Brookings report: clusters good for the economy

Governors looking to boost job creation in their states should cultivate industry clusters that 112510switchgrass25_mc14132.jpgfocus on existing businesses and home-grown start-ups, says a Brookings Institution report released on Wednesday.

Old economic development strategies — tax credits, research and development, training programs, and physical infrastructure — won’t by themselves get it done in today’s post-recession environment, according to the report, Job Creation on a Budget.

“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. … States also need to cultivate their industry clusters — geographic concentrations of interconnected firms and supporting organizations,” the report says.

Tennessee Gov. Bill Haslam should be plenty familiar with one of the successful regional industry clusters cited by the report — a bio-fuels cluster that has sprouted in recent years in the Knoxville-Oak Ridge Innovation Valley.

Here’s what the report says about what it calls the “Tennessee Agricultural R&D Cluster.”

“Oak Ridge National Lab — the world’s largest multidisciplinary research institution — and the University of Tennessee, with a $242 million annual research budget, have helped catalyze an agricultural R&D cluster in Eastern Tennessee’s Knoxville-Oak Ridge Innovation Valley around biofuels. At the BioEnergy Science Center university and lab researchers work to develop clean fuel sources, and leading companies like DuPont Tate & Lyle BioProducts, DuPont Danisco Cellulosic Ethanol (DDCE), and Genera Energy all conduct research in the region. DDCE and Genera, for their parts, along with the University of Tennessee’s BioSciences Initiative, opened a collaborative, pilot-scale, commercialization-oriented biorefinery earlier this year,” the report says.

Governors, especially new ones, are flooded with unsolicited advice. But Haslam and his economic development team would do well to take a close look at the Brookings report.

The report is the first in a series of Brookings policy papers that will analyze the challenges facing state and metro economies and offer advice for meeting those challenges. Future reports will look at manufacturing, infrastructure and exports.

Full Job Creation on a Budget report

More on Brookings Institution

News Sentinel freelancer Larisa Brass recently took an in-depth look at the regional bio-fuels industry. Here’s a link to her report.

Photo: Holly Baxter, a research associate at the University of Tennessee, works with genetically engineered switchgrass tissue cultures. Researchers seek to introduce genetic traits that will allow the plant to resist weeds and disease. Switchgrass is an agriculture product being turned into fuel. (J. Miles Cary/News Sentinel)