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New Mexico Competitiveness: State and Cluster Economic Performance
 

New Mexico Competitiveness: State and Cluster Economic Performance

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Harvard Business School

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

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    New Mexico Competitiveness: State and Cluster Economic Performance New Mexico Competitiveness: State and Cluster Economic Performance Presentation Transcript

    • New Mexico Competitiveness: State and Cluster Economic Performance Prepared for Governor Susana Martinez Professor Michael E. Porter National Governors Association Winter Meeting February 26, 2011NGA 2011 – New Mexico– Rich Bryden 1 Copyright © 2011 Professor Michael E. Porter
    • New Mexico Performance Snapshot Position Trend Prosperity Productivity Labor Mobilization Top quintile Innovation 2nd quintile 3rd quintile 4th quintile Cluster Strength Lowest quintile • Education and Knowledge Creation • Hospitality and Tourism Leading Clusters • Oil and Gas Products and Services • Entertainment • Information TechnologyNGA 2011 – New Mexico– Rich Bryden 2 Copyright © 2011 Professor Michael E. Porter
    • State Comparative PerformanceNGA 2011 – New Mexico– Rich Bryden 3 Copyright © 2011 Professor Michael E. Porter
    • New Mexico Competitiveness Overall Economic Performance Indicators Prosperity Cluster Gross State Product per capita, 2009 Share of State Traded Employment in Strong Clusters, 2008 • In New Mexico: $37,221 Rank: 42 • In New Mexico: 50.0% Rank: 8 • In the US: $46,093 • In the US: 41.8% • State difference to US: -19.2% Change in Share of National Employment in Strong Clusters, 1998-2008 Growth in Gross State Product per capita, real annual rate, 1999-2009 • In New Mexico: 0.04% Rank: 25 • In New Mexico: 0.63% Rank: 37 • In the US: -0.06% • In the US: 0.86% Share of Employment in Traded Clusters, 1998-2008 • In New Mexico: 24.4% Rank: 46 • 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 New Mexico: $77,961 Rank: 42 • In New Mexico: -0.9% Rank: 15 • In the US: $92,382 • In the US: -2.2% • State difference to US: -15.6% Labor Mobilization Growth in Gross State Product per labor force participant*, 1999-2009 • In New Mexico: 0.41% Rank: 45 Population, 2009 • In the US: 1.09% • In New Mexico: 2,009,661 Rank: 36 • % of US: 0.65% Average private wage, 2008 • In New Mexico: $34,734 Rank: 41 Population growth, annual rate, 1999-2009 • In the US: $42,435 • In New Mexico: 1.06% Rank: 17 • State difference to US: -18.1% • In the US: 0.96% Private wage Growth, annual rate, 1998-2008 Labor Force Participation, 2009 • In New Mexico: 3.63% Rank: 14 • In New Mexico: 61.6 Rank: 46 • In the US: 3.32% • In the US: 65.4 Employment, 2010 (December) • In New Mexico: 875,985 Rank: 38 Innovation Output • % of US: 0.63% Patents Per 10,000 Employees, 2009 • In New Mexico: 4.73 Rank: 26 Employment growth, annual rate, 2000-2010 (December) • In the US: 6.83 • In New Mexico: 0.76% Rank: 8 • In the US: 0.11% Growth in total patents, annual rate, 1998-2009 • In New Mexico: -1.12% Rank: 27 Unemployment, 2010 (December) • In the US: 0.23% • In New Mexico: 8.5% Rank: 24 • In the US: 9.4% Traded establishment formation, annual growth rate, 1998-2008 • In New Mexico: 1.90% Rank: 21 Change in Unemployment, 2000-2010 (December) • In the US: 1.79% • In New Mexico: 3.6% Rank: 13 • In the US: 5.5%NGA 2011 – New Mexico– Rich Bryden 4 Copyright © 2011 Professor Michael E. Porter
    • 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 – New Mexico– Rich Bryden 5 Copyright © 2011 Professor Michael E. Porter
    • 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 $55,000 Massachusetts Washington Virginia California Hawaii Colorado Maryland North Dakota $50,000 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 Florida Arizona 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 – New Mexico– Rich Bryden 6 Copyright © 2011 Professor Michael E. Porter
    • 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 Oklahoma Maine Nebraska $35,000 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 – New Mexico– Rich Bryden 7 Copyright © 2011 Professor Michael E. Porter
    • 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 New Hampshire Mississippi Michigan 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 – New Mexico– Rich Bryden 8 Copyright © 2011 Professor Michael E. Porter
    • 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 South North Carolina Pennsylvania Nebraska Dakota Oklahoma North Dakota Oregon Georgia Indiana Utah Iowa Rhode Island Alabama Arizona Wisconsin West Virginia $80,000 Florida New Mexico Ohio Missouri 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 – New Mexico– Rich Bryden 9 Copyright © 2011 Professor Michael E. Porter
    • 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 Hampshire New Mexico West Virginia Rhode Island Maine Hawaii Idaho Delaware Montana North South Dakota Vermont Dakota Alaska 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 – New Mexico– Rich Bryden 10 Copyright © 2011 Professor Michael E. Porter
    • 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 Idaho Nebraska New Hawaii Maine Delaware Hampshire North Dakota Montana Rhode Island South DakotaVermont 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 – New Mexico– Rich Bryden 11 Copyright © 2011 Professor Michael E. Porter
    • 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 Maine Maryland Montana Wisconsin Utah Louisiana Massachusetts New York Arkansas Alaska Delaware Texas New Pennsylvania New Mexico Colorado 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% Higher Above average Nevada unemployment 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 – New Mexico– Rich Bryden 12 Copyright © 2011 Professor Michael E. Porter
    • Near Term State Unemployment Rate 2007 to 2010 3.0 % Below average Change in US Average North unemployment Employment Rate: 4.4% Dakota Nebraska South Dakota % 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 New Mexico Delaware Texas Pennsylvania Massachusetts New Jersey Colorado U.S. Average % 9.0 Alabama Connecticut Idaho Arizona Missouri Illinois Unemployment Rate: 9.4% Indiana Tennessee West Virginia Ohio North Carolina Georgia Mississippi Oregon Kentucky 11.0 % South Washington Carolina Rhode Island Florida Michigan California % 13.0 Nevada Unemployment rising Above average 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 – New Mexico– Rich Bryden 13 Copyright © 2011 Professor Michael E. Porter
    • Long Term State Patenting Performance U.S. States, 1999 to 2009 14 High and declining Idaho U.S. average Growth Rate innovation 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 Connecticut High and improving 8 Delaware New Hampshire innovation rate versus U.S. Michigan New Jersey Colorado New York 6 Texas Utah Arizona U.S. average Patents per Wisconsin 10,000 Employees: 5.96 Illinois Pennsylvania Rhode Island North Carolina 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 Nebraska Wyoming 2 Kentucky Arkansas (-6.9%, 0.76) Oklahoma Maine Alabama West Virginia Mississippi Hawaii South Dakota Alaska Low and declining innovation Low and improving innovation 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 – New Mexico– Rich Bryden 14 Copyright © 2011 Professor Michael E. Porter
    • New Mexico Patents by Organization Patents Patents Rank Organization Rank Organization 2005-2009 2005-2009 1 Sandia Corporation 202 25 Fast Ditch, Inc. 5 2 Los Alamos National Security, Llc 63 27 Microsoft Corporation 4 3 University Of California, The Regents Of 62 27 Itt Manufacturing Enterprises, Inc. 4 Science & Technology Corporation At Genesys Telecommunications 4 University Of New Mexico 39 27 Laboratories, Inc. 4 5 Cabot Corporation 36 27 Wavefront Sciences, Inc. 4 5 Xilinx, Inc. 36 27 Sionex Corporation 4 7 United States Of America, Air Force 27 27 Science Medicus, Inc. 4 8 Intel Corporation 13 27 Avistar, Inc. 4 8 Honeywell International Inc. 13 27 Bernardo Footwear, Llc 4 8 Memx, Inc. 13 27 Riccobene Designs Llc 4 8 Inlight Solutions, Inc. 13 36 Becton, Dickinson And Company 3 12 Boeing Company 11 36 Charles Stark Draper Laboratory, Inc. 3 12 Emcore Corporation 11 36 E. I. Du Pont De Nemours And Company 3 12 Knowm Tech, Llc 11 36 Massachusetts Institute Of Technology 3 15 Eastman Kodak Company 10 36 Micron Technology, Inc. 3 United States Of America, Department Of 15 Energy 10 36 Motorola, Inc. 3 17 General Electric Company 9 36 Public Service Company Of New Mexico 3 Pageant Technologies, Inc. (Micromem 17 Southwest Sciences, Incorporated 9 36 Technologies, Inc.) 3 19 Kestrel Corporation 7 36 Koninklijke Philips Electronics N.V. 3 19 Dharma Living Systems, Inc. 7 36 Pinnacle West Capital Corporation 3 21 Cts Corporation 6 36 Environmental Robots, Inc. 3 21 Miox Corporation 6 36 Accent Optical Technologies, Inc. 3 21 Lumidigm, Inc. 6 36 Nanopore, Inc. 3 21 Arrowhead Center, Inc. 6 36 Santa Fe Science And Technology, Inc. 3 25 New Mexico Tech Research Foundation 5 36 Surfect Technologies, Inc. 3 Universities and Research Institutions Government OrganizationsSource: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – New Mexico– Rich Bryden 15 Copyright © 2011 Professor Michael E. Porter
    • 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 – New Mexico– Rich Bryden 16 Copyright © 2011 Professor Michael E. Porter
    • 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 – New Mexico– Rich Bryden 17 Copyright © 2011 Professor Michael E. Porter
    • Composition of the New Mexico Economy and Cluster PerformanceNGA 2011 – New Mexico– Rich Bryden 18 Copyright © 2011 Professor Michael E. Porter
    • 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 – New Mexico– Rich Bryden 19 Copyright © 2011 Professor Michael E. Porter
    • Overall Composition of the New Mexico Economy, 2008 80% 70% NM 75.1% US 71.7%Private Employment 60% 50% 40%Percent of Total 30% US 20% NM 27.4% 24.0% 10% NM US 0.9% 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 – New Mexico– Rich Bryden 20 Copyright © 2011 Professor Michael E. Porter
    • Composition of the New Mexico Economy Employment by Traded Cluster, 2008 Rank in US Business Services 36 24,302 Education and Know ledge Creation 30 22,408 Hospitality and Tourism 34 19,819 Oil and Gas Products and Services 7 16,704 Heavy Construction Services 36 11,783 Entertainment 31 8,886 Information Technology 29 8,597 Financial Services 45 5,168 Processed Food 42 4,807 Distribution Services 44 4,211 Transportation and Logistics 46 3,622 Analytical Instruments 32 3,231 Publishing and Printing 43 2,168 Aerospace Vehicles and Defense 26 1,998 Pow er Generation and Transmission 33 1,935 Building Fixtures, Equipment and Services 43 1,922 Jew elry and Precious Metals 13 1,915 Agricultural Products 35 1,603 Metal Manufacturing 42 1,323 Forest Products 40 1,323 Chemical Products 41 1,224 Production Technology 45 881 Medical Devices 39 874 Automotive 45 723 Plastics 46 669 Heavy Machinery 44 649 Lighting and Electrical Equipment 38 630 Furniture 42 494 Prefabricated Enclosures 39 445 Construction Materials 43 442 Communications Equipment 41 404 Leather and Related Products 39 386 Aerospace Engines 30 375 Motor Driven Products 43 258 Textiles 44 162 Apparel 45 88 Biopharmaceuticals 48 81 New Mexico overall employment rank = 37 Tobacco 25 60Sporting, Recreational and Childrens Goods 47 43 0 5,000 10,000 15,000 20,000 25,000 30,000 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 – New Mexico– Rich Bryden 21 Copyright © 2011 Professor Michael E. Porter
    • Composition of the New Mexico Economy Specialization by Traded Cluster, 1998 to 2008 Jewelry and Precious Oil and Gas Products and Metals Services (+0.29%, 2.92%) 2.0% Overall change in the New MexicoNew Mexico’s national employment share, 2008 Share of US Traded Employment: +0.04% 1.5% Power Generation Heavy Information Construction and Transmission Hospitality and Tourism 1.0% Technology Services Entertainment Aerospace Education and Vehicles and Knowledge New Mexico Overall Defense Creation Share of US Traded Aerospace Analytical 0.5% Engines Instruments Employment: 0.47% Financial Services Forest Products Employment Medical 1998-2008 Devices Added Jobs Transportation Apparel and Logistics Lost Jobs 0.0% -0.45% -0.25% -0.05% 0.15% 0.35% 0.55% Change in New Mexico share of National Employment, 1998 to 2008 Employees 4,500 =Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – New Mexico– Rich Bryden 22 Copyright © 2011 Professor Michael E. Porter
    • Composition of the New Mexico Economy Specialization by Traded Cluster, 1998 to 2008 (continued) 0.6% Analytical Overall change in Instruments the New Mexico Agricultural Share of Products US Traded Employment:New Mexico’s national employment share, 2008 0.5% +0.04% Business Services 0.4% Leather and Processed Related Products Food New Mexico Overall Chemical Share of US Traded Products Building Fixtures, 0.3% Employment: 0.47% Equipment and Services Lighting and Electrical Construction Equipment Financial Materials Publishing Services and Printing Prefabricated Furniture 0.2% Enclosures Communication Heavy Machinery Distribution Equipment Transportation Metal Production and Logistics Services Manufacturing Technology 0.1% Motor Driven Employment Products Plastics 1998-2008 Textiles Added Jobs Automotive Biopharmaceuticals Lost Jobs 0.0% -0.15% -0.10% -0.05% 0.00% 0.05% 0.10% 0.15% Change in New Mexico share of National Employment, 1998 to 2008 Employees 4,500 =Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – New Mexico– Rich Bryden 23 Copyright © 2011 Professor Michael E. Porter
    • Job Creation, 1998 to 2008 -4,000 -2,000 2,000 4,000 6,000 8,000 10,000 0 Education and Knowledge Creation Business ServicesNGA 2011 – New Mexico– Rich Bryden Oil and Gas Products and Services Hospitality and Tourism Heavy Construction Services Aerospace Vehicles and Defense Processed Food Forest Products Publishing and Printing Entertainment Building Fixtures, Equipment and Services Agricultural Products Prefabricated Enclosures Leather and Related Products Lighting and Electrical Equipment Plastics Production Technology Sporting, Recreational and Childrens Goods 24 Construction Materials Textiles Heavy Machinery 1998 to 2008 Chemical Products given national cluster growth.* Metal Manufacturing Indicates expected job creation Biopharmaceuticals Furniture Motor Driven Products Aerospace Engines Communications Equipment Information Technology Medical Devices Transportation and Logistics Distribution Services Jewelry and Precious Metals New Mexico Job Creation by Traded Cluster Analytical Instruments +19,538 Power Generation and Transmission Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director. 1998 to 2008: Financial Services Automotive Net traded job creation, Apparel * Percent change in national benchmark times starting regional employment. Overall traded job creation in New Mexico, if it matched national benchmarks, would be +16602 Tobacco Copyright © 2011 Professor Michael E. Porter
    • New Mexico Wages by Traded Cluster vs. National Benchmarks Oil and Gas Products and Services Financial Services Analytical Instruments Medical Devices Production Technology Business Services Distribution Services Heavy Construction Services Metal Manufacturing Heavy Machinery Chemical Products Information Technology Aerospace Vehicles and Defense Publishing and Printing Communications Equipment Forest Products Transportation and Logistics Construction Materials Apparel l Indicates average Leather and Related Products national wage in Sporting, Recreational and Childrens Goods the traded cluster. Automotive Building Fixtures, Equipment and Services Agricultural Products Processed Food Biopharmaceuticals Education and Knowledge Creation Jewelry and Precious Metals Plastics Furniture Motor Driven Products New Mexico average Entertainment Textiles traded wage: $41,712 Hospitality and Tourism Power Generation and Transmission Aerospace Engines Tobacco Lighting and Electrical Equipment Fishing and Fishing Products U.S. average traded Prefabricated Enclosures wage: $57,706 Footwear $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 Wages, 2008Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – New Mexico– Rich Bryden 25 Copyright © 2011 Professor Michael E. Porter
    • New Mexico Employment in Highest Wage Clusters, 2008 = 12.2 % of total private employmentTotal private, non-agricultural employment in New Mexico: 640,894.Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – New Mexico– Rich Bryden 26 Copyright © 2011 Professor Michael E. Porter
    • New Mexico Cluster Portfolio, 2008 Fishing & Fishing Products Textiles Entertainment Prefabricated Hospitality Agricultural Enclosures & Tourism Products Processed Food Transportation Furniture & Logistics Building Jewelry & Distribution Aerospace Fixtures, Construction Precious Services Vehicles & Equipment & Materials Metals Information Defense Services Tech. Lightning & Heavy Electrical Construction Business Analytical Services Education & Instruments Equipment Services Forest Financial Knowledge Power Medical Products Services Creation Generation & Devices Communi Transmission Publishing cations & Printing Biopharma- Equipment Heavy ceuticals Machinery Motor Driven Production Apparel Chemical Products Technology Products Tobacco Leather & Oil & Related Gas Metal Automotive Products Plastics LQ > 4 Aerospace Manufacturing Engines LQ > 2 Footwear LQ > 1. Sporting & Recreation Goods LQ, or Location Quotient, measures the state’s share in cluster employment relative to its overall share of U.S. employment. An LQ > 1 indicates an above average employment share in a cluster.NGA 2011 – New Mexico– Rich Bryden 27 Copyright © 2011 Professor Michael E. Porter
    • New Mexico Oil and Gas Products and Services Cluster, 1998-2008 Specialization by Subcluster 4.0% Oil and Gas Exploration and 3.5% Drilling Hydrocarbons 3.0%National employment share, 2008 New Mexico Share of US Oil and Gas Products and Services Pipeline Transportation 2.5% Employment: 2.92% Change in New Mexico Share of US Oil and Gas Products and Services Employment: +0.29% 2.0% 1.5% Petroleum Processing 1.0% Oil and Gas Machinery Employment 1998-2008 0.5% Added Jobs Lost Jobs 0.0% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% Change in Share of National Employment, 1998 to 2008 Employees 1,200 =Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – New Mexico– Rich Bryden 28 Copyright © 2011 Professor Michael E. Porter
    • New Mexico Top 50 Subclusters by National Employment Share, 2008 Change in Employment Employment Employment Share in U.S. Subcluster Cluster Employment Rank in U.S. Share in U.S. 1998-2008 1 Oil and Gas Exploration and Drilling Oil and Gas Products and Services 11,060 7 3.5% -0.6% 2 Hydrocarbons Oil and Gas Products and Services 3,443 7 3.2% 0.5% 3 Pipeline Transportation Oil and Gas Products and Services 1,066 10 2.7% 1.7% 4 Research Organizations Education and Knowledge Creation 18,371 14 2.4% -0.1% 5 Jewelry and Precious Metals Products Jewelry and Precious Metals 1,845 10 2.4% -0.6% 6 Electronic Components and Assemblies Information Technology 3,925 12 2.3% 0.0% 7 Processed Dairy and Related Products Processed Food 1,159 14 2.0% 1.2% 8 Entertainment Venues Entertainment 7,195 19 1.7% -0.3% 9 Electric Services Power Generation and Transmission 1,750 31 1.4% -0.8% 10 News Syndicates Publishing and Printing 122 14 1.3% 0.7% 11 Communications Services Information Technology 4,372 23 1.3% -0.3% 12 Search and Navigation Equipment Analytical Instruments 1,750 22 1.2% 0.3% 13 Costume jewerly Jewelry and Precious Metals 60 21 1.1% -1.2% 14 Switchgear Lighting and Electrical Equipment 375 26 1.1% 0.2% 15 Petroleum Processing Oil and Gas Products and Services 750 21 1.1% 0.1% 16 Optical Instruments Analytical Instruments 175 20 1.0% 0.2% 17 Irrigation Systems Agricultural Products 347 24 1.0% -0.3% 18 Accommodations and Related Services Hospitality and Tourism 15,707 28 1.0% 0.1% 19 Facilities Support Services Business Services 2,400 27 1.0% -1.4% 20 Final Construction Heavy Construction Services 8,274 31 1.0% 0.2% 21 Mobile Homes Prefabricated Enclosures 375 21 0.9% 0.7% 22 CeramicTile Heavy Construction Services 60 21 0.9% 0.2% 23 Tourism Attractions Hospitality and Tourism 1,856 26 0.9% 0.6% 24 Oil and Gas Machinery Oil and Gas Products and Services 385 8 0.9% 0.3% 25 Concrete, Gypsum and Other Building Products Building Fixtures, Equipment and Services 386 34 0.9% -0.3% Rising national employment share Declining national employment shareNGA 2011 – New Mexico– Rich Bryden 29 Copyright © 2011 Professor Michael E. Porter
    • New Mexico Top 50 Subclusters by National Employment Share, 2008 (continued) Change in Employment Employment Employment Share in U.S. Subcluster Cluster Employment Rank in U.S. Share in U.S. 1998-2008 26 Equipment Distribution and Wholesaling Heavy Construction Services 1,391 37 0.9% -0.2% 27 Subcontractors Heavy Construction Services 808 34 0.8% 0.0% 28 Engineering Services Business Services 7,659 33 0.8% 0.0% 29 Specialty Foods and Ingredients Processed Food 1,592 34 0.8% 0.2% 30 Leather products Leather and Related Products 104 30 0.7% 0.2% 31 Photographic Services Publishing and Printing 90 27 0.7% 0.4% 32 Agricultural Products Agricultural Products 774 29 0.7% 0.1% 33 Entertainment Equipment Entertainment 185 31 0.7% 0.2% 34 Coated Fabrics Leather and Related Products 60 28 0.7% 0.6% 35 Clay and Vitreous Products Building Fixtures, Equipment and Services 63 32 0.7% 0.3% 36 Turbines and Turbine Generators Power Generation and Transmission 175 26 0.7% 0.7% 37 Aircraft Aerospace Vehicles and Defense 1,823 21 0.7% 0.6% 38 Cut and Crushed Stone Construction Materials 250 36 0.6% 0.1% 39 Lighting Fixtures Lighting and Electrical Equipment 185 32 0.6% 0.6% 40 Tourism Related Services Hospitality and Tourism 1,771 37 0.6% 0.2% 41 Mining Machinery Heavy Machinery 64 21 0.6% 0.1% 42 Cigarettes Tobacco 60 6 0.6% 0.6% 43 Intermediate Chemicals and Gases Chemical Products 940 32 0.6% 0.2% 44 Aircraft Engines Aerospace Engines 375 30 0.5% -0.3% 45 Paper Products Forest Products 435 32 0.5% 0.3% 46 Pumps Metal Manufacturing 175 35 0.5% 0.5% 47 Professional Organizations and Services Business Services 8,763 37 0.5% 0.3% 48 Candy and Chocolate Processed Food 271 32 0.5% -0.1% 49 Farm Management and Related Services Agricultural Products 424 35 0.5% 0.1% 50 Motors and Generators Motor Driven Products 198 27 0.5% 0.4% Rising national employment share Declining national employment shareNGA 2011 – New Mexico– Rich Bryden 30 Copyright © 2011 Professor Michael E. Porter
    • New Mexico Employment by Local Cluster Rank in US 2008 Local Health Services 39 85,035 Local Hospitality Establishments 37 70,239 Local Real Estate, Construction, and Develo 36 66,654 Local Commercial Services 40 53,115 Local Retail Clothing and Accessories 37 35,415 Local Motor Vehicle Products and Services 37 31,214 Local Community and Civic Organizations 36 29,563Local Food and Beverage Processing and Dist 39 21,092 Local Financial Services 39 19,662 Local Logistical Services 37 15,180 Local Personal Services (Non-Medical) 38 14,487 Local Household Goods and Services 37 11,722 Local Entertainment and Media 36 11,644 Local Utilities 40 9,632 Local Education and Training 36 8,312 New Mexico overall employment rank = 37 Local Industrial Products and Services 37 7,350 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 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 – New Mexico– Rich Bryden 31 Copyright © 2011 Professor Michael E. Porter
    • New Mexico Job Creation by Local Cluster 1998 to 2008 18,000 16,000 Net local job creation, 1998 to 2008: 14,000 + 85,795 Job Creation, 1998 to 2008 12,000 Indicates expected job creation 10,000 given national cluster growth.* 8,000 6,000 4,000 2,000 0 -2,000 Local Hospitality Local Health Services Local Financial Services Local Education and Local Retail Clothing Local Real Estate, Local Utilities Products and Services Local Personal Services Local Logistical Services Beverage Processing Local Community and Local Entertainment and Local Industrial Products Local Household Goods Construction, and Local Commercial Establishments Civic Organizations Local Motor Vehicle and Accessories Local Food and Services (Non-Medical) Develo and Services and Services Training and Dist Media* Percent change in national benchmark times starting regional employment. Overall local job creation in New Mexico, if it matched national benchmarks, would be +71,344 Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – New Mexico– Rich Bryden 32 Copyright © 2011 Professor Michael E. Porter
    • New Mexico Wages by Local Cluster vs. National Benchmarks Local Utilities Local Industrial Products and Services Local Health Services Local Commercial Services Local Financial Services Local Real Estate, Construction, and Develo Local Logistical Services l Indicates average Local Education and Training national wage in the local cluster. Local Motor Vehicle Products and Services Local Household Goods and Services Local Entertainment and Media Local Food and Beverage Processing and Dist Local Personal Services (Non-Medical) New Mexico average local wage: $31,331 Local Community and Civic Organizations Local Retail Clothing and Accessories U.S. average local wage: $36,911 Local Hospitality Establishments $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 Wages, 2008Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – New Mexico– Rich Bryden 33 Copyright © 2011 Professor Michael E. Porter
    • Appendix: Chart Descriptions, Interpretation, and SourcesNGA 2011 – New Mexico– Rich Bryden 34 Copyright © 2011 Professor Michael E. Porter
    • State Snapshot The snapshot chart summarizes the relative performance of a state on levels and trends in five key measures. The circles in the chart indicate quintile of performance as shown in chart legend. 1. Prosperity: State GDP per capita and 10-year trend 2. Productivity: Average private wage and 10-year trend 3. Labor Mobilization: Total labor force as a share of civilian population and 10-year trend 4. Innovation: Utility patents per 10,000 workers and 10-year trend 5. Cluster Strength: • A “strong cluster” is identified by relative employment rank in the top 20% across all states. A state’s “cluster strength” is in turn the state’s total share of traded employment in these strong clusters. • A positive trend in cluster strength is indicated by a state’s increasing national cluster share across these strong clusters. Leading Clusters: A listing of the state’s strong clusters is included. A state may have more than five strong clusters; the top five by employment size in the state are shown in this section.NGA 2011 – New Mexico– Rich Bryden 35 Copyright © 2011 Professor Michael E. Porter
    • Components of Regional Economies A state’s or region’s economy can be divided into traded clusters, local clusters, and natural endowment industries: Traded clusters include those industries that compete across regions, and which tend to concentrate in particular locations. Traded clusters are the engines of regional economic competitiveness. While they account for only about a third of employment, they achieve the highest wages and productivity levels and drive demand for localized businesses. Local clusters involve activities serving almost exclusively the local market. Local clusters are present in every region in roughly the same proportions. They employ the majority of people in any regional economy, so their efficiency is critical for competitiveness in traded clusters. However, they cannot prosper over the long run without success in the traded clusters. Natural Endowment-dependent industries concentrate at natural resource sites. They account for a small and declining share of national employment but can be relatively high wage. The Cluster Mapping Project data presented in this report focuses primarily on traded clusters, though it contains some information about other categories of industries. The performance of traded clusters holds the key to present and future competitiveness.Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business SchoolNGA 2011 – New Mexico– Rich Bryden 36 Copyright © 2011 Professor Michael E. Porter
    • Employment by Traded Cluster Within the broad category of traded clusters, a state’s economy can be divided into individual clusters. Clusters are geographically proximate groups of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities. Examples include automotive producers in Michigan and Ohio, information technology in Silicon Valley, and money management in Boston. The 41 traded clusters (and their 264 component subclusters) utilized in the Cluster Mapping Project were developed using statistical analysis of the actual patterns of business location in the U.S. economy. Clusters and subclusters are listed at the end of this appendix. Interpretation: This chart gives total employment in the state economy by each traded cluster. Employment by cluster gives a more detailed profile of the activities in the state economy that make up the job base. It can be used to understand the importance of the health of various groups or industries on the overall prosperity of the region. z Also shown on the chart are employment ranks for each cluster versus those in the 50 U.S. states plus D.C. Ranks above the region’s overall share of national employment are an indication of cluster specialization in the state and are highlighted on the chart.Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business SchoolNGA 2011 – New Mexico– Rich Bryden 37 Copyright © 2011 Professor Michael E. Porter
    • Specialization by Traded Cluster While other charts in this report focus on absolute employment and changes in employment, the Specialization chart shows the region’s competitive position by traded cluster. The size of each cluster “bubble” is proportional to the number of jobs in the region. The location of each cluster bubble on the chart identifies a cluster’s relative performance in the US economy: • Clusters on the top half of the chart have local employment levels that are more than proportionate to the region’s overall employment. These are clusters in which the region is relatively specialized. • Clusters on the right half of the chart are growing employment at a faster rate than the national average for those clusters. These are clusters in which the region is gaining position in terms of relative employment. The region’ share of cluster employment Strong and growing relative to its size position Cluster is growing faster than the US average When present, a gray shaded area on the chart indicates that further detail is available on a second version of the chart immediately following the current page.Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business SchoolNGA 2011 – New Mexico– Rich Bryden 38 Copyright © 2011 Professor Michael E. Porter
    • Specialization by Subcluster The specialization by subcluster chart is interpreted similarly to the specialization chart for all traded clusters. Additional insight on particular cluster strengths and trends in cluster composition can be observed. Please note that only one or a few subcluster charts were included in this report. Specialization charts and other data for all subclusters are available online at the Cluster Mapping Project reached from www.isc.hbs.edu. High share of national employment relative to average for Strongest Strong and growing the cluster and fastest position growing positions Subcluster is growing faster than average for the clusterNGA 2011 – New Mexico– Rich Bryden 39 Copyright © 2011 Professor Michael E. Porter
    • Job Creation by Traded Cluster This chart shows the overall net change in traded jobs in the state over the period from 1998 to 2008 and the net gain or loss by traded cluster. The clusters are arranged in order of net jobs created. The blue bars provide benchmarks for job creation based upon rates of growth in the cluster throughout the U.S. Interpretation: This chart allows a state to identify its biggest job generators and job losers among traded clusters over the last decade. A few clusters often account for a large majority of the overall employment gain. Clusters with job losses are a cause for concern. It is helpful to compare job performance with the policy priorities a region has set. Comparison of job growth relative to the U.S. benchmarks provides insights into the strengths and weaknesses in the region’s economy and shifts in the region’s competitive position. A region might not be participating in a cluster which is surging nation-wide; or a region might be gaining market position in an important cluster.Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business SchoolNGA 2011 – New Mexico– Rich Bryden 40 Copyright © 2011 Professor Michael E. Porter
    • Wages by Traded Cluster The state’s clusters are listed in order by average wage. The yellow bars show the benchmark average wage for the cluster nationally. The average wage across all traded clusters in the region is indicated by the green dashed line. Wages are a direct measure of a cluster’s productivity and competitiveness. Clusters that are exceptionally productive (the value of output produced per unit of labor) can sustain higher wages. Note: The wages for some clusters may not be reported due to data suppression in the underlying government reports. When few employers in an industry are present in a given region, wage and precise employment figures are omitted to protect the confidentiality of the data. Benchmark lines provide a comparison to wages in the cluster across the U.S.Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business SchoolNGA 2011 – New Mexico– Rich Bryden 41 Copyright © 2011 Professor Michael E. Porter
    • Employment in Highest Wage Clusters The ten highest wage traded clusters in the state are shown in decreasing order, with the width of the columns proportional to the number of workers in each cluster. The area of each cluster is thus equivalent to the overall wage sum the cluster generated in the state. The chart displays how the average wage in the state’s traded clusters is built up by highest wage clusters. Some high wage clusters may have a small impact on overall wage levels because of their small size, the case in some high wage clusters. Some large, high wage clusters are often those in services. The comparison to the U.S. average wages by cluster (on the previous chart) gives an initial benchmark to evaluate the composition of average wages in the state economy. States can increase wages in two different ways: (1) increase the employment in high wage clusters relative to low wage clusters and/or (2) increase the state’s relative wages in given clusters. In practice, the second effect dominates as the explanation for why state wages differ.NGA 2011 – New Mexico– Rich Bryden 42 Copyright © 2011 Professor Michael E. Porter
    • Cluster Portfolio Cluster Linkages Our research on clusters, in addition to deriving a model of 41 distinct traded clusters, provides a measure for the the strength of the links between these traded clusters. The strength of these links is summarized visually in the portfolio diagram below by the relative positioning and overlapping of cluster circles. Location Quotient (LQ) The Location Quotient is a ratio measure of the concentration of a cluster in a state relative to that state’s average share of employment in the U.S. traded economy. So, LQ is a measure of a clusters level of concentration within a state, with an LQ > 1 indicating higher than average concentration in that state. Interpretation Using Location Quotient as the measure of cluster concentration in the state, we overlay the state’s cluster portfolio on the model of cluster linkages with three color levels as below. The pattern of a state’s portfolio relative to the cluster linkages will often indicate paths of opportunity for development in clusters.Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business SchoolNGA 2011 – New Mexico– Rich Bryden 43 Copyright © 2011 Professor Michael E. Porter
    • Top Subclusters by National Employment Share This chart selects the sub-clusters in the region with the highest National Employment Shares. The subclusters are grouped by cluster and ordered by subcluster National Employment Share. Sub-clusters with a high share of national employment may form the basis for developing a competitive position in a cluster. Strengths in a breadth of related sub-clusters are an indication of an established position in a cluster.Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business SchoolNGA 2011 – New Mexico– Rich Bryden 44 Copyright © 2011 Professor Michael E. Porter
    • Defining the by Organization Patents Appropriate Region Massachusetts in BEA Economic Areas This table lists by organization the top patent recipients in the region for the most recent five-year period. Patents are assigned to regions according to the inventor’s address of residence. In the case of multiple inventors from different locations, the patent is assigned fractionally to each region. Universities and research institutes are highlighted in blue and government agencies in green. Interpretation: Patenting is the best single measure of innovation output. States and regions with a healthy level of innovation tend to have patents originating from a variety of corporations across a number of fields as well as significant patenting from universities and research institutes. Concerns about innovative capacity arise when the patenting rate is low, patents originate principally from a government agency, or patenting is dominated by only a few large firms.Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business SchoolNGA 2011 – New Mexico– Rich Bryden 45 Copyright © 2011 Professor Michael E. Porter
    • A Note on Regions The political boundaries of a state often encompass many distinct regional economies or portions of larger regional economies. A comprehensive approach to economic development should reflect both the distinct economies within a state as well as the often strong linkages to economies in neighboring states. The map on the following page shows the intersection of the state with the Economic Areas defined by the U.S. Bureau of Economic Analysis (BEA.) We find that the Economic Areas are a very meaningful unit of geography for exploring the specialization and linkages in the U.S. economy. BEAs 179 economic areas cover the entire U.S. and define the relevant regional markets surrounding metropolitan or micropolitan statistical areas. They consist of one or more economic nodes - metropolitan or micropolitan statistical areas that serve as regional centers of economic activity - and the surrounding counties that are economically related to the nodes. Please note that while this report has focused exclusively on the state, the website of the Cluster Mapping Project reached from www.isc.hbs.edu provides similar data and analyses for all Economic Areas (and Metropolitan Areas) in the U.S.Note: There are 177 Economic Areas in the continental U.S. and one each for Alaska and Hawaii.NGA 2011 – New Mexico– Rich Bryden 46 Copyright © 2011 Professor Michael E. Porter
    • Defining the Appropriate Region New Mexico in BEA Economic Areas Farmington, NM Santa Fe-Espanola, NM Albuquerque, NM Pueblo, CO Amarillo, TX Midland-Odessa, TX Phoenix-Mesa-Scottsdale, AZ El Paso, TXSource: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.Data from Bureau of Economic Analysis 2010.NGA 2011 – New Mexico– Rich Bryden 47 Copyright © 2011 Professor Michael E. Porter
    • Traded Clusters and Subclusters in the US Economy A ero space Engines Chemical P ro ducts Furniture M etal M anufacturing P ro cessed Fo o d Aircraf t Engines Int ermediat e Chemicals and Gases Furnit ure Fabricat ed Met al Product s Milk and Frozen Dessert s Precision Met al Product s Packaged Chemical Product s Wood Mat erials and Product s Met al Alloys Baked Packaged Foods Ot her Processed Chemicals Furnishings Primary Met al Product s Cof f ee A ero space Vehicles and Defense Ref ract ories Tableware and Kit chenware Precision Met al Product s Processed Dairy and Relat ed Product s Aircraf t Leat her Tanning and Finishing Fast eners Meat and Relat ed Product s and Services Missiles and Space Vehicles Ammunit ion Heavy Co nstructio n Services Wire and Springs Flour Def ense Equipment Special Packaging Final Const ruct ion Met al Processing Specialt y Foods and Ingredient s Treat ed Garment s Subcont ract ors Iron and St eel Mills and Foundries Milling A gricultural P ro ducts Primary Const ruct ion Mat erials Nonf errous Mills and Foundries Candy and Chocolat e Farm Management and Relat ed Services Co mmunicatio ns Equipment CeramicTile Met al Furnit ure Malt Beverages Soil Preparat ion Services Communicat ions Equipment Equipment Dist ribut ion and Wholesaling Environment al Cont rols Paper Cont ainers and Boxes Irrigat ion Syst ems Elect rical and Elect ronic Component s Fabricat ed Met al St ruct ures and Piping Pumps Met al and Glass Cont ainers Packaging Specialt y Of f ice Machines Explosives Saw Blades and Handsaws Food Product s Machinery Fert ilizers General Indust rial Machinery Agricult ural Product s Co nstructio n M aterials Heavy M achinery Laundry and Cleaning Equipment P ro ductio n Techno lo gy Wine and Brandy Tile, Brick and Glass Const ruct ion Machinery Met al Armament s Machine Tools and Accessories Cigars Plumbing Fixt ures Farm Machinery Process Equipment Sub-syst ems and Component s Milling and Ref ining Wood Product s Railroad Equipment and Rent al M o to r Driven P ro ducts Hoist s and Cranes Cut and Crushed St one Mining Machinery Mot ors and Generat ors Process Machinery A nalytical Instruments Gum and Wood Chemicals Machinery Component s Bat t eries Indust rial Pat t erns Laborat ory Inst rument s Rubber Product s Valves and Pipe Fit t ings Mot orized Equipment Fabricat ed Plat e Work Opt ical Inst rument s Ref rigerat ion and Heat ing Equipment Indust rial Trucks and Tract ors Process Inst rument s Distributio n Services Ho spitality and To urism Appliances Ball and Roller Bearings Search and Navigat ion Equipment Merchandise Wholesaling Tourism At t ract ions Specialized Pumps Elect ronic Component s Apparel and Accessories Wholesaling Tourism Relat ed Services Specialized Machinery P ublishing and P rinting Cat alog and Mail-order Wat er Passenger Transport at ion Tires and Inner Tubes Publishing A pparel Food Product s Wholesaling Accommodat ions and Relat ed Services News Syndicat es Mens Clot hing Farm Mat erial and Supplies Wholesaling Boat Relat ed Services Oil and Gas P ro ducts and Services Signs and Advert ising Specialt ies Womens and Childrens Clot hing Transport at ion Vehicle and Equipment Dist ribut ion Ground Transport at ion Oil and Gas Machinery Phot ographic Services Hosiery and Ot her Garment s Hydrocarbons Phot ographic Equipment and Supplies Accessories Educatio n and Kno wledge Creatio n Info rmatio n Techno lo gy Oil and Gas Explorat ion and Drilling Radio, TV, Publisher Represent at ives Knit t ing and Finishing Mills Educat ional Inst it ut ions Comput ers Oil Pipelines Print ing Services Research Organizat ions Elect ronic Component s and Assemblies Pet roleum Processing Print ing Input s A uto mo tive Educat ional Facilit ies Peripherals Oil and Gas Trading Paper Product s Mot or Vehicles Pat ent Owners and Lessors Sof t ware Wat er Freight Transport at ion Services Specialt y Paper Product s Aut omot ive Part s Supplies Communicat ions Services Inked Paper and Ribbons Aut omot ive Component s P lastics Of f ice Equipment and Supplies Forgings and St ampings Entertainment Jewelry and P recio us M etals Plast ic Mat erials and Resins Flat Glass Video Product ion and Dist ribut ion Jewelry and Precious Met al Product s Plast ic Product s Spo rting, Recreatio nal and Childrens Go o ds Product ion Equipment Recorded Product s Cost ume jewelry Paint s and Allied Product s Sport ing and At hlet ic Goods Small Vehicles and Trailers Ent ert ainment Equipment Cut lery Synt het ic Rubber Games, Toys, and Childrens Vehicles Ent ert ainment Relat ed Services Collect ibles Mot orcycles and Bicycles B io pharmaceuticals Ent ert ainment Venues P o wer Generatio n and Transmissio n Biopharmaceut ical Product s Leather and Related P ro ducts Elect ric Services Textiles Healt h and Beaut y Product s Financial Services Leat her product s Turbines and Turbine Generat ors Fabric Mills Cont ainers Deposit ory Inst it ut ions Fur Goods Transf ormers Specialt y Fabric Mills Securit ies Brokers, Dealers and Exchanges Coat ed Fabrics Porcelain, Carbon and Graphit e Component s Specialt y Fabric Processing B uilding Fixtures, Equipment and Services Insurance Product s Relat ed Product s Elect ronic Capacit ors Text ile Machinery Plumbing Product s Healt h Plans Accessories Yarn and Thread Mills Drapery Hardware Risk Capit al Providers P refabricated Enclo sures Carpet s and Rugs Fabricat ed Mat erials Invest ment Funds Lighting and Electrical Equipment Recreat ional Vehicles and Part s Wool Mills Heat ing and Light ing Real Est at e Invest ment Trust s Light ing Fixt ures Mobile Homes Fibers Furnit ure and Fit t ings Passenger Car Leasing Elect ric Lamps Trucks and Trailers Finishing Plant s Clay and Vit reous Product s Bat t eries Casket s Specialt y Apparel Component s Floor Coverings Fishing and Fishing P ro ducts Swit chgear Elevat ors and Moving St airways Womens and Childrens Underwear St eam and Air-condit ioning Fish Product s Elect rical Part s Of f ice Furnit ure Tire Cord and Fabrics St one and Tile Work Fishing and Hunt ing Met al Part s Household Ref rigerat ors and Freezers Wood Cabinet s, Fixt ures and Ot her Product s Processed Seaf oods Aluminum Processing To bacco Concret e, Gypsum and Ot her Building Product s M edical Devices Cigaret t es Fo o twear Surgical Inst rument s and Supplies Ot her Tobacco Product s B usiness Services Foot wear Dent al Inst rument s and Supplies Tobacco Processing Management Consult ing Specialt y Foot wear Opht halmic Goods Specialt y Packaging Online Inf ormat ion Services Foot wear Part s Medical Equipment Comput er Services Diagnost ic Subst ances Transpo rtatio n and Lo gistics Comput er Programming Fo rest P ro ducts Biological Product s Air Transport at ion Phot ocopying Paper Product s Bus Transport at ion Market ing Relat ed Services Paper Mills Marine Transport at ion Prof essional Organizat ions and Services Paper Indust ries Machinery Ship Building Engineering Services Pref abricat ed Wood Buildings Transport at ion Arrangement and Warehousing Laundry Services Wood Part it ions and Fixt ures Trucking Terminal Facilit ies Support Services Airport s Bus TerminalsSee http://www.isc.hbs.edu/cmp/help.html for Excel listing.Source: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business SchoolNGA 2011 – New Mexico– Rich Bryden 48 Copyright © 2011 Professor Michael E. Porter
    • About This Report This report was prepared in conjunction with Prof. Michael E. Porter’s presentation before the National Governors Association Winter Meeting on February 26, 2011. It draws on data and analysis from the Cluster Mapping Project and other sources at the Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director. Additional information may be found at the website of the Institute for Strategy and Competitiveness, www.isc.hbs.edu. None of this information may be duplicated, disseminated or copied without express written consent from the Institute for Strategy and Competitiveness. This report is available electronically at http://www.isc.hbs.edu/stateprofiles.htm.NGA 2011 – New Mexico– Rich Bryden 49 Copyright © 2011 Professor Michael E. Porter