Regional Economic Development

All parts of the country are undergoing radical restructuring of their state and regional economies. Globalization is forcing "old" manufacturing into direct competition with emerging economies around the world. Education and expertise are becoming widespread in former "third world" nations so that manufacturing (and even service) processes that have become "routine" can be established virtually anywhere in the world where appropriate labor and infrastructure can be assembled. As Thomas Friedman puts it, the world has become "flat," communication advances, the development of global supply chains and rising educational attainment means production is not limited to Europe and the North America as it has in the past.

What's a state to do as its traditional industries no longer provide employment for all of its population?  In many states the "middle" employment categories are disappearing, that is those jobs that provided middle income salaries, and economic security and no longer secure. Instead new industries, calling for new combinations of advanced skills command the highest salaries, and a host of low skill jobs become the destination of those who formerly were employed by the "middle."

States are seeking analysis of these trends and, more importantly, strategies they can employ to foster new economic growth, to provide transition opportunities to workers displaced from the "middle." The range of potential policy agendas is broad, including education policy, workforce development, fostering entrepreneurship and supplies of venture capital and trade policy.

Theories of economic growth harnessed to support these policy agendas focus on (a) so-called cluster strategies where combinations or industries sharing common resources and supply chains are fostered, or (b) the development of entrepreneurial firms especially in the "second stage" of development roughly when employment passes 100 and professional management development is required or (c) "Mid Market" firms where sales stand between $50 million and $100 million. If clusters or second stage or mid-market firms are the "trigger" to faster economic growth then supporting policies could be used to spur regional development.

The Analytical Promise of NETS 

The National Establishment Time series is a data source describing virtually all establishments in the country (available conveniently by states) in terms of employment and sales, along with a extensive list of other descriptive indicators of industry, location, ownership, and legal status. The 2006 release contains data over a 17 year period from 1990-2006.  The data are derived from the credit reporting service of Dun and Bradstreet and is distributed by Walls and Associates*.

There are a few key advantages to the NETS data. First, from the perspective of fully characterizing employment change, the NETS captures business relocation. Unlike the other data sources described above, the NETS database tracks business address changes and identifies business moves over time within the entire country. As discussed below, this is important because business retention and attraction issues are often at the center of policy debates at the state (and local) level. In addition, the NETS offers significant advantages in actually carrying out research on employment dynamics (or other topics). The use of freely available government data from the Bureau of Labor Statistics, or Bureau of Economic Analysis or the Census for the analysis of  growth trends at detailed industry and geographic levels is highly restricted because of confidentiality reasons, and hence requires a long and complex process of application and approval. As a practical matter, this has deterred many researchers from pursuing research with these data, and has clearly made it difficult to do research in a timely manner. In addition, again because of confidentiality, researchers working with these data sources are restricted in the geographic detail to which they can disaggregate in describing results. And this confidentiality extends to studying and certainly extends to identifying particular companies. With the NETS data, in contrast, none of these problems arise. The data are accessible and there are no confidentiality restrictions imposed on users. 

The level of analysis detail supported by these data provides a means to identify the trends state economic development authorities and private interested parties are looking for, and thus provides a new level of precision in data informed policy development.

See further resources in the Economic Development section of the Documents page. 

*Walls & Associates
Phone: (510) 763-0641
Email: dwalls2@earthlink.net