In works such as Glaeser (2011) and Porter (1995), prominent economists have suggested that metropolitan areas are the key to economic growth. In this article, we examine the economic development strategies and performance of the largest metropolitan areas in the five states of the Seventh Federal Reserve District—Illinois, Indiana, Iowa, Michigan, and Wisconsin. The cities, from smallest to largest by metro population, are: Des Moines, Indianapolis, Milwaukee, Detroit, and Chicago. Theory suggests that cities that promote industry agglomeration (clusters) should be best positioned for growth. Industry agglomeration promotes synergies, whereby firms can be more productive by sharing resources (specialized labor and inputs) and benefiting from knowledge spillovers. Economic development professionals frequently use the concept of industry clusters to measure the type of firm agglomeration that exists within a city or metropolitan area.
We examine industry structure and agglomeration along several dimensions. We begin by reporting the industry and employment concentrations of each city in 2012 and how they compare to the nation as a whole. This will give us a sense of the levels of industry specialization in each economy. Then, we describe each city’s “traded cluster” structure, which comprises its exporting industries, and the economic performance of these clusters over a period of 11 years ending in 2009 (the period for which Porter’s cluster data are available). Based on long-standing economic theory, the traded cluster is likely to be a city’s most important engine for economic success (Porter, 1998). These traded clusters often have smaller employment shares than nontraded, locally consumed business clusters, but they have a disproportionate impact on wealth generation for the metropolitan area.