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Rural Knowledge Clusters:Innovation and Rural Community Vitality
Overview
Globalization and Knowledge Clusters for Rural America
Rural Knowledge ClustersMinnesota Case StudiesRural Knowledge Cluster Strategies
Globalization and Knowledge Clusters for Rural America
1. Research examining the consequences of globalization for local government and local development policy and activities
2. Research examining the phenomenon of “rural knowledge clusters” through a series of case studies and related empirical research
3. National conferences • Rural Community Vitality in a Global Economy (2002)• Knowledge Clusters and Entrepreneurship as Keys to Regional
Economic Developmnt (2004)4. Outreach effort to translate research findings into
strategies for communities of rural Minnesota
Goals of the Project• An enhanced understanding among rural,
economic, and community development practitioners about the dynamics of globalization for rural economies;
• Contribution toward a model of rural innovation that emphasizes the role of community institutions as catalysts of knowledge creation; and
• Effective outreach to rural communities, consistent with the University’s land grant mission.
Challenge of Rural Economic Prosperity
Double-edged sword – Access to global markets but exposure to global competition
Traditional staples – agriculture, natural resource-based industries (forestry, mining) vulnerable to changing export conditions
Rural competitive advantages for manufacturing – low costs, access to markets – diminished with globalization
Human capital shifts in knowledge-based economy
Successful Rural Development Themes
• Adaptability, not conformity• Emphasis on education, entrepreneurship,
ownership in human community, tools of the age
• Interdisciplinary thinking, combining economics, sociology, demography, geography, political science, and more
• Sustained efforts, journey not a destination
“The Knowledge Economy”In today’s economy, innovation is survival, no
matter what your product or service line is.Any innovation requires knowledge about the
technologies, processes, markets, etc., that make it work.
The economic development challenge:providing a fertile environment for innovation.
“Rural Knowledge Clusters”Specialized networks of innovative,
interrelated firms
Centered outside major metropolitan areas
Deriving competitive advantages primarily through accumulated, embedded, and imported knowledge among local actors
What Matters for“Rural Knowledge Clusters”?
• Competitive advantage: current factors related to supply or demand conditions, related industries, or local rivalry that give local firms a market advantage.
• History: an historical base of knowledge about an industry or technology that has given rise to current sources of competitive advantage.
• Institutions: formal and informal institutions that develop around clusters to support the creation, diffusion, and import of knowledge.
Competitive AdvantageMichael Porter, Competitive Advantage of
Nations (1990)“Diamond of advantage” drives innovation:
Factor conditionsDemand conditionsRelated and supporting industriesFirm strategy, structure, and rivalry
History• Knowledge is path dependent –
the new knowledge you create is directly related to the knowledge you already possess
• Specialization is prevalent and self-reinforcing in high-tech economies (Cortright)
• Patent activity as example
Institutions Local institutions as catalysts of knowledge
creation and diffusion Formal
Educational – universities, tech colleges Government – cities, counties Civic – trade associations, non-profits Regional partnerships
Informal Social capital Entrepreneurship
Rural Knowledge Clusters Indicators
Economic Indicators - location quotients; self-employment concentrations; wage levels; new business formation
Demographic Indicators - educational attainment; in-migration
Knowledge Creation Indicators - patent data; R&D expenditures
Industry Specific Indicators - industry associations; trade directories
Minnesota Case Studies
• Mankato area: wireless technologies and radio frequency technologies
• Alexandria area: automation and motion control technologies
• Northwest Minnesota: recreational transportation equipment
• Winona area: advanced composite materials • Southwest Minnesota: precision agricultural
equipment
Alexandria
Northwest Minnesota
Mankato
Rural Knowledge ClusterCase Studies
Winona
Institutions
• MSU Mankato
• South Central Technical College
• Wireless & Comm. Tech Alliance
• Global Wireless Ed Consortium
• MN High Tech Association
Competitive Advantages
•Skilled, specialized labor force•Diverse market opportunities•Cooperative interfirm relations
Firms and Industries•Wireless service providers
•Electronic components for wireless applications
•Training in wireless technology
History•EF Johnson: radio manufacturer, incubator of local talent
•Informal networking through ham radio club
Wireless and radio frequency
technologies
Mankato: Rural Knowledge Cluster Profile
History•Ag region, craft-like machine shops and equipment mfg
•Proximity to markets for packaging equipment
Automation and motion control technologies
Alexandria: Rural Knowledge Cluster Profile
Competitive Advantages
•Industry collective action around shared needs•Shortage of skilled labor in related industries
Firms and Industries•Industry packaging and material handling machinery
•Other light manufacturing industries
Institutions
•Alexandria Technical College, Ctr for Automation & Motion Control•MN Mfg Automation Coalition•Tri-State Manufacturer’s Assoc.•Minnesota Technology Inc.•West Central Initiative
History•Farm equipment mfg base
•Need for transportation in snow
•Heteen et al develop first modern snowmobile, start Polaris
•Spins off, starts Arctic Cat
Recreational transportation
equipment
NW Minnesota: Rural Knowledge Cluster
Competitive Advantages
•Demanding local customers•Intense interfirm rivalry•Diffusion to new products and industries
Firms and Industries•Snowmobile manufacturing
•All-terrain vehicles
•Equipment suppliers and machine shops
Institutions•Northland Community & Technical College•Minnesota Job Skills Partnership• “Racing culture” – snowmobile racing circuit
Advanced composite
materials mfg
Winona: Rural Knowledge Cluster Profile
Competitive Advantages•Diverse local industry base•Skilled worker base around composite engineering•Cooperative relationships
Firms and Industries•Composite materials producers•Existing products improved through use of composite materials (i.e. canoes, heated plastics, automotive products, violin bows)
Institutions•SAMPE – professional society•Winona St – composite eng•COMTEC – applied R&D/testing•Winona Composites Consortium•Technical college – custom training, technical education
History•Miller Brothers – formed Fiberite after WWII•Initial growth in aerospace, military applications•Spinoff/startup activity to new firms
Southwestern Minnesota:Precision Agricultural Equipment
• Agricultural sprayer technology• Potential pitfall of having a cluster of
companies doing essentially the same thing, rather than diverse activities around the same technology
• Vulnerability that comes from non-local ownership
What did we find out about rural knowledge clusters?
Innovation doesn’t take place in a vacuum – history and context matter.
Educational institutions are important feedback mechanisms that foster knowledge development.
A core base of knowledge can be a driver of innovation and success for a diverse set of industries.
Knowledge is heterogeneous, and comparable indicators are extremely hard to find.
An institutional or entrepreneurial strategy can boost the vitality of rural knowledge clusters.
Rural Knowledge Cluster StrategiesInstitutional Strategies • Develop consensus around the need for new or enhanced
local institutions to address key competitiveness issues facing the cluster. Such institutions--when developed effectively--may represent a key competitive advantage, or alternatively, provide the kind of support necessary to overcome disadvantages.
Entrepreneurial Strategies • Focus on creating an environment that is supportive for start-
up and spin-off firms, as new ventures often extend the region's knowledge base into technologies and product markets. Further, they mitigate the risk of overspecialization and reduce the cluster's reliance on the success of a small number of larger firms.
Northwest Minnesota Knowledge Cluster Development Project
Project Partners• Northwest Minnesota Foundation• Northwest Technical College• Headwaters Regional Development
Commission• University of Minnesota’s Humphrey Institute
of Public Affairs• Minnesota Department of Employment and
Economic Development
Northwest Minnesota Knowledge Cluster Development Project
Key Clusters• Wood products• Value-added agriculture• Recreational vehicles
Northwest Minnesota Knowledge Cluster Development Project
Ingenuity Frontier Strategies• Center for Applied Engineering and Manufacturing• Applied engineering degree/graduate program • Career ladders for skill development and training within
clusters• Apprenticeship, internship and scholarship programs• Seed/venture-capital fund to encourage entrepreneurship
and business development within clusters• Targeted marketing campaign to attract and retain high-
skill workers and businesses within cluster areas
Implications for Rural Development
Understand your local knowledge base.Foster linkages between firms and the local
institutions that support them.Develop strategies for promoting innovation
around rural knowledge clusters.Don’t try to go it alone – promote a regional
vision to guide strategies.
For further information contact:Lee W. Munnich, Jr.Director, State and Local Policy ProgramHubert H. Humphrey Institute of Public AffairsUniversity of Minnesota157 Humphrey Center301-19th Ave. S.Minneapolis, MN 55455 [email protected]://www.hhh.umn.edu/centers/slp/index.html1-612-625-7357