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Will Cookson: Identifying your region’s comparative advantage is key to attracting new businesses

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The end of central funding, together with a number of other factors such as the devolution agenda and Brexit, means that attracting new businesses and growing existing sectors has become more crucial than ever.

Not only this, but with every other local authority finding themselves essentially in a similar position, competition between regions to attract business is only likely to increase. A question that every council should be asking is this: How can we build a more compelling, evidence-based case for businesses to move into our region?

A prerequisite of answering this question is to first identify those sectors in which they have a comparative advantage over other regions. However, this is of course easier said than done, and perhaps the biggest hindrance to doing it effectively is simply the sheer number of businesses and sectors in each region. One possibility is to use government datasets, but the problem with this is that they tend to be both too broad (569 standard industry classifications) and too general to be particularly useful in identifying sector strengths within specific localities.

Through research carried out over the last year, we have developed a methodology that tackles this problem by grouping a region’s industries – at the local authority level – into 49 “industry clusters”, based on shared characteristics, such as a similar workforce, a tendency to co-locate in the same areas, and supply chain connections. In practice, this not only hugely simplifies the task of analysing a region’s industries, but it also makes the job of determining what it is that gives a region a comparative advantage over other areas of the country far easier.

But above all, because these clusters have been developed on the basis of industries which have similar characteristics, building a compelling case for new businesses to relocate into an area also becomes far easier, since it can be much more easily demonstrated to those companies that there is an appropriately skilled workforce and existing supply chain connections already waiting for them in the region.

In terms of building an evidence-based businesses attraction strategy, this new methodology could well prove to be vital. If you would like to see a free demonstration of how this works, tailored to your area, you can book in a slot by clicking here.

https://calendly.com/wcookson

Will Cookson is business development manager for economic development for the labour market insight specialists, Emsi

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