Why Target Industry Analysis is the Cornerstone of Modern Economic Development

In the world of economic development, few strategies are as critical—and as frequently misunderstood—as target industry analysis. For communities looking to attract investment, create jobs, and build sustainable prosperity, knowing which industries to pursue isn’t just helpful; it’s essential.

At Aha! Creative, we’ve worked with economic development organizations across the country, helping them communicate their unique value to site selectors and businesses. Time and again, we’ve seen that the most successful regions are those that have done their homework, made strategic choices, and developed a laser focus on the industries where they can genuinely compete.

Here’s why target industry analysis matters and how you can use it to build a stronger economic future.

What Is Target Industry Analysis?

Industry targeting is the process of focusing economic development programs and efforts on specific industries or clusters of related industries. The goal is to identify sectors that have both high potential for locating in your area and attractive economic impacts in terms of job growth, wages, and tax base contributions.

This isn’t about chasing every company that comes along. It’s about making deliberate choices—choosing what not to pursue, as much as what to pursue—so that limited resources can be deployed where they’ll have the greatest impact.

Why Guessing Isn’t Good Enough

Without a data-driven target industry strategy, economic development organizations (EDOs) often fall into one of two traps:

The “Everything is a Target” Trap: Many regions claim to specialize in the same broad industries—advanced manufacturing, life sciences, and food and beverage are nearly ubiquitous. When a strategy “focuses” on half to three-quarters of the entire regional economy, it fails to provide direction for investment, marketing, or workforce development. It’s not really a strategy at all.

The “Trend-Chasing” Trap: Other regions chase the latest headlines, hoping to land a semiconductor plant or AI data center without honestly assessing whether their community has the infrastructure, workforce, or assets to compete. As the UN Conference on Trade and Development (UNCTAD) notes, strategic sectors like AI infrastructure and semiconductors accounted for 44% of global greenfield investment in 2025, up from just 16% in 2020. But that investment is highly concentrated—the top three recipient economies captured 56% of it. Most communities simply can’t win that game without a realistic, targeted approach.

What Makes a Smart Target Industry?

The best target industries share a few key characteristics. According to Business Oregon—which conducts a comprehensive target industry assessment every three years—target sectors are typically selected based on criteria like:

• Rapid job growth

• High wage potential

• Regional competitive advantages (industries where your area has specialization)

• Emerging status with strong prospects for future expansion

Backward linkage effects are another critical consideration. This refers to how an industry connects to and stimulates other parts of the local economy. An industry that relies on local suppliers, creates supply chain opportunities, and multiplies its economic impact is far more valuable than one that operates in isolation.

Alignment with Site Selector Expectations

The importance of target industry analysis isn’t just theoretical—it’s driven by what site selectors and corporate real estate professionals actually want. In 2026, the key factors influencing site selection include:

1. Qualified workforce (the top concern)

2. Utilities and infrastructure (especially reliable power)

3. AI and automation (and how communities are preparing)

4. Quality of place

5. Industry clusters (known, shared assets)

Note that incentives rank lower than many assume. As one site selector put it at the Site Selectors Guild conference, “Sustainable operations matter more than incentives. Incentives go away eventually.” 

This means your target industry analysis needs to go beyond “what incentives can we offer?” and dig into what actually makes your community attractive over the long term: talent, infrastructure, ecosystem, and quality of life.

The Geopolitical Factor: Playing a Bigger Game

Target industry analysis is also becoming more complex due to global shifts. The industries that are attracting capital are changing fast:

• Strategic sectors (AI infrastructure, semiconductors, critical minerals, energy transition, and advanced technologies) are capturing an increasing share of investment

• Traditional manufacturing investment outside these strategic sectors fell 17% in 2021-2025 compared to the previous five-year period

• U.S. Department of Defense spending is driving demand for aerospace and defense relocation projects

• Life sciences sub-sectors (medical devices, drug discovery, gene therapy) each have different product cycles and site requirements

A good target industry analysis accounts for these trends, helping communities position themselves in sectors with genuine growth potential rather than fighting over shrinking opportunities.

Regional Success Stories

Some regions have used target industry analysis to build genuine competitive advantages:

• Texas released a five-year strategic plan in 2025 identifying target sectors expected to drive growth across different regions of the state

• Utah has built a strong aerospace and defense ecosystem around Hill Air Force Base and Salt Lake City, with site selectors pointing to it as a model of “doing it right”

• Fort Worth has seen concentrated inquiries in computer and electronics manufacturing, driven by the national AI boom and local successes like Wistron’s manufacturing facilities

These regions didn’t succeed by accident—they analyzed their strengths, made strategic choices, and invested accordingly.

Putting Target Industry Analysis Into Practice

Here’s a practical framework for conducting target industry analysis:

1. Assess Current Economic Conditions

Use tools like the Appalachian Regional Commission’s ARC-LEAP model to evaluate your region’s current economy and likely future trends.

2. Identify Potential Clusters

Don’t just look at individual industries—examine clusters of related industries that share supply chains, talent pools, and infrastructure needs. These clusters create the ecosystems that attract and retain companies.

3. Evaluate Realistic Potential

Be honest about your region’s assets. Do you have the workforce, utilities, sites, and infrastructure to compete for a particular industry? If not, either invest in building those capacities or choose a different target.

4. Make Trade-Offs

The most successful strategies are those that choose what not to do. By focusing on one or two truly relevant specializations, you can concentrate resources and build genuine expertise.

5. Communicate Your Strategy

Once you’ve identified your targets, your marketing must reflect that focus. As the Fort Worth EDP’s experience shows, showing up at site selector conferences with a clear, data-backed story about your target industries is how deals get made.

The Bottom Line

In an era of increasing competition for investment, target industry analysis is no longer optional—it’s the foundation of any serious economic development strategy. It provides the “why” behind your investments, the focus for your marketing, and the evidence that site selectors need to take your community seriously.

As the Brookings Institution noted, simply labeling a broad swathe of the economy as “targets” undermines an EDO’s ability to act strategically. Instead, the winners are those who make difficult choices, build on genuine strengths, and communicate their unique position with clarity and conviction.

Ready to tell your community’s story? At Aha! Creative, we specialize in building websites and marketing campaigns that help economic development organizations attract investment.