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Cluster-based Economic Development: A Winning Strategy for the Research Triangle Region


Research Triangle Region, N.C. -- ABB North America’s $632,000 gift to N.C. State’s electrical and computer engineering department, announced earlier this month, will leverage state and matching grants to create a $1.2 million initiative that will support power engineering research and education at the university and help the global power and automation technology company recruit top engineering professionals.

Such synergistic collaboration among companies, universities and government is at the heart of the Research Triangle Region’s cluster-based economic development strategy.

Companies like ABB locate in the region because of the competitive assets it offers them; in this case, R&D, talent and specialized centers, such as N.C. State’s FREEDM Systems Center, that keep it at the leading edge of smart grid technology development.

The company grows and thrives in this rich environment, then invests back into the community that helps make it so successful. That investment creates more R&D, talent and resources to grow the cluster.

It makes perfect sense but does it work? A recent analysis of investments made in the 13-county region over the past two years suggests it does.

Of the $4.1 billion in capital investments and 16,500 jobs announced in the region during 2009-2010, more than 80 percent of the new investments and 70 percent of new jobs came from companies in the region’s 11 targeted clusters.

“These results affirm the approach we’ve taken since we first launched the cluster-based strategy in 2004,” says Charles A. Hayes, president and CEO of the Research Triangle Regional Partnership, which leads economic development for the 13-county region.

“We’ve conducted extensive research into the region’s R&D capabilities to identify those technologies in which we are a world leader, or have the potential to be,” Hayes says. “We then target only those we believe hold the highest potential for job creation in the future. This analysis indicates we’re on the right track.”

Targeting Resources for Highest ROI

Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers and associated institutions in a particular field. Clusters arise because they increase the productivity with which companies can compete.

The adage “success breeds success” is at the heart of region’s cluster strategy – promoting the growth of clusters for which the region is highly competitive because of its critical mass of R&D, companies and specialized vendors and support services.

The Research Triangle Region is a world leader in life sciences and technology. So its 11 targeted clusters each represent a specialized, high-potential segment of those industries. The 11 clusters are advanced medical care, agricultural biotechnology, analytical instrumentation, biological agents and infectious diseases, clean/green technologies, defense technologies, informatics, interactive gaming and e-learning, nanoscale technologies, pervasive computing and pharmaceuticals.

Pursuing a cluster-based strategy does not mean that economic developers ignore business opportunities that fall outside those clusters,” explains Lee Anne Nance, RTRP senior vice president for strategic initiatives.

“We work on every project that comes in with the same energy and passion, and we are equally delighted when any company selects our region as the place it wants to settle and grow,” Nance says.

“However, we focus our region’s strategic efforts – business development, product development and regional collaboration – on our targeted clusters because we believe they will yield the highest return on our investment,” she says.

Analysis Reveals Cluster-led Growth

RTRP’s examination of announcements revealed which segments were growing faster, in both urban and rural areas, as well as the impact of international firms during the two-year period.

Among the highlights:

* Advanced medical care cluster leads regional investments. The advanced medical care cluster posted the highest investment value ($1.3 billion) and the highest number of total projects (17) during the period, as well as contributing 1,358 jobs. The cluster grew due to major expansions by leading regional healthcare providers, Duke University Medical Center, Rex Healthcare and WakeMed Health& Hospitals, as well as medical device makers, such as Teleflex Inc. and TransEnterix.

* Biological agents and infectious diseases cluster ranks a close second. Major investments by vaccine makers Novartis and Medicago and public health research and consulting company SciMetrika led investments in the region’s biological agents and infectious diseases cluster, which contributed $1.1 billion and nearly 600 jobs during the period.

* The emerging clean/green technologies cluster comes in third. A new cluster target in the region’s strategic plan, clean/green technologies, includes a critical mass of researchers, more than 200 companies and a range of support organizations that are accelerating economic and technological growth in smart grid, advanced transportation and alternative energy. Investments in this cluster totaled $412 million during the two years, creating 1,200 new jobs, led by LED maker Cree Inc.’s $392 million investment and 330 new jobs.

* Rural counties attracted $504 million in investments and 2,451 new jobs. Among companies in the region’s targeted clusters, Talecris Biotherapeutics led the way with its $269 million expansion in Johnston County, creating 259 jobs. Others included Frontier Spinning Mill’s $15.5 million investment in Lee County, creating 35 jobs, and thermoplastics maker Palziv North America’s $8 million plant in Franklin County, creating 70 jobs.

* International companies invest $1.6 billion, create 3,159 jobs. Leading the region’s international investments were Switzerland’s Novartis and its $1 billion vaccine plant, creating 350 jobs; Japanese auto parts maker AW North Carolina’s $106 million expansion in Durham County, creating 360 jobs; and U.K.-based pharmaceutical giant GlaxoSmithKline’s $70 million expansion.

For more information on the region’s economic development strategy, The Shape of Things to Come, contact Nance at (919) 840-7372 ext. 15 or lnance@researchtriangle.org.

The Research Triangle Regional Partnership (RTRP) is a public-private partnership that coordinates economic development for the Research Triangle Region, home of The Research Triangle Park and the 13 central-North Carolina counties of Chatham, Durham, Franklin, Granville, Harnett, Johnston, Lee, Moore, Orange, Person, Vance, Wake and Warren.