History tells us that societies succeed when the fruits of growth are broadly shared. Indeed, no society has ever succeeded without a large, prospering middle class that embraced the idea of progress. Today, the ability of free-market democracies to deliver widely shared increases in prosperity is in question as never before. The primary challenge democracies face is neither military nor philosophical.

On September 29, 2014, Professor Mercedes Delgado from Temple University's Fox School of Business and Professor Scott Stern from MIT Sloan School of Management delivered a presentation at Mapping the Midwest's Future, a conference held in Minneapolis and hosted by the University of Minnesota that officially launched the new U.S. Cluster Mapping tool. Their presentation focused on the underlying research and methodology behind cluster mapping, and the relevance of clusters to economic development, resilience from recessions, innovation, and improved regional economic performance.

In works such as Glaeser (2011) and Porter (1995), prominent economists have suggested that metropolitan areas are the key to economic growth. In this article, we examine the economic development strategies and performance of the largest metropolitan areas in the five states of the Seventh Federal Reserve District—Illinois, Indiana, Iowa, Michigan, and Wisconsin. The cities, from smallest to largest by metro population, are: Des Moines, Indianapolis, Milwaukee, Detroit, and Chicago.

Why do investments in certain places yield jobs, growth, and prosperity while similar investments made in seemingly identical places fail to produce the desired results? Starting with the observation that innovation clusters spatially across a broad spectrum of industries, my work seeks to understand the mechanisms and institutions that promote the creation of useful knowledge.

Cluster theory and its application and cluster-based economic development policy, have been in the forefront of regional economic development theory and practice during the past decade. Cluster theory suggests that firms that are part of a geographically defined cluster benefit from being a part of that cluster and that these benefits result in growth in economic output for the region. It is important for policy makers and practitioners to understand how and in what ways they do so and what actions they can take to enhance economic growth through generating additional cluster benefits.

This paper takes a close look at the reasons, procedures, and results of cluster identification methods. Despite being a popular research topic in strategy, economics, and sociology, geographic clusters are often studied with little consideration given to the underlying economic activities, the unique cluster boundaries, or the appropriate benchmark of economic concentration. Our goal is to increase awareness of the complexities behind cluster identification, and to provide concrete insights and methodologies applicable to various empirical settings.

America’s research capabilities, entrepreneurial spirit and industrial prowess are poised to be focused and, in many cases, repurposed to realize the economic and employment returns many innovative technologies promise. However, if we are to be successful in assuring that all Americans share in this success, we need to expand the ability of many more locales to leverage their centers of basic research and related public and private R&D enterprises to enhance regional economic growth and competitiveness.

Over the last 30 years, researchers across the country have been documenting the shifts in university policies and practices enabled in no small part by the Bayh-Dole legislation of the mid-1980s, and the establishment and growth of the Small Business Innovation Research (SBIR) Program. These major shifts in national policy created an environment in which universities were free to manage their IP in ways that would support knowledge transfer as well as commercialization of new companies, along with an increased availability of private sector risk capital to support promising start ups.

National prosperity is created, not inherited. It does not grow out of a country's natural endowments, its labor pool, its interest rates, or its currency's value, as classical economics insists.

A nation's competitiveness depends on the capacity of its industry to innovate and upgrade. Companies gain advantage against the world's best competitors because of pressure and challenge. They benefit from having strong domestic rivals, aggressive home-based suppliers, and demanding local customers. 

Employment growth is strongly predicted by smaller average establishment size, both across cities and across industries within cities, but there is little consensus on why this relationship exists. Traditional economic explanations emphasize factors that reduce entry costs or raise entrepreneurial returns, thereby increasing net returns and attracting entrepreneurs. A second class of theories hypothesizes that some places are endowed with a greater supply of entrepreneurship. Evidence on sales per worker does not support the higher returns for entrepreneurship rationale.