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Can the Government Spawn Vibrant Manufacturing Clusters?

Posted By Jeff Moad, May 23, 2013 at 12:52 PM, in Category: Industrial Policy

By now the notion of economic clusters as geographic collections of companies in complementary industries and supported educational institutions and government agencies is well-known. Classic examples such as the high tech cluster known as Silicon Valley and more recent examples such as the growing automotive cluster in Louisville, KY, can generate accelerated economic development, lead to job growth, and expand exports.

While successful economic clusters such as Silicon Valley have certainly benefited tremendously from government support and spending, they have tended to take root and grow organically, often enabled by factors such as nearby universities, transportation infrastructure, and skilled workforces.

Now the U.S. federal government is attempting to take a more direct role in encouraging and enabling local manufacturing clusters. Recently various federal agencies announced phase one of what they call the Investing in Manufacturing Communities program that will eventually lead to up to six local communities receiving grants of up to $25 million to improve their attractiveness to manufacturers.

Under phase one of the initiative, the government will hand out at least 25 grants of $200,000 each to help local groups develop long-term economic development plans aimed at increasing their appeal to manufacturers. Local communities can submit proposals beginning June 13, and awards will be made in September. (See here for more details.)

In phase two, up to six local groups with the strongest plans will receive grants of up to $25 million each to implement their plans.

The program “will encourage collaboration at the local level to identify the region’s comparative advantages and assets, and plan investments to expand the area’s appeal to manufacturers,” according to a government statement announcing the program last week.

One of the questions raised by such a program is whether manufacturing-centric economic clusters that have sprouted organically elsewhere can be encouraged and enabled by government policy and cash.

What do you think? Have there been examples of this in the U.S. or other developed economies?

Category: Industrial Policy
Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit


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