North Dakota Competitiveness:                                       State and Cluster Economic Performance                ...
North Dakota Performance Snapshot                                                        Position                         ...
State Comparative PerformanceNGA 2011 – North Dakota– Rich Bryden                3                  Copyright © 2011 Profe...
North Dakota Competitiveness                                               Overall Economic Performance Indicators        ...
Long Term State Prosperity Performance                                                                                    ...
Near Term State Prosperity Performance                                                                                    ...
State Private Sector Wage Performance                                                                                   19...
Long Term State Labor Productivity Performance                                                                            ...
Near Term State Labor Productivity Performance                                                                            ...
Long Term State Job Growth                                                                           2000 to 2010         ...
Near Term State Job Growth                                                                                    2007 to 2010...
Long Term State Unemployment Rate                                                                                      200...
Near Term State Unemployment Rate                                                                                 2007 to ...
Long Term State Patenting Performance                                                                                     ...
North Dakota Patents by Organization                                                                          Patents     ...
The Impact of Cluster Mix and Cluster Strength on Wages                                                                   ...
Effect of Urban and Rural Areas on Average State Wages                                                                    ...
Composition of the North Dakota Economy                                               and Cluster PerformanceNGA 2011 – No...
Composition of Regional Economies, United States                                                                          ...
Overall Composition of the North Dakota Economy, 2008                     80%                     70%                     ...
Composition of the North Dakota Economy                                             Employment by Traded Cluster, 2008    ...
Composition of the North Dakota Economy                                                                             Specia...
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
North Dakota Competitiveness: State and Cluster Economic Performance
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North Dakota 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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North Dakota Competitiveness: State and Cluster Economic Performance

  1. 1. North Dakota Competitiveness: State and Cluster Economic Performance Prepared for Governor Jack Dalrymple Professor Michael E. Porter National Governors Association Winter Meeting February 26, 2011NGA 2011 – North Dakota– Rich Bryden 1 Copyright © 2011 Professor Michael E. Porter
  2. 2. North Dakota Performance Snapshot Position Trend Prosperity Productivity Labor Mobilization Top quintile Innovation 2nd quintile 3rd quintile 4th quintile Cluster Strength Lowest quintile • Heavy Machinery • Processed Food Leading Clusters • Oil and Gas Products and Services • Agricultural ProductsNGA 2011 – North Dakota– Rich Bryden 2 Copyright © 2011 Professor Michael E. Porter
  3. 3. State Comparative PerformanceNGA 2011 – North Dakota– Rich Bryden 3 Copyright © 2011 Professor Michael E. Porter
  4. 4. North Dakota Competitiveness Overall Economic Performance Indicators Prosperity Cluster Gross State Product per capita, 2009 Share of State Traded Employment in Strong Clusters, 2008 • In North Dakota: $49,274 Rank: 16 • In North Dakota: 25.5% Rank: 43 • In the US: $46,093 • In the US: 41.8% • State difference to US: 6.9% Change in Share of National Employment in Strong Clusters, 1998-2008 Growth in Gross State Product per capita, real annual rate, 1999-2009 • In North Dakota: 0.07% Rank: 23 • In North Dakota: 3.64% Rank: 1 • In the US: -0.06% • In the US: 0.86% Share of Employment in Traded Clusters, 1998-2008 • In North Dakota: 28.4% Rank: 21 • 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 North Dakota: $87,603 Rank: 22 • In North Dakota: 2.7% Rank: 2 • In the US: $92,382 • In the US: -2.2% • State difference to US: -5.2% Labor Mobilization Growth in Gross State Product per labor force participant*, 1999-2009 • In North Dakota: 3.19% Rank: 1 Population, 2009 • In the US: 1.09% • In North Dakota: 646,839 Rank: 48 • % of US: 0.21% Average private wage, 2008 • In North Dakota: $32,976 Rank: 45 Population growth, annual rate, 1999-2009 • In the US: $42,435 • In North Dakota: 0.04% Rank: 51 • State difference to US: -22.3% • In the US: 0.96% Private wage Growth, annual rate, 1998-2008 Labor Force Participation, 2009 • In North Dakota: 4.04% Rank: 3 • In North Dakota: 72.4 Rank: 2 • In the US: 3.32% • In the US: 65.4 Employment, 2010 (December) • In North Dakota: 354,987 Rank: 48 Innovation Output • % of US: 0.25% Patents Per 10,000 Employees, 2009 • In North Dakota: 2.69 Rank: 36 Employment growth, annual rate, 2000-2010 (December) • In the US: 6.83 • In North Dakota: 0.55% Rank: 13 • In the US: 0.11% Growth in total patents, annual rate, 1998-2009 • In North Dakota: 2.13% Rank: 6 Unemployment, 2010 (December) • In the US: 0.23% • In North Dakota: 3.8% Rank: 1 • In the US: 9.4% Traded establishment formation, annual growth rate, 1998-2008 • In North Dakota: 1.68% Rank: 25 Change in Unemployment, 2000-2010 (December) • In the US: 1.79% • In North Dakota: 1.1% Rank: 1 • In the US: 5.5%NGA 2011 – North Dakota– Rich Bryden 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 – North Dakota– Rich Bryden 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 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 – North Dakota– Rich Bryden 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 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 – North Dakota– Rich Bryden 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 Indiana Rhode Island Iowa South Oregon Dakota Georgia Arizona Tennessee Kansas Alabama Dakota Ohio Wisconsin $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 – North Dakota– Rich Bryden 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 South North Carolina Pennsylvania Nebraska 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 – North Dakota– Rich Bryden 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 Hampshire New Mexico West Virginia Rhode Island Maine Hawaii Idaho Delaware Montana South Dakota Vermont Alaska North 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 – North Dakota– Rich Bryden 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 4,000,000 Virginia New Jersey 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 Statistics 11NGA 2011 – North Dakota– Rich Bryden 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 New New Mexico Colorado 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 – North Dakota– Rich Bryden 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 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 Delaware Texas New Mexico Washington 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 % New Jersey 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 – North Dakota– Rich Bryden 13 Copyright © 2011 Professor Michael E. Porter
  14. 14. 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 Ohio Maryland North Carolina Iowa 4 Indiana New Mexico Kansas Georgia Florida Missouri Virginia North Dakota Montana (-5.7%, 1.58) Nevada South Carolina 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 – North Dakota– Rich Bryden 14 Copyright © 2011 Professor Michael E. Porter
  15. 15. North Dakota Patents by Organization Patents Patents Rank Organization Rank Organization 2005-2009 2005-2009 1 Clark Equipment Company, Inc. 37 25 Branick Industries, Inc. 1 2 Deere + Company 25 25 Exportech Company, Inc. 1 International Business Machines 3 Microsoft Corporation 18 25 Corporation 1 4 Pioneer Hi-Bred International, Inc. 10 25 Lisle Corporation 1 4 Goodrich Corporation 10 25 Rubbermaid Incorporated 1 6 Cnh America Llc 8 25 Rugby Manufacturing Co. 1 North Dakota State University Research 7 Foundation 6 25 Summers Manufacturing Company, Inc. 1 University Of North Dakota Energy And 8 Agri-Cover, Inc. 5 25 Environment Research Center Foundation 1 8 Imation Corp. 5 25 Acceleration Products, Inc. 1 Springer Family Patents Limited 8 New Products Marketing Corporation 5 25 Parternship 1 11 Dakota Technologies, Inc. 4 25 Loegering Mfg. Inc. 1 11 University Of North Dakota 4 25 Jacam Chemicals, L.L.C. 1 Alfred E. Mann Institute For Biomedical Engineering At The University Of Southern 13 Nanotek Instruments, Inc. 3 25 California 1 13 Psi-Ets 3 25 United States Seamless 1 13 Packet Digital 3 25 Duratech Industries International, Inc. 1 Hitachi Global Storage Technologies 16 Bailey Nurseries, Inc. 2 25 Netherlands B.V. 1 16 Echelon Corporation 2 25 Bayer Cropscience Gmbh 1 16 North Dakota State University 2 25 Triple I 1 16 Reechcraft, Inc. 2 25 New Design Corporation, Inc. 1 16 Monsanto Technology, Llc 2 25 Terramarc Industries, Inc. 1 16 Magtec Llc 2 25 Aqua-Envirotech Mfg., Inc. 1 16 Sno-Bear Industries, Llc 2 25 Fargo Products, Llc 1 Great Plains Assistance Dogs Foundation, 16 Blade Lift, Inc. 2 25 Inc. 1 16 Cannon Technologies, Inc. 2 25 Wil-Rich, Llc 1 25 Baker Hughes Incorporated 1 25 Great River Energy 1 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. 15NGA 2011 – North Dakota– Rich Bryden 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 – North Dakota– Rich Bryden 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 – North Dakota– Rich Bryden 17 Copyright © 2011 Professor Michael E. Porter
  18. 18. Composition of the North Dakota Economy and Cluster PerformanceNGA 2011 – North Dakota– Rich Bryden 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 – North Dakota– Rich Bryden 19 Copyright © 2011 Professor Michael E. Porter
  20. 20. Overall Composition of the North Dakota Economy, 2008 80% 70% ND US 70.9% 71.7%Private Employment 60% 50% 40%Percent of Total 30% ND US 20% 27.8% 27.4% 10% ND US 1.3% 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 – North Dakota– Rich Bryden 20 Copyright © 2011 Professor Michael E. Porter
  21. 21. Composition of the North Dakota Economy Employment by Traded Cluster, 2008 Rank in US Financial Services 41 10,726 Business Services 49 9,370 Hospitality and Tourism 48 9,072 Heavy Machinery 13 8,519 Processed Food 38 6,610 Oil and Gas Products and Services 17 5,281 Education and Know ledge Creation 49 4,188 Distribution Services 46 3,639 Entertainment 45 3,452 Heavy Construction Services 50 3,401 Pow er Generation and Transmission 28 2,500 Analytical Instruments 37 2,045 Automotive 41 1,992 Forest Products 37 1,760 Transportation and Logistics 50 1,671 Agricultural Products 33 1,670 Information Technology 44 1,646 Publishing and Printing 46 1,423 Production Technology 42 1,312 Building Fixtures, Equipment and Services 46 1,092 Metal Manufacturing 46 1,028 Plastics 45 871 Furniture 41 640 Aerospace Vehicles and Defense 33 610 Prefabricated Enclosures 41 397 Lighting and Electrical Equipment 43 360 Chemical Products 48 344 Construction Materials 48 219 Medical Devices 48 130 Leather and Related Products 47 90 Jew elry and Precious Metals 44 80 Communications Equipment 47 80 Apparel 46 80 Textiles 48 70Sporting, Recreational and Childrens Goods 46 70 Biopharmaceuticals 49 70 Motor Driven Products 48 30 Footw ear 37 10 North Dakota overall employment rank = 48 Fishing and Fishing Products 49 10 Aerospace Engines 45 10 0 2,000 4,000 6,000 8,000 10,000 12,000 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 – North Dakota– Rich Bryden 21 Copyright © 2011 Professor Michael E. Porter
  22. 22. Composition of the North Dakota Economy Specialization by Traded Cluster, 1998 to 2008 Heavy Machinery Power Generation and (2.46%, +0.21% ) Transmission (1.27%, +0.79%) Oil and Gas Products and Services 0.80%North Dakota’s national employment share, 2008 Overall change in the North Dakota Share of US Traded Employment: +0.06% Agricultural Products 0.60% Processed Food Forest Products Financial Services Hospitality and 0.40% Tourism Entertainment North Dakota Overall Analytical Share of US Traded Furniture Instruments Employment: 0.26% Production 0.20% Technology Heavy Lighting and Employment Construction Electrical Equipment 1998-2008 Added Jobs Transportation Lost Jobs and Logistics 0.00% -0.10% 0.00% 0.10% 0.20% 0.30% 0.40% Change in North Dakota share of National Employment, 1998 to 2008 Employees 2,000 =Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director.NGA 2011 – North Dakota– Rich Bryden 22 Copyright © 2011 Professor Michael E. Porter
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