Detecting new industry emergence using government data: a new analytic approach to regional innovation policy

This paper presents the rationale and method for a new model of innovation policy by regional government that is based on the early detection of the emergence of new industry clusters. The approach takes advantage of regional governments' superior access to distributed information about the categories of activities and investments that individual firms are making. By coding and analyzing this information we show how the nascent seeds of new industries can be detected in clusters of overlapping activities. Surprisingly, these patterns may be opaque to the firms themselves because other firms exploring similar opportunities may not be co-located or even in the same industry. We propose that this method of early detection can be leveraged into opportunities for 'industrial incubation' in the form of institutional support.