The best way to create more jobs in a state is to grow them at home, rather than poach them from elsewhere: Some 95 percent of all job gains in a year in an average state come from the expansion of existing businesses or the birth of new establishments. However, the usual recipe of tax credits, R&D, training programs, and physical infrastructure is not sufficient, by itself, to spur such “organic” job creation. States also need to cultivate their industry clusters—geographic concentrations of interconnected firms and supporting organizations. Properly designed, cluster strategies are a low-cost way to stimulate innovation, new-firm start-ups, and job creation by helping to link and align the many factors that influence firm and regional growth.
Additionally, thinking in terms of clusters gives governors a way to articulate a positive vision of economic prosperity, engage broad groups of stakeholders in driving recovery, boost the export intensity of the economy, and bring focus and discipline to myriad state investments and policies.
Image: Nick Lowndes