Clusters reveal innovation trends in Illinois and Chicago
Over the past decade, the concept of clusters—the concentration of related companies, organizations, and institutions in a particular field or industry—has gained increasing acceptance as a more comprehensive approach to gauging the economic development and dynamism of a geographic area. The existence of clusters in a state or urban center can have a direct impact on the attraction of investment, talent, and businesses that seek to take advantage of an integrated supply chain and technology transfer.
The U.S. Cluster Mapping Project’s data on Illinois and Chicago from 1998 to 2010 (the latest year for which data are available) reveals some key strengths and opportunities to support innovation. Illinois’ total nonfarm employment hit its decade low point in December 2009; while the state has added 200,000 jobs since 2010, the data in this edition still reflect the lingering effects of the financial recession. Over the past three years, the state has demonstrated continued strength and increased concentration in key clusters.
Illinois’ performance in select clusters
To assess Illinois’ performance from 1998 to 2010, we selected 15 traded1 clusters that reflect the largest and most innovation-intensive clusters of the state’s economy. During this period, the state increased employment in 7 clusters, with business services leading the way, followed by education and knowledge creation. Illinois’ overall growth in employment lagged behind the U.S. Cluster Mapping Project’s data; the financial services cluster, for example, declined at more than four times the national benchmark. But several clusters in Illinois bucked the trend: biopharmaceuticals, information technology, and aerospace engines all outpaced the national benchmark.
The evolution of Illinois’ economy
The U.S. Cluster Mapping Project data encompass a transformational period for the U.S. economy marked by not only economic upheaval but also declining employment in manufacturing sectors. Illinois reflects this trend: from 1998 to 2010, the state’s top clusters in terms of employment shifted from production-based to service-intensive clusters. Education and knowledge creation, which includes research and development organizations, expanded the most rapidly, growing from 6.4 percent of total traded cluster employment in 1998 to 10.1 percent in 2010. Although Illinois’ top clusters aren’t typically perceived as representing the leading edge of innovation, the integration of technology into operations has greatly increased demand for IT solutions. Financial services, for example, has become a leader in patents as firms seek to develop new trading technologies. IT has also revolutionized transportation, logistics, and distribution, and a number of innovative local companies such as Coyote Logistics and SMS-Assist have emerged in these clusters.
The data also show that the labor market is becoming concentrated in a smaller number of clusters. Illinois’ top 10 clusters by employment accounted for 71.6 percent of traded cluster employment in 2010, up from 61.9 percent in 1998. Furthermore, the state’s largest sectors include a substantial portion of high-skilled positions. In the field of business services, jobs for computer service professionals and programmers increased by more than 13,000 since 1998. In education and knowledge creation, research organizations created more than 4,000 new jobs, and educational institutions added more than 30,000.
Chicago’s strengths in innovation-intensive clusters
The Chicago MSA’s performance varied significantly across innovation-intensive sectors. From 1998 to 2010, Chicago nearly tripled its share of national employment in biopharmaceuticals and maintained its leadership in production technology and metals manufacturing among other major MSAs. Although overall employment in these industries has dropped along with the national decline in manufacturing employment over the past decade, Chicago has maintained its leadership in share of employment among these other MSAs. Conversely, the Chicago MSA saw its medical devices employment drop significantly.
Technological advances have enabled the rise of innovation-intensive clusters in a growing number of MSAs. A recent study by the Brookings Institution found that since 1980, manufacturing’s national share of employment has declined across all regions.2 At the same time, the integration of technology into a range of industries has enabled more MSAs to invest in innovation-intensive clusters, anchored by research institutions that are magnets for talent, intellectual property, and collaboration. As a result, the innovation economy is becoming increasingly dispersed. For example, biopharmaceuticals used to be overwhelmingly concentrated in New York City and New Jersey, but MSAs such as Chicago and San Jose have achieved impressive gains over the past 15 years.
The coming years will likely bring growing competition among states and MSAs for companies and workers in innovation-intensive clusters. Although Illinois remains strong in manufacturing, its economy is increasingly driven by service-intensive clusters, with transportation and distribution clusters showing impressive growth. The biopharmaceuticals industry has emerged as a major new cluster over the past decade, showing signs of growth in spite of the recession.
About the research
The U.S. Cluster Mapping Project’s methodology is based on a clustering algorithm and updated underlying data. For more information, follow this link.