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EDA is collaborating with Purdue University on a holistic update of existing industry cluster definitions to harmonize them with the revised, 2022 edition of the North American Industry Classification System (NAICS).

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February 8, 2024

EDA and Purdue University Partner to Redefine Industry Clusters

Through transformational investments like the regional Tech Hubs initiative and Build Back Better Regional Challenge, the U.S. Economic Development Administration (EDA) has centered the creation and curation of regional industry clusters at the forefront of the nation’s economic development agenda. When strategically placed and properly supported, industry clusters can be effective in steering the direction and development of local economies.

Recently, EDA’s Research and National Technical Assistance (RNTA) program announced a $525,901 grant for the Purdue Center for Regional Development (PCRD) at Purdue University. This award will support a holistic update of existing industry cluster definitions to harmonize them with the revised, 2022 edition of the North American Industry Classification System (NAICS).

North American Industry Classification System 6 digit codes — NAICS codes aid in the collecting, analyzing, and publishing of statistical data, as well as aligning organizations and businesses with opportunities directed at their specific industries.

NAICS is a joint effort of the U.S. Office of Management and Budget (OMB), Statistics Canada, and Mexico’s National Institute of Statistics and Geography (INEGI), that classifies businesses by their type of economic activity for the purpose of collecting and analyzing statistical data. These NAICS codes aid in the collecting, analyzing, and publishing of statistical data, as well as aligning organizations and businesses with opportunities directed at their specific industries.

This initiative will support a two-year project where researchers will use quantitative and qualitative analysis to revisit and update the existing industry cluster definitions and identify new types of clusters based on the business and industry, occupations, and skills of the 21st century economy. The researchers will utilize multidisciplinary clustering and network analysis techniques, spatial and aspatial clustering methods, as well as focus groups and expert interviews, to complete their work. The work will culminate in a website that houses a technical report outlining the new definitions, data dashboards, and an interactive mapping component. After the completion of the grant project, PCRD will manage an annual data update to ensure the project’s long-term sustainability.

“This update to the industry cluster definitions marks the first complete revision since 2007,” said Alejandra Y. Castillo, U.S. Assistant Secretary of Commerce for Economic Development. “It will ensure planners and researchers are able to effectively utilize data to analyze and identify gaps and drivers of the new economy.”

“The need and value for industry clusters information is vital,” said Indraneel Kumar, Associate Director and Principal Investigator at PCRD. “However, we need to update these industry cluster definitions and also identify new types of business and industry, occupation and skills clusters to address the emerging trends in the new economy.”

“This is another example of how Purdue University through PCRD conducts meaningful engagement with broader impacts,” said Roberto Gallardo, Vice President for Engagement at Purdue University.

EDA and PCRD anticipate that the revised industry cluster definitions will be available in Fall 2024. Receive updates on this, and other EDA programs, by subscribing to EDA’s Impact newsletter.