Economic Structure in Appalachia's Urban Regions: Clustering and Diversification Strategies

In support of economic development practitioners' efforts to devise strategies that can align with both industrial clustering and industrial diversification, this report provides a wide range of relevant measures and metrics. In addition to standard regional analysis tools like coefficients of specialization, location quotients, and growth rates, we introduce two fundamentally new measures for understanding the nature of regional clusters. These measures focus on the industries that anchor the clusters and characterize their strength and regional dominance. The former measures the share of the anchor industry's direct and indirect requirements that could be satisfied by regional industries, and the latter measures the share of the regional economy that is potentially oriented to the cluster anchor. We then apply an algorithm that identifies anchors and industries that might be further developed to strengthen the region's industrial clusters. The design of the analysis commonly leads to the identification of different clusters, and thereby points to opportunities to strengthen within and diversify across clusters. Results of these analyses for all 120 micro- and metropolitan regions wholly within the Appalachian region are reported in the supplements to this methodological overview.