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
*Walls & Associates
Phone: (510) 763-0641