Using the North American Industry Classification System (NAICS) to Identify National Industry Cluster Templates for Applied Regional Analysis

Abstract

Kelton C. M. L., Pasquale M. K. and Rebelein R. P. Using the North American Industry Classification System (NAICS) to identify national industry cluster templates for applied regional analysis, Regional Studies. Whereas Feser and Bergman developed the concept of national-level cluster templates and introduced a systematic methodology to identify such clusters, their technique and results were based on the now-outdated Standard Industrial Classification (SIC) system for categorizing industries. The paper updates their results using the 1997 Benchmark Input–Output Accounts for the USA, which are based on the North American Industry Classification System (NAICS). Since the treatment of services is much more comprehensive under NAICS, the paper expands on the Feser and Bergman manufacturing templates to identify more comprehensive mixed-sector templates. The cluster templates determined can provide a foundation for regional economic development strategies.

Kelton C. M. L., Pasquale M. K. et Rebelein R. P. L'emploi des NAICS afin d'identifier des modèles de grappes nationales industrielles pour l'analyse régionale appliquée, Regional Studies. Alors que Feser et Bergman ont développé la notion de modèles de grappes sur le plan national et ont avancé une méthodologie systématique afin d'identifier de telles grappes, leur technique et leurs résultats ont été fondés sur le classement industriel SIC (Standard Industrial Classification) qui est aujourd'hui dépassé. A partir des Benchmark Input–Output Accounts (tableau repère des échanges inter-industriels) pour les E-U et fondés sur la NAICS (North American Industry Classification System), on remet à jour leurs résultats. Vu que le traitement des services est beaucoup plus détaillé selon le classement NAICS, on peut développer les modèles industriels de Feser et Bergman afin d'identifier des modèles sectoriels mixtes plus détaillés. Les modèles de grappes ainsi déterminés pourraient fournir un point de départ pour les stratégies d'aménagement du territoire.

Grappes et liens industriels Aménagement du territoire

Kelton C. M. L., Pasquale M. K. und Rebelein R. P. Identifizierung nationaler Branchencluster-Vorlagen zur angewandten Regionalanalyse mit Hilfe des NAICS, Regional Studies. Feser und Bergman entwickelten das Konzept von Clustervorlagen auf nationaler Ebene und führten zur Identifizierung dieser Cluster eine systematische Methodologie ein. Allerdings stützten sich ihre Technik und Ergebnisse auf das inzwischen veraltete Branchenkategorisierungsschema der Standard Industrial Classification (SIC). Wir aktualisieren ihre Ergebnisse mit Hilfe der Benchmark-Input–Output-Konten für die USA, die auf dem Klassifikationsschema North American Industry Classification System (NAICS) beruhen. Im NAICS werden Dienstleistungen in weitaus stärkerem Maße berücksichtigt, weshalb wir die Produktionsvorlagen von Feser und Bergman weiterentwickeln können, um umfassendere Vorlagen mit gemischten Sektoren zu identifizieren. Die von uns entwickelten Clustervorlagen können als Grundlage für Strategien zur regionalen Wirtschaftsentwicklung dienen.

Branchencluster und Verknüpfungen Regionalentwicklungspolitik

Kelton C. M. L., Pasquale M. K. y Rebelein R. P. Identificación de las plantillas de aglomeración de la industrial nacional para el análisis regional aplicado mediante SCIAN, Regional Studies. Feser y Bergman desarrollaron el concepto de plantillas de aglomeración a nivel nacional e introdujeron una metodología sistemática para identificar estas aglomeraciones. Sin embargo, su técnica y resultados para clasificar las industrias estaban basados en el ahora ya desfasado sistema de Clasificación Estándar Industrial (código de SIC). Nosotros hemos actualizado sus resultados con ayuda del modelo de análisis comparativo de entrada-salida de 1997 para los Estados Unidos, basado en el sistema de clasificación industrial de América del Norte (SCIAN). Dado que el tratamiento de los servicios es mucho más completo en el SCIAN, podemos ampliar las plantillas de fabricación de Feser y Bergman para identificar plantillas del sector mixto más exhaustivas. Las plantillas de aglomeración que hemos determinado pueden cimentar las bases para las estrategias de desarrollo en la economía regional.

Aglomeraciones y vínculos industriales Política de desarrollo regional

Keywords:

• Industry clusters and linkages
• Regional development policy

JEL classifications:

• R10
• R11
• R58

Acknowledgements

This research was inspired by the authors' involvement in a large regional cluster analysis commissioned by the Cincinnati USA Partnership. The work benefited substantially from conversations by the authors with other faculty and development practitioners involved in the project, including Jeff Rexhausen, George Vredeveld, Howard Stafford, Eric Thompson, and Marge Rotte. The authors appreciate Marty Levy's statistical advice. They also thank two anonymous referees for their insights and suggestions; the manuscript benefited tremendously from their expertise.

Notes

1. The six studies are Target Marketing Strategy (Wadley-Donovan Group, 1999); Kentucky Clusters: Industrial Interdependence and Economic Competitiveness (Feser and Koo, 2001); An Ohio Technology-Based Economic Development Strategy (Battelle Memorial Institute, 2002); Hamilton County's Comparative and Competitive Advantages (Nolan, 2003); Northern Kentucky New Economy Readiness Strategy (Angelou Economics, 2003); and Identification of Industry Clusters for Guiding Economic Development Efforts in Cincinnati USA (Economics Center for Education & Research, 2004). Although each of the studies includes a biotechnology cluster, each study defines this cluster differently. The study performed by the Economics Center used the Feser and Bergman (2000) technique applied to summary industries. The biotechnology cluster identified was less than satisfactory; working with detailed industries produces a much stronger result.

2. It is worth noting that the present method is not the only systematic, quantitative approach to cluster identification. For example, Feser (2003) suggests a statistical methodology for identifying clusters of industries that have similar occupation patterns. Using both supply-chain and occupational approaches (based on national data) in tandem could provide an especially rich base for regional cluster analyses.

3. Twenty-eight value-chain clusters are identified by Feser and Koo (2001, pp. 63–69). Included in the Printing and Publishing cluster are: General Medical and Surgical Hospitals (SIC 8062), Psychiatric Hospitals (SIC 8063), and Testing Laboratories (SIC 8734). Included in the Chemicals and Plastics Cluster are: Offices and Clinics of Optometrists (SIC 8042), Kidney Dialysis Centers (SIC 8092), and Specialty Outpatient Facilities (SIC 8093). Moreover, none of the 28 clusters provides a good approximation to biotechnology. Pharmaceuticals is identified as an independent cluster with only four industries: Medicinals and Botanicals (SIC 2833), Pharmaceutical Preparations (SIC 2834), Diagnostic Substances (SIC 2835), and Biological Products, Excluding Diagnostics (SIC 2836).

4. Of the 490 detailed industries in the 1997 Benchmark Input–Output Accounts, only seven are omitted from the factor analysis. Wholesale Trade (NAICS 42) and Retail Trade (NAICS 44 and 45) are omitted due to their two-digit level of aggregation. In some initial work these industries proved too aggregated to load meaningfully on factors. If there is greater detail in future benchmark tables produced by the Bureau of Economic Analysis, consideration should be given to working again with these sectors. Moreover, Private Households (NAICS 814), Federal Electric Utilities (S00101), State and Local Government Passenger Transit (S00201), State and Local Government Electric Utilities (S00202), and General Government Industry (S00500) are omitted as well from the analysis. These industries sell only to final purchasing sectors; they have no intermediate industrial sales. Moreover, they are excluded from both the 2002 Economic Census and County Business Patterns. The paper, however, does maintain two final industries: Hospitals (NAICS 622), and Nursing and Residential Care Facilities (NAICS 623); hospitals, at least, are expected to load onto healthcare clusters identified.

5. This paper uses a promax rotation, rather than the varimax rotation used in Feser and Bergman (2000), since the promax rotation accounts for inter-factor correlations (which are present to some degree in the data). The results are generally robust to the rotation technique used.

6. These statistics are taken from Statistics of U.S. Businesses (US Department of Commerce, Bureau of the Census, 1998, 2002). Note that Feser and Bergman (2000) report value-added for clusters identified. Since value-added data are available only for manufacturing industries, reported instead are total receipts, which are collected consistently across all sectors of the economy.

7. The Bureau of Labor Statistics forecasts substantial growth in both employment and real output in Pharmaceutical and Medicine Manufacturing (NAICS 3254) and Scientific Research and Development Services (NAICS 5417). The 2004–14 forecast for pharmaceuticals is a 2.3% average annual growth in employment and a 3.3% average annual growth in real output. The forecast for research and development is a 2.5% average annual growth in employment and an impressive 4.8% average annual growth in real output (US Department of Labor, Bureau of Labor Statistics, 2005).

8. See US Department of Commerce, Technology Administration, Bureau of Industry and Security (2003). Out of the 897 biotechnology users surveyed by the Department of Commerce that reported being in any industry at all, 333 were in Scientific Research and Development Services (NAICS 5417), 301 were in Pharmaceutical and Medicine Manufacturing (NAICS 3254), 36 were in Electromedical and Electrotherapeutic Apparatus Manufacturing (NAICS 334510), 20 were in Medical and Diagnostic Laboratories (NAICS 6215), 16 were in Food Manufacturing and Beverage and Tobacco Product Manufacturing (NAICS 311 and 312, respectively), and 19 were in Basic Chemical Manufacturing (NAICS 3251). Most of these industries load onto the Biotechnology cluster as identified in this paper.

9. Interviews were conducted in spring 2006 in the context of a study commissioned by the Hamilton County Regional Planning Commission.