support the expenditures in capital infrastructure for continued growth of firms in this industry. In the end, if the economic returns are not there, you’ll have a tough time creating them through government policy.

Which economic clusters to pursue? No one has the crystal ball to see the next breakthrough. But by having a region where people want to live, attracting a creative class and having policies that work with the market forces to support the growth of clusters, you have a fighting chance that economic growth will continue to happen here in Oregon.

Former Gov. Tom McCall proclaimed that people should come visit but not stay — probably the greatest marketing slogan to promote the state. And who knows, “Keep Portland Weird” may be an economic marketing magnet. We don’t know the perfect recipe, and the search will continue. We have to be aware of market forces and work them into policy.

For now, in a large bowl, put 2 cups economic clusters, add 3 tablespoons creative class, a dash of innovation incentives…


Tom Potiowsky is an economics professor at Portland State University. In January, he returns to his post as state economist, a position he held for six years until 2006, when he returned to PSU.

Have an opinion? E-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it
 

More Articles

Beyond Bodegas

April 2015
Friday, March 27, 2015
BY JACOB PALMER

Five years in the making, the Portland Mercado — the city’s first Latino public market — will celebrate its grand opening April 11. A $3.5 million public-private partnership spearheaded by Hacienda CDC, the market will house 15 to 20 businesses in the food, retail and service sectors. It has some big-name funders, including the Paul G. Allen Family Foundation and JPMorgan Chase. The project goals are equally ambitious: to improve cross-cultural understanding, alleviate poverty and spur community economic development. 


Read more...

Opening soon: 3 of the coolest new breweries in Oregon

The Latest
Thursday, March 19, 2015
brewthumbBY JACOB PALMER | DIGITAL NEWS EDITOR

There are 278 companies licensed to operate as brewery, according to the Oregon Liquor Control Commission. Here are three new beer-making hubs slated to open soon.


Read more...

Grassroots movement pursues carbon bills

News
Tuesday, February 24, 2015
eventthumbBY KIM MOORE | OB RESEARCH EDITOR

A partnership of a grassroots environmental organization and a youth group is striving to build community and business support for carbon price legislation.


Read more...

Meeting Facilities Perspective

March 2015
Tuesday, February 24, 2015
BY KIM MOORE | OB RESEARCH EDITOR

A conversation with Donna Earley, director of sales and marketing for the Salem Convention Center.


Read more...

10 Oregon companies positioning themselves for growth

The Latest
Friday, March 13, 2015
vcthumbBY JACOB PALMER | OB DIGITAL NEWS EDITOR

Ten startups have secured venture capital, angel or seed funding in 2015.


Read more...

Car Talk

April 2015
Thursday, March 26, 2015
BY LINDA BAKER

Everyone knows cell phones and driving are a lethal combination. The risk is especially high for teenage drivers, whose delusions of immortality pose such a threat to us all. Enforcement alas, remains feeble; more promising are pedagogical approaches aimed at getting people to focus on the road, not their devices.


Read more...

Footloose

April 2015
Friday, March 27, 2015
BY LINDA BAKER

Founded 12 years ago, Keen Inc. likes to push the envelope, starting with the debut of the “Newport” closed toe sandal in 2003. Since then, the company has opened a factory on Swan Island and a sleek new headquarters in the Pearl District. The brand’s newest offering, UNEEK, is a sandal made from two woven cords and not much more.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS