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  • 2015
  • Report

Clusters and Regional Economies: Implications for the Great Lakes - St. Lawrence Region

By: Christian H.M. Ketels
  • Format:Print
  • | Language:English
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Abstract

The Great Lakes – St. Lawrence Region, covering eight U.S. states and two Canadian provinces located around the lakes and waterways that have given this region its name, is what economic developers call a 'macro region'. It is an area of intensive economic interaction through trade and value chain linkages. And it shares many similarities in terms of economic development, competitiveness issues, and institutional structure, culture, and history. These two factors make the Region an important arena for policy action, both in areas with strong cross-border implications and for those where challenges are similar but action will ultimately be local.
The Great Lakes – St. Lawrence Region is at an annual GDP in excess of $5 trillion and a population of more than 100 million one of the largest macro-regions in the global economy. It is also highly prosperous in international comparison, roughly matching the Canada/US economy with a GDP per capita of close to $45,000. Heterogeneity across the Region is high, however, and more recently the Region has gradually lost position.
A key factor for understanding the Great Lakes – St. Lawrence Region economy and its recent performance is its industrial composition. The Region used to benefit from a higher share of traded industries, i.e. those that compete internationally and concentrate in specific regional clusters. These industries also achieved a particularly strong wage premium compared to their peers across Canada and the US. This 'double premium' has been eroding over time, with the Great Recession as a dramatic accelerator of this process. A closer look at the data reveals that the losses have been particularly pronounced in the Region's strongest clusters, i.e. those with the highest level of specialization, in particular in clusters related to core manufacturing activities. One hypothesis to explain this unusual outcome is that these strong clusters were less fast in adopting new technologies and serving more attractive market segments than their peers elsewhere. The Region's overall cluster portfolio includes a broad range of clusters, the manufacturing-heavy industries but also many others like Financial Services, IT and Analytical Instruments, and Food Processing. The IT and Analytical Instruments cluster, for example, meaningful but not a relative strength of the Region, has managed to gain market share, with the strongest dynamism in medium-size college towns rather than the traditional hubs in the largest cities. Many of the strong clusters are linked, creating opportunities for future growth in areas related to current strengths.

Keywords

Clusters; Regional Policy; Great Lakes; Economic Development; Industry Clusters; Economy; Canada; United States

Citation

Ketels, Christian H.M. "Clusters and Regional Economies: Implications for the Great Lakes - St. Lawrence Region." Report, Conference of Great Lakes and St. Lawrence Governors and Premiers, Chicago, IL, August 2015.
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About The Author

Christian H.M. Ketels

→More Publications

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    • 2022
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    Industrial Policy in a New Global Reality: Towards a More Location- and Sector-Driven Approach

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    • 2021
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    Cluster Presence and Economic Performance: A New Look Based on European Data

    By: Christian H.M. Ketels and Sergiy Protsiv
    • December 2020
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    Rethinking the Role of the EU in European Competitiveness

    By: Christian H.M. Ketels and Michael E. Porter
More from the Author
  • Industrial Policy in a New Global Reality: Towards a More Location- and Sector-Driven Approach By: Christian H.M. Ketels and Emiliano Duch
  • Cluster Presence and Economic Performance: A New Look Based on European Data By: Christian H.M. Ketels and Sergiy Protsiv
  • Rethinking the Role of the EU in European Competitiveness By: Christian H.M. Ketels and Michael E. Porter
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