Nebraska Competitiveness: State and Cluster Economic Performance

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Harvard Business School
Professor Michael E. Porter
National Governors Association Winter Meeting
February 26, 2011

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Nebraska Competitiveness: State and Cluster Economic Performance

  1. 1. Nebraska Competitiveness: State and Cluster Economic Performance Prepared for Governor Dave Heineman Professor Michael E. Porter National Governors Association Winter Meeting February 26, 2011NGA 2011 – Nebraska 1 Copyright © 2011 Professor Michael E. Porter
  2. 2. Nebraska Performance Snapshot Position Trend Prosperity Productivity Labor Mobilization Top quintile Innovation 2nd quintile 3rd quintile 4th quintile Cluster Strength Lowest quintile • Processed Food • Financial Services Leading Clusters • Heavy Machinery • Medical Devices • Agricultural ProductsNGA 2011 – Nebraska 2 Copyright © 2011 Professor Michael E. Porter
  3. 3. State Comparative PerformanceNGA 2011 – Nebraska 3 Copyright © 2011 Professor Michael E. Porter
  4. 4. Nebraska Competitiveness Overall Economic Performance Indicators Prosperity Cluster Gross State Product per capita, 2009 Share of State Traded Employment in Strong Clusters, 2008 • In Nebraska: $48,112 Rank: 18 • In Nebraska: 34.7% Rank: 29 • In the US: $46,093 • In the US: 41.8% • State difference to US: 4.4% Change in Share of National Employment in Strong Clusters, 1998-2008 Growth in Gross State Product per capita, real annual rate, 1999-2009 • In Nebraska: 0.10% Rank: 21 • In Nebraska: 1.88% Rank: 7 • In the US: -0.06% • In the US: 0.86% Share of Employment in Traded Clusters, 1998-2008 • In Nebraska: 30.6% Rank: 8 • In the US: 27.4% Productivity Gross State Product per labor force participant, 2009 Change in Share of Employment in Traded Clusters, 1998-2008 • In Nebraska: $88,140 Rank: 19 • In Nebraska: -1.0% Rank: 16 • In the US: $92,382 • In the US: -2.2% • State difference to US: -4.6% Labor Mobilization Growth in Gross State Product per labor force participant*, 1999-2009 • In Nebraska: 2.08% Rank: 9 Population, 2009 • In the US: 1.09% • In Nebraska: 1,796,613 Rank: 38 • % of US: 0.59% Average private wage, 2008 • In Nebraska: $35,046 Rank: 37 Population growth, annual rate, 1999-2009 • In the US: $42,435 • In Nebraska: 0.53% Rank: 33 • State difference to US: -17.4% • In the US: 0.96% Private wage Growth, annual rate, 1998-2008 Labor Force Participation, 2009 • In Nebraska: 3.34% Rank: 25 • In Nebraska: 72.1 Rank: 4 • In the US: 3.32% • In the US: 65.4 Employment, 2010 (December) • In Nebraska: 930,671 Rank: 37 Innovation Output • % of US: 0.67% Patents Per 10,000 Employees, 2009 • In Nebraska: 2.40 Rank: 39 Employment growth, annual rate, 2000-2010 (December) • In the US: 6.83 • In Nebraska: 0.06% Rank: 28 • In the US: 0.11% Growth in total patents, annual rate, 1998-2009 • In Nebraska: -0.50% Rank: 22 Unemployment, 2010 (December) • In the US: 0.23% • In Nebraska: 4.4% Rank: 2 • In the US: 9.4% Traded establishment formation, annual growth rate, 1998-2008 • In Nebraska: 1.67% Rank: 26 Change in Unemployment, 2000-2010 (December) • In the US: 1.79% • In Nebraska: 1.6% Rank: 2 • In the US: 5.5%NGA 2011 – Nebraska 4 Copyright © 2011 Professor Michael E. Porter
  5. 5. Long Term State Prosperity Performance 1999 to 2009 $70,000 U.S. GDP per Capita Wyoming Delaware Real Growth Rate: 0.86% High but declining Alaska High and rising $65,000 versus U.S. Connecticut prosperity versus U.S. $60,000 Gross Domestic Product per Capita, 2009 New York New Jersey Massachusetts $55,000 Virginia Washington California Hawaii $50,000 Maryland North Dakota Colorado Nevada Illinois Minnesota U.S. GDP per Nebraska Iowa South Dakota Capita: $46,093 Louisiana Texas New Hampshire Rhode Island $45,000 Kansas Pennsylvania Oregon North Carolina Wisconsin Indiana Oklahoma Ohio Utah Vermont $40,000 Georgia Missouri Florida Tennessee Arizona Maine Michigan Kentucky Montana New Mexico Alabama $35,000 West Virginia Arkansas Idaho South Carolina Low and declining Mississippi Low but rising versus U.S. versus U.S. $30,000 -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% Gross Domestic Product per Capita Real Growth Rate, 1999 to 2009Notes: Real GDP figures in 2005 chained US dollars from the Bureau of Economic Analysis. Growth rate is calculated as compound annual growth rate. D.C. excludedNGA 2011 – Nebraska 5 Copyright © 2011 Professor Michael E. Porter
  6. 6. Near Term State Prosperity Performance U.S. States, 2007 to 2009 $70,000 High but declining versus U.S. Wyoming Delaware Alaska High and rising $65,000 Connecticut prosperity versus U.S. U.S. GDP per Capita Real Growth Rate: -1.87% $60,000 Gross Domestic Product per Capita, 2009 New York New Jersey Massachusetts $55,000 Washington Virginia California Hawaii $50,000 Colorado Maryland North Dakota Nevada Illinois Minnesota Nebraska Iowa South Dakota Texas Louisiana New Hampshire U.S. GDP per $45,000 Rhode Island Kansas Pennsylvania Capita: $46,093 Oregon North Carolina Wisconsin Indiana Oklahoma Ohio Vermont Georgia Utah Missouri $40,000 Arizona Florida Tennessee Maine Michigan Montana New Mexico Kentucky $35,000 Alabama Arkansas South Carolina Idaho West Virginia Mississippi Low and declining versus U.S. Low but rising versus U.S. $30,000 -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% Gross Domestic Product per Capita Real Growth Rate, 2007 to 2009Notes: Real GDP figures in 2005 chained US dollars from the Bureau of Economic Analysis. Growth rate is calculated as compound annual growth rate.NGA 2011 – Nebraska 6 Copyright © 2011 Professor Michael E. Porter
  7. 7. State Private Sector Wage Performance 1998-2008 $60,000 High but declining versus U.S. High and rising wages relative to U.S. New York U.S. Average Wage Growth: 3.32% $55,000 Connecticut Massachusetts New Jersey $50,000 AlaskaAverage Wage, 2008 California Illinois Washington $45,000 Delaware Maryland U.S. Average Minnesota Virginia Wage: $ 42,435 Colorado Texas Pennsylvania New Hampshire Michigan Rhode Island $40,000 Oregon Georgia Wyoming Ohio Wisconsin Arizona Missouri Nevada Louisiana North Carolina Kansas Tennessee Florida Indiana Utah Hawaii Nebraska Oklahoma $35,000 Maine Kentucky New Mexico Iowa Vermont South Carolina Idaho Arkansas North Dakota Alabama West Virginia South Dakota Low and declining versus U.S. Mississippi Montana Low but rising versus U.S. $30,000 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% Wage Growth (CAGR), 1998-2008Source: Census CBP report; private, non-agricultural employment. Growth is calculated on nominal wage levels.NGA 2011 – Nebraska 7 Copyright © 2011 Professor Michael E. Porter
  8. 8. Long Term State Labor Productivity Performance 1999-2009 $150,000 High but declining versus U.S. U.S. GDP per Labor Force Participant Real Growth: 1.09% Highly productive and Delaware productivity rising versus U.S.Gross Domestic Product per Labor Force Participant, 2009 $140,000 $130,000 Alaska Wyoming Connecticut $120,000 New York $110,000 New Jersey Massachusetts Hawaii Louisiana California $100,000 Virginia Washington Illinois Maryland Colorado U.S. GDP per Labor Force Nevada Texas Participant: $92,382 $90,000 North Carolina Minnesota Nebraska North Pennsylvania Oklahoma Utah Dakota Georgia Indiana Rhode Island Iowa South Oregon Arizona Alabama Ohio Tennessee Wisconsin Kansas Dakota $80,000 Missouri Florida West Virginia New Mexico Michigan New Hampshire Mississippi Kentucky Arkansas South Carolina Maine Montana Idaho $70,000 Vermont Low and declining versus U.S. Low but rising versus U.S. $60,000 -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Gross Domestic Product per Labor Force Participant Real Growth Rate, 1999-2009Source: Bureau of Economic Analysis. Notes Growth rate calculated as compound annual growth rate (CAGR).NGA 2011 – Nebraska 8 Copyright © 2011 Professor Michael E. Porter
  9. 9. Near Term State Labor Productivity Performance 2007-2009 $150,000 High but declining versus U.S. Highly productive and $140,000 Delaware productivity rising versus U.S. U.S. GDP per Labor ForceGross State Product per Labor Force Participant, 2009 Participant Real Growth: -0.97% $130,000 Wyoming Alaska $120,000 Connecticut New York $110,000 New Jersey Massachusetts California Hawaii $100,000 Virginia Louisiana Washington Maryland Illinois Colorado U.S. GDP per Labor Force Texas Nevada Participant: $92,382 $90,000 Minnesota Nebraska South North Carolina Pennsylvania Dakota Oklahoma North Dakota Oregon Georgia Indiana Utah Iowa Rhode Island Alabama Arizona Wisconsin West Virginia $80,000 Florida Ohio Missouri New Mexico Michigan Arkansas South Carolina Kentucky Mississippi Maine Idaho Montana $70,000 Vermont Kansas Tennessee Low and declining versus U.S. New Hampshire Low but rising versus U.S. $60,000 -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% Gross State Product per Labor Force Participant Real Growth Rate, 2007-2009Source: Bureau of Economic Analysis. Notes: Growth rate calculated as compound annual growth rate (CAGR).NGA 2011 – Nebraska 9 Copyright © 2011 Professor Michael E. Porter
  10. 10. Long Term State Job Growth 2000 to 2010 9,000,000 California (15,945,558) New York Texas (11,202,388) Florida 8,000,000 U.S. Average Growth Rate: 0.11% 7,000,000 6,000,000 IllinoisNumber of Jobs 2010 Pennsylvania Ohio 5,000,000 Michigan Georgia New Jersey North Carolina 4,000,000 Virginia Massachusetts Washington 3,000,000 Indiana Wisconsin Maryland Arizona Tennessee Minnesota Missouri Colorado Louisiana 2,000,000 Alabama Kentucky South Carolina Oregon Connecticut Iowa Kansas Mississippi Oklahoma Arkansas Nevada Utah 1,000,000 Nebraska New Mexico New Hampshire West Virginia Rhode Island Maine Hawaii Idaho Delaware Montana North South Dakota Alaska Vermont Dakota Wyoming 0 -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% Losing Jobs Job Growth Rate (CAGR), 2000-2010 Gaining JobsSource: Bureau of Labor StatisticsNGA 2011 – Nebraska 10 Copyright © 2011 Professor Michael E. Porter
  11. 11. Near Term State Job Growth 2007 to 2010 9,000,000 California (15,945,558) Texas (11,202,388) New York Florida 8,000,000 U.S. Average Growth Rate: -1.52% 7,000,000 6,000,000 IllinoisNumber of Jobs 2010 Pennsylvania Ohio 5,000,000 Michigan Georgia North Carolina New Jersey Virginia 4,000,000 Massachusetts Washington 3,000,000 Wisconsin Arizona Indiana Minnesota Missouri Tennessee Maryland Colorado 2,000,000 Alabama Kentucky South Carolina Oregon Louisiana Oklahoma Connecticut Utah Arkansas Iowa Nevada Kansas Mississippi 1,000,000 West Virginia New Mexico New Idaho Hawaii Nebraska Delaware Maine Hampshire North Dakota Montana Rhode Island South Dakota Vermont Alaska Wyoming 0 -4.0% -3.5% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% Losing Jobs Job Growth Rate (CAGR), 2007-2010 Gaining JobsSource: Bureau of Labor StatisticsNGA 2011 – Nebraska 11 Copyright © 2011 Professor Michael E. Porter
  12. 12. Long Term State Unemployment Rate 2000 to 2010 3.0 % Below average unemployment North Dakota Nebraska South Dakota 5.0 % New Hampshire Vermont Iowa Wyoming Oklahoma Hawaii Virginia Kansas Unemployment Rate, 2010 7.0 % Minnesota Montana Maine Maryland Wisconsin Utah Louisiana Massachusetts New York Arkansas Alaska Delaware Texas Colorado New New Mexico Pennsylvania Jersey Alabama U.S. Average 9.0 % Connecticut Illinois Washington Missouri Unemployment Rate: 9.4% Indiana Ohio Idaho West Virginia North Carolina Georgia Mississippi Kentucky Oregon Tennessee South Carolina 11.0 % Arizona Rhode Island Florida Michigan California 13.0 % Change in US Average Employment Rate: 5.5% Above average Nevada Unemployment rising unemployment 15.0 % % 10.0 % 9.0 % 8.0 % 7.0 % 6.0 % 5.0 % 4.0 % 3.0 % 2.0 % 1.0 % 0.0Source: Bureau of Labor Statistics Change in Employment Rate, 2000 to 2010NGA 2011 – Nebraska 12 Copyright © 2011 Professor Michael E. Porter
  13. 13. Near Term State Unemployment Rate 2007 to 2010 3.0 % Below average Change in US Average North unemployment Employment Rate: 4.4% Dakota South Dakota Nebraska 5.0 % New Hampshire Vermont Wyoming Hawaii Iowa VirginiaUnemployment Rate, 2010 Kansas 7.0 % Oklahoma Minnesota Montana Maine Utah Maryland Wisconsin Louisiana Arkansas New York Alaska Delaware Texas New Jersey New Mexico Pennsylvania Massachusetts Colorado U.S. Average 9.0 % Alabama Connecticut Unemployment Rate: 9.4% Idaho Arizona Missouri Illinois Indiana Tennessee West Virginia Ohio North Carolina Georgia Mississippi Oregon Kentucky 11.0 South Washington % Carolina Rhode Island Florida Michigan California 13.0 % Nevada Above average Unemployment rising unemployment 15.0 % % 10.0 % 9.0 % 8.0 % 7.0 % 6.0 % 5.0 % 4.0 % 3.0 % 2.0 % 1.0 % 0.0 Change in Employment Rate, 2007 to 2010Source: Bureau of Labor StatisticsNGA 2011 – Nebraska 13 Copyright © 2011 Professor Michael E. Porter
  14. 14. Long Term State Patenting Performance U.S. States, 1999 to 2009 14 High but declining U.S. average Growth Rate Idaho of Patenting: -0.30% California 12 Vermont Massachusetts Washington (+8.0%, 13.53) Oregon (+4.9%, 10.31)Patents per 10,000 Employees, 2009 10 Minnesota High and improving innovation rate versus U.S. Connecticut 8 Delaware New Hampshire Michigan New Jersey Colorado New York U.S. average Patents per Texas Utah 10,000 Employees: 5.96 6 Arizona Wisconsin Illinois North Carolina Pennsylvania Rhode Island Ohio Maryland Iowa 4 Indiana New Mexico Kansas Georgia Florida Missouri Virginia Montana (-5.7%, 1.58) Nevada South Carolina North Dakota Louisiana (-6.0%, 1.34) Tennessee Wyoming 2 Kentucky Arkansas (-6.9%, 0.76) Oklahoma Maine Nebraska Alabama West Virginia Mississippi Hawaii South Dakota Alaska Low and declining Low but improving 0 -5% -4% -3% -2% -1% 0% 1% 2% 3% Growth Rate of Patenting, 1999 to 2009 3,000 patents issued in 2009 =Source: USPTO, Bureau of Labor Statistics. Note: Growth rate calculated as compound annual growth rate (CAGR).NGA 2011 – Nebraska 14 Copyright © 2011 Professor Michael E. Porter
  15. 15. Nebraska Patents by Organization Patents Patents Rank Organization Rank Organization 2005-2009 2005-2009 1 Sportsstuff, Inc. 71 25 Snyder Industries, Inc. 4 2 J. A. Woollam Co. Inc. 58 25 Weyerhaeuser Company 4 University Of Nebraska, The Board Of 3 Regents Of 50 25 Automatic Equipment Mfg. Co. 4 4 First Data Corporation 44 25 Gabriel Technologies, Inc. 4 5 Pioneer Hi-Bred International, Inc. 25 25 Auburn Consolidated Industries, Inc. 4 6 West Corporation 18 25 Solutionary, Inc. 4 Exmark Manufacturing Company, 7 Baldwin Filters, Inc. 15 32 Incorporated 3 8 Centurion Wireless Technologies, Inc. 13 32 Kawasaki Jukogyo Kabushiki Kaisha 3 9 Goodyear Tire + Rubber Company 12 32 Lindsay Manufacturing Corporation 3 9 Monsanto Technology, Llc 12 32 Rowse Hydraulic Rakes Company, Inc. 3 11 Valmont Industries Inc. 11 32 Ttx Company 3 12 Li-Cor, Inc. 9 32 International Game Technology (Igt) 3 12 Teledyne Isco, Inc. 9 32 Amylin Pharmaceuticals, Inc. 3 14 Vishay Dale Electronics, Inc. 8 32 Ip Holdings, L.L.C. 3 Hewlett-Packard Development Company, 15 L.P. 7 32 Syngenta Participations Ag 3 16 Adc Telecommunications, Inc. 5 32 Paraclipse, Inc. 3 16 Creighton University 5 32 Powermate Corporation 3 16 J.C.Robinson Seed Company 5 32 Election Systems & Software, Inc. 3 16 Kroy Building Products, Inc. 5 32 Elemental Scientific Inc. 3 16 Magnesium Diagnostics, Inc. 5 45 Abbott Laboratories 2 16 Irwin Industrial Tool Company 5 45 Aero Industries, Inc. 2 16 Adc Incorporated 5 45 CabelaS Inc. 2 16 Streck, Inc. 5 45 Cargill, Inc. 2 16 Wheatware Usa, Inc 5 45 Data Security, Inc. 2 25 Hornady Manufacturing Company 4 45 Delaware Capital Formation, Inc. 2 Universities and Research Institutions Government OrganizationsNote: Universities, research institutes, and government organizations are highlighted.Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – Nebraska 15 Copyright © 2011 Professor Michael E. Porter
  16. 16. The Impact of Cluster Mix and Cluster Strength on Wages U.S. States, 2008 State Traded State Traded Wage versus Relative Wage versus Relative National Cluster Mix Cluster National Cluster Mix Cluster State Average Effect Wage Effect State Average Effect Wage Effect New York + 34,578 5,188 29,390 North Carolina -10,673 -5,131 -5,543 Connecticut + 20,008 6,898 13,109 Missouri -10,953 -1,634 -9,319 Massachusetts + 17,308 5,191 12,117 Rhode Island -11,089 -1,370 -9,719 New Jersey + 12,157 4,638 7,519 Florida -11,780 -1,473 -10,307 California + 9,597 121 9,476 Oklahoma -12,225 1,533 -13,758 Maryland + 6,435 2,778 3,657 Alabama -12,301 -4,713 -7,588 Washington + 4,827 3,058 1,769 Tennessee -13,063 -3,987 -9,076 Virginia + 2,550 945 1,605 Vermont -13,095 -2,936 -10,159 Illinois + 2,501 -61 2,562 Indiana -13,309 -5,495 -7,814 Alaska + 2,386 -3,044 5,431 Nebraska -14,659 41 -14,699 Texas +1,400 2,796 -1,396 Utah -14,947 327 -15,274 Colorado + 753 2,292 -1,539 South Carolina -15,256 -5,694 -9,562 Delaware + 612 13,346 -12,733 Nevada -15,429 -2,829 -12,600 Louisiana -4,172 573 -4,745 Maine -15,826 -726 -15,100 Minnesota -4,404 43 -4,448 North Dakota -16,437 2,940 -19,378 Wyoming -4,423 1,408 -5,831 Iowa -16,963 -2,602 -14,361 Michigan -4,981 -2,534 -2,447 New Mexico -16,991 -125 -16,866 Pennsylvania -5,182 -1,064 -4,118 Kentucky -17,303 -5,013 -12,291 New Hampshire -6,359 1,224 -7,584 West Virginia -17,357 -4,290 -13,067 Georgia -7,262 -1,923 -5,338 Arkansas -17,616 -5,171 -12,445 Arizona -8,662 1,557 -10,219 Hawaii -18,103 -14,124 -3,980 Kansas -8,828 1,820 -10,648 Idaho -18,636 -1,567 -17,069 Ohio -9,766 -1,436 -8,330 Mississippi -20,859 -6,165 -14,694 Oregon -9,774 -2,355 -7,420 South Dakota -21,211 955 -22,166 Wisconsin -10,479 -3,341 -7,138 Montana -22,488 -3,494 -18,994 Cluster mix: a region’s particular mix of lower and higher average wage clusters Relative cluster wage: a region’s cluster wage relative to the average national wage in that cluster The cluster mix and the cluster wage level effects add up to the total difference between a region’s average wage and the national average wage. On average, the wage level effect is responsible for 76.3% of the total difference in state wages to the national average.NGA 2011 – Nebraska 16 Copyright © 2011 Professor Michael E. Porter
  17. 17. Effect of Urban and Rural Areas on Average State Wages U.S. States, 2008 Average Average Overall Overall Wage Relative Relative Wage Relative Relative Difference Metro- Metro Rural Difference Metro- Metro Rural State to U.S. Rural Mix Wage Wage State to U.S. Rural Mix Wage Wage New York + 15,412 982 14,078 353 Nevada -4,560 815 -5,752 377 Connecticut + 10,919 1,013 9,592 315 Louisiana -4,739 -630 -4,764 655 Massachusetts + 10,197 1,674 8,333 190 Kansas -5,371 -2,175 -2,535 -661 New Jersey + 8,488 1,631 6,765 92 North Carolina -5,505 -1,262 -3,796 -446 Alaska + 6,538 -1,438 5,158 2,818 Tennessee -5,992 -538 -4,973 -481 California + 5,584 1,476 3,844 265 Florida -6,132 -128 -6,074 70 Illinois + 3,427 411 3,277 -261 Indiana -6,225 -630 -5,665 70 Washington + 3,013 832 2,122 58 Oklahoma -6,501 -2,030 -4,496 25 Delaware + 2,664 -191 2,895 -40 Hawaii -6,583 -1,892 -4,871 179 Maryland + 2,201 1,159 775 267 Utah -7,054 169 -7,273 50 Virginia +1,182 509 709 -36 Vermont -7,280 -6,080 -968 -232 Minnesota +1,024 -903 2,130 -202 Nebraska -7,419 -2,652 -3,621 -1,146 Colorado +539 -110 -66 714 Alabama -7,544 -1,206 -5,701 -636 Texas +325 350 -234 209 Maine -7,697 -2,479 -5,243 24 New Hampshire -504 -2,856 924 1,428 Kentucky -7,978 -2,179 -5,285 -515 Pennsylvania -1,184 262 -1,480 34 Iowa -8,096 -3,123 -4,509 -464 Michigan -1,785 -165 -1,576 -44 New Mexico -8,531 -1,843 -6,548 -140 Rhode Island -2,143 1,720 -3,846 -17 South Carolina -9,137 -609 -8,203 -325 Wyoming -2,478 -6,929 -2,304 6,755 Arkansas -9,482 -2,207 -6,283 -992 Georgia -3,136 -120 -2,542 -475 Idaho -9,766 -1,928 -6,872 -966 Ohio -3,925 -224 -3,799 98 North Dakota -9,973 -2,963 -6,607 -403 Arizona -3,962 937 -4,897 -2 West Virginia -10,074 -3,104 -7,013 43 Oregon -4,116 -359 -3,505 -251 South Dakota -10,976 -3,811 -5,475 -1,690 Wisconsin -4,336 -910 -3,419 -7 Mississippi -11,446 -4,569 -5,493 -1,383 Missouri -4,540 -573 -3,103 -865 Montana -11,792 -5,468 -5,495 -829 Metro-rural mix: average wage impact from a state’s relative proportion of metro and rural regions Relative metro wage: average wage impact from state relative performance in metro regions Relative rural wage: average wage impact from state relative performance in rural regions On average 66.3% of the average wage gap in a state is due to the metro wage effect.Note: Data are based on private, non-agricultural employment.Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – Nebraska 17 Copyright © 2011 Professor Michael E. Porter
  18. 18. Composition of the Nebraska Economy and Cluster PerformanceNGA 2011 – Nebraska 18 Copyright © 2011 Professor Michael E. Porter
  19. 19. Composition of Regional Economies, United States Traded Clusters • Serve markets in other regions and countries • Free to choose location • Exposed to competition Local Clusters 27.4% of from other regions employment • Serve almost 37.3% of income exclusively the local market 71.7% of 96.4% of patents employment • Not exposed to 61.8% of income cross-regional competition for 3.5% of patents employment Resource-based Clusters • Location determined by resource availability • <1% of income,Source: Michael E. Porter, Economic Performance of Regions, Regional Studies (2003); Updated via employment, and patents inCluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School (2008) the U.S.NGA 2011 – Nebraska 19 Copyright © 2011 Professor Michael E. Porter
  20. 20. Overall Composition of the Nebraska Economy, 2008 80% 70% NE US 69.8% 71.7%Private Employment 60% 50% 40%Percent of Total 30% NE US 20% 30.0% 27.4% 10% NE US 0.2% 0.9% 0% Traded Clusters Local Clusters Natural Endowment DependentNote: Data throughout this section of the report are based on private, non-agricultural employment.Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – Nebraska 20 Copyright © 2011 Professor Michael E. Porter
  21. 21. Composition of the Nebraska Economy Employment by Traded Cluster, 2008 Rank in US Business Services 34 44,203 Processed Food 14 38,218 Financial Services 26 23,784 Education and Know ledge Creation 34 16,558 Distribution Services 33 12,599 Heavy Machinery 8 12,567 Hospitality and Tourism 43 11,369 Heavy Construction Services 39 10,695 Automotive 23 9,331 Transportation and Logistics 38 8,946 Publishing and Printing 33 6,609 Medical Devices 22 6,047 Metal Manufacturing 37 5,545 Agricultural Products 17 4,943 Information Technology 37 4,218 Building Fixtures, Equipment and Services 34 3,880 Plastics 36 3,403 Production Technology 37 3,214 Entertainment 48 3,158 Prefabricated Enclosures 25 2,778 Communications Equipment 23 2,120 Chemical Products 38 2,091 Construction Materials 30 1,880 Analytical Instruments 40 1,472 Lighting and Electrical Equipment 34 1,370 Forest Products 43 1,060 Motor Driven Products 33 1,000 Biopharmaceuticals 36 935 Oil and Gas Products and Services 35 693 Textiles 40 413 Pow er Generation and Transmission 48 350 Furniture 45 307Sporting, Recreational and Childrens Goods 41 221 Apparel 41 210 Aerospace Engines 36 185 Leather and Related Products 45 140 Aerospace Vehicles and Defense 42 130 Jew elry and Precious Metals 47 50 Nebraska overall employment rank = 36 Footw ear 37 10 Fishing and Fishing Products 49 10 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Employment, 2008Note: Ranks are among the 50 US states plus the District of Columbia.Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – Nebraska 21 Copyright © 2011 Professor Michael E. Porter
  22. 22. Composition of the Nebraska Economy Specialization by Traded Cluster, 1998 to 2008 4.0% Overall change in the Nebraska Employment Share of US Traded Employment: 1998-2008 Heavy Machinery +0.03.% Added Jobs 3.5% Lost JobsNebraska’s national employment share, 2008 3.0% Processed Food 2.5% 2.0% Agricultural Products (1.7%, +1.2%) 1.5% Medical Devices Prefabricated Enclosures Financial Services Communications Equipment Business Services Construction Materials 1.0% Chemical Products Nebraska Overall Share of US Plastics Traded Employment: 0.75% 0.5% Information Technology Production Technology Aerospace Engines 0.0% -0.5% -0.4% -0.3% -0.2% -0.1% 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% Change in Nebraska share of National Employment, 1998 to 2008 Employees 8,000 =Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – Nebraska 22 Copyright © 2011 Professor Michael E. Porter
  23. 23. Composition of the Nebraska Economy Specialization by Traded Cluster, 1998 to 2008 (continued) 1.0% Overall change in the Nebraska Share of US Traded Employment: +0.03.% Business Services AutomotiveNebraska’s national employment share, 2008 0.8% Heavy Construction Services Nebraska Overall Share of US Traded Employment: 0.75% Building Fixtures, Publishing and Printing Equipment and Services Distribution Services 0.6% Lighting and Electrical Equipment Metal Manufacturing Education and Knowledge Creation Transportation and Hospitality and Tourism Logistics 0.4% Biopharmaceuticals Motor Driven Products Analytical Instruments Sporting, Recreational Entertainment Forest Products and Childrens Goods 0.2% Power Generation and Transmission Employment Oil and Gas Products Textiles 1998-2008 Furniture and Services Apparel Added Jobs Lost Jobs 0.0% -0.2% -0.2% -0.1% -0.1% 0.0% 0.1% 0.1% 0.2% Change in Nebraska share of National Employment, 1998 to 2008 Employees 8,000 =Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – Nebraska 23 Copyright © 2011 Professor Michael E. Porter

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