Host Mary Walden asks about a buzz phrase heard often in discussions about economic development — economic clusters. Her husband N.C. State University economist Mike Walden responds.
Mike Walden, “Mary, an economic cluster is a combination of companies, pretty much doing all the same thing, that have found a location in particular region to be very positive for them. That region can then build off of that and actually attract more similar companies and therefore, become known for that type of business.
“For example, probably the best known economic cluster would be in the entertainment field, which is primarily located either in New York City or Los Angeles. Here in North Carolina, for example, in the Research Triangle Park area, we have an economic cluster in terms of information technology as well as pharmaceuticals.
“So, what is often done in terms of a state having an economic plan is to look at the clusters it now has and say ‘we’re going to build off of them, and we’re going to go out and try to recruit companies that fit into these clusters because we already have a concentration here. It’ll be easier for us to get those companies here rather than starting from scratch.’
“One of the downsides of this, of course, is that the economy can change, and a group of companies that’s doing well today may, quite frankly, disappear in 10 or 20 years. And so what you have to be cautious of is sort of betting on a group of companies that may look good now, but it may turn out to be a bad bet later. So this is this is not something that’s good or bad. But it’s certainly a caution flag that needs to go up when really trying to craft your economic development plan around economic clusters.”