Regions across the U.S. vary markedly in terms of the prosperity levels that their population is able to enjoy. Competitive regions provide conditions under which companies can compete successfully on national and international markets while paying wages that can support a high standard of living to citizens.
The economic performance of regions can be tracked through indicators like GDP per capita, labor productivity, labor mobilization, and wages, which together provide insights into the standard of living enjoyed in a location. There is also a range of other indicators of economic activity such as exports or investments that add perspective on the economic dynamism of a region.
Competitive regions allow the companies that are located there to compete successfully in national and global markets while also supporting a high and rising standard of living for its citizens. The key to achieve this dual test is a growing level of regional productivity, driven by a business environment that enables innovation, entrepreneurship and growth. Policymakers and others need to understand a region's performance across the many different factors that contribute to overall business environment quality.
The diamond model, a conceptual framework introduced by Professor Michael Porter in 1990, organizes the business environment qualities that drive regional productivity into four main categories: the factor (input) conditions; the context for firm strategy, structure, and rivalry; the demand conditions; and the quality and availability of related and supporting industries.
Although a strong set of business environment qualities establishes the baseline for regional success, a region must develop a distinctive strategy in order to sustain a healthy and prosperous economy. No single policy or strategy will work for all regions. Each region must craft an approach to upgrade its performance based on its own unique assets and relative strengths.