Determinants of entry: Evidence from new manufacturing firms in the U.S

The objective of this paper is to estimate the relationship between agglomeration economies and the birth of new firms in U.S. manufacturing sectors during 2004–2012. I examine the variations in Marshallian factors across MSAs and across counties within MSAs. My findings support the existence of Marshallian agglomeration forces: input sharing, labor market pooling, and knowledge spillovers, with input–output linkages particularly important. I then examine the variations in Marshallian factors across regions and find regional differences are not very strong. In addition, large-sized firms appear to be more responsive to a supplier-customer relationship. Moreover, my empirical results provide evidence that firms in highly concentrated industries react more to input linkage and labor pooling.     

Maquiladoras and U.S.‐Bound Migration in Central Mexico

Over the past one and a half decades, smaller cities and nonmetropolitan areas in Mexico have attracted manufacturing plants, led by the export manufacturing sector. Maquiladoras in particular are increasingly locating their plants in such places in the “deep interior” Mexico—outside of the border states. Using 1980 and 1990 Mexican census data for 19 growth centers and 27 high‐emigration municipios (counties) in Central Mexico, this paper suggests that foreign‐owned assembly (maquiladora) jobs decentralized significantly over the 1980s, locating closer to emigrant municipios. An examination of 17 emigrant municipios in the industrialized states of Jalisco and Guanajuato found that an emigrant municipio's accessibility to maquiladora jobs, and jobs indirectly related to maquiladora growth, was positively related to its overall employment growth, which was, in turn, negatively related to its U.S. migration rate over the decade. Although the migration reduction inherent in these relationships is relatively small, it could be accelerated by U.S. and Mexican policies giving incentives for more peripheral locations of export‐oriented and other manufacturing.     

The response of U.S. regional demographics to import shocks

We analyze regional demographic responses to increased competition from Chinese imports. Treating the opening up of the Chinese economy in recent decades as an exogenous shock to the degree of trade exposure faced by U.S. regions, we find that demographic characteristics such as education level, population growth, immigrant share, and age structure, are not significantly impacted by increased Chinese trade exposure. We also discuss possible mechanisms that may explain this finding and explain why our results may differ in direction from previous studies. Specifically, our finding is consistent with a story where moving costs hamper labor mobility and significant demographic shifts do not occur even after employment falls due to trade exposure.     

The Impact of the Maquiladora Industry on U.S. Border Cities

For decades, the maquiladora industry has been a major economic engine along the U.S.–Mexico border. Since the 1970s, researchers have analyzed how the maquiladora industry affects cities along both sides of the border. Hanson produced the first comprehensive study on the impact of the maquiladoras on U.S. border cities, considering the effects of in‐bond plants on both employment and wages. His estimates became useful rules of thumb for the entire U.S.–Mexico border; however, they have become dated. Using Hanson's framework, we estimate the maquiladora industry impact on U.S. border cities from 1990 to 2006. We find that a 10 percent increase in maquiladora production leads to a 0.5 to 0.9 percent increase in employment. We also find large differences among individual border cities. Furthermore, we estimate the cross‐border maquiladora impacts before and after 2001 when border security begins to rise, and the global low‐wage competition intensified after China joined the World Trade Organization. Empirical results indicate that U.S. border cities are less responsive to growth in maquiladora production from 2001 to 2006 than in the earlier period; however, when looking into specific sectors, we find that U.S. border city employment in service sectors is more responsive post‐2001.     

The Regional Impact of Monetary Policy in Indonesia

This paper employs vector autoregressive (VAR) models to measure the impact of monetary policy shocks on regional output in Indonesia. We find substantial cross‐regional variation in policy responses in terms of both magnitude as well as timing. Our work adds to the existing literature by providing insights from a large developing country, viz. Indonesia, where monetary policy has both a national and a regional dimension. The results support previous findings that the differential regional effects of monetary policy are significantly related to sectoral composition (especially the share of manufacturing), providing evidence for the relevance of the interest rate channel of monetary policy. We also find that firm size contributes to these differences, providing evidence for the importance of the credit channel. As a whole, both types of channels appear to operate simultaneously in the decentralized Indonesian monetary policy and to impact on the real part of the regional economy.     

The Impact of Trade Liberalization on Regional Disparities in Mexico

After a long period of industrialization based on import substitution (ISI), Mexico started to open up its economy by accessing the General Agreement on Tariffs and Trade (GATT) in 1986. The export‐promotion strategy was transformed into one of regional integration with the signing of the North American Free Trade Agreement (NAFTA) in 1994. The paper explores the impact of the opening of the economy on regional disparities in Mexico using σ and β‐convergence analyses. Four different samples have been employed to control for possible data bias linked to the inclusion of oil‐producing and maquiladora‐based states. The results show that whereas the final stages of the ISI period were dominated by convergence trends, trade liberalization (GATT) and economic integration (NAFTA) have led to divergence. In particular, the NAFTA period is related to divergence regardless of the type of analysis chosen and the sample used.     

Interregional Spillovers in Regional Impact Assessment: New Mexico,Texas, and the Supreme Court

ABSTRACT Input-output models are frequently used to estimate impacts, benefits or damages from some event. These analytic models and the questions they are designed to answer are usually based on political definitions of regions. However the true impacts propagate according to the actual spatial pattern of the regional economy. Because of the divergence between the political regions used for analysis and the economic regions on the ground, the economic impacts which spill over political boundaries can sometimes become analytically important. This paper applies these concepts to a case study of allocating irrigation water from the Pecos River in Texas and New Mexico. The U.S. Supreme Court has ruled that New Mexico used water belonging to Texas. Our analysis suggests that the spillover benefits to Texas from New Mexico's use of the water might equal or exceed the benefits which Texas would have gotten from using the water itself. Texas might be better off because New Mexico took its water.     

Research and development intensive clusters and regional competitiveness

Modern cluster theory provides reasons for positive external effects that accrue from the interaction of spatially proximate firms operating in common and related fields of economic activity. In this paper, we examine the impact of R&D-intensive clusters as a key factor of regional competitiveness on productivity growth. In relying on a hybrid approach of cluster identification, we examine effects of cluster specialization and diversity for a panel of German NUTS-3 regions in 2003–2019. After controlling for regional characteristics and unobserved heterogeneity, a robust cluster strength effect (i.e., specialization) on productivity growth is found within the context of conditional convergence across German regions. With regard to the underlying mechanisms, we find that the presence of multiple R&D-intensive clusters in specific technological fields is most strongly linked to higher levels of regional productivity growth. We also find that advantages from cluster specialization are strongest in key industrial sector such as automobile production, machinery, chemical and pharmaceutical products. Overall, our estimates particularly highlight the working of Marshallian externalities in productivity dynamics, while Jacobs-type spillovers tend to be partially realized. These findings indicate that some but not all cluster-based regional development strategies are promising policy tools to foster regional growth processes.     

Air Passenger Transportation and Growth in the U.S. Urban System, 1950–1987

The relationship between transportation and urbanization at the national scale is revisited by focusing upon the role that air passenger transportation has played in the post-war evolution of the U.S. urban system. Theory suggests that major transportation innovations have exhibited profound and prolonged interdependencies with patterns of growth in national or regional urban systems. As the most recent major intercity transportation innovation, it should be expected that utilization of air transportation should bear some relationship to patterns of growth in urban places. This paper documents this relationship by using FAA and U.S. Census data to correlate volumes of air passenger flows per capita with changes in population and employment for the 50 largest U.S. metropolitan areas. The expectation that higher volumes of air passenger flow per capita exhibit a positive correlation with both previous and subsequent growth is confirmed by the analysis. More detailed examination of both high and low air passenger index cities suggests functional and regional consistencies with the central hypothesis. The implications of these results for air transportation and airport planning include at least some justification for increased attention to provision of air service and adequate airport infrastructure as well as reiteration of the importance of air transportation in economic development.     

The Changing Regional Structure of the U.S. Economy

This paper utilizes newly available industry-specific historical measures of Gross Regional Product to highlight the changing regional structure of the U.S. economy between 1963 and 1986. During this period, the percentage of U.S. output produced in the eight different regions changed significantly. The largest changes occurred in the Great Lakes (?3.65 percent), Mideast (?3.32 percent), and Southeast (+3.64 percent). Four major industry sectors (Agriculture, Mining, Construction, and Government) declined in relative importance in all eight regions. Five major industry sectors (TCPU, Retail Trade, Wholesale Trade, FIRE, and Services) expanded in relative importance. Somewhat surprisingly, Manufacturing output expanded for the U.S. as a whole and for six of the eight regions. The perception of decline in the relative importance of manufacturing in the U.S. is clearly based on the dramatic declines in the once dominant manufacturing base of the Mideast and Great Lakes regions.     

U.S. Commuting Networks and Economic Growth: Measurement and Implications for Spatial Policy

Labor market areas (LMAs) have long been a staple of regional and urban analysis. As commuting patterns have expanded over time, these areas have become larger and more complex, and the dichotomous designation of a county either belonging to an LMA or not may no longer be adequate. We apply recent advances in network science to conduct a more refined analysis of U.S. commuting patterns, and examine their effects on local economic growth. Results show that network degree and entropy measures explain variations in county per capita income growth patterns. Higher in‐ and out‐commuting entropies are associated with lower per capita income growth, but their interaction enhances economic growth in places simultaneously open to both in‐ and out‐commuters. Using these results, common ground may be found for creating new forms of regional governance that better reflect local realities of cross‐county border flows of workers and economic activity.     

U.S. Farm Wages and Labor Market Efficiency

This study examines convergence in real wages for hired farm labor in the U.S. agricultural sector over the period 1978‐92,using the ‘average farm’ in each county as an observation. Convergence is investigated at the aggregate (or the entire U.S. level)and regional levels. Evidence supports convergence with a slower rate at the aggregate level than that at the regional level. Suggested by the evidence is the possibility that absolute benefits of wage equalization across states are ‘contagious’—that one state's successful investment raises productivity and factor payments in neighboring states and that agricultural labor markets are efficient and integrated all over the country.     

Labor and the Geographic Reorganization of Container Shipping in the U.S.

The globalization of production and the geographic dispersion of economic activity have elevated the importance of the transportation and logistics sectors of the economy. One sector in particular that has experienced significant expansion is maritime transport and container shipping. As the cargo has become increasingly “discretionary” such that it can conceivably be transported through any port that allows intermodal access to the hinterland, the industry has become much more foot‐loose vis‐à‐vis a particular port of entry. The enhanced mobility of the cargo results in more intense port competition. One particular place to observe and study this dynamic is in the port and terminal selection of shippers and shipping lines and the role of port authorities in attempting to attract these carriers to their facilities. In this paper, the focus is on the role of labor and labor relations in such decisions. These issues will be studied in the context of the potential container traffic rerouting from the West to the East Coast of the U.S. and, as an illustrative case study, how these developments have played out for the East Coast port of Jacksonville, Florida.     

Fluctuations and Downturns in a “Company Town”

ABSTRACT A semi-structural VAR time-series model was used to examine movements in Flint Metropolitan Statistical Area (MSA) employment levels and determine how area employment was affected by movements in different sectors of the U.S. economy. Flint was chosen because in 1958 over 50 percent of the area's population was employed by the transportation industry, the majority in automobile production, and therefore Flint should be considered as a company town prototype for this modeling technique. Due to the dependency of this area's employment base on the automotive industry and the highly volatile nature of area employment levels, the Choleski decomposition was used instead of the structural Bernanke method. It was found that the effects of movements in the automotive industry were a major impact on aggregate area employment as well as on virtually all manufacturing sectors. These results are more robust than those for the Detroit Metropolitan Statistical Area (PSA) ¹ 1 As found in Rushen (1993).
. This is due primarily to Flint's greater degree of area dependency on the automotive-industry.     

A Note on Localization and Specialization

ABSTRACT Analysts and policy makers frequently measure industrial localization and regional specialization. However, they rarely examine the nation's full array of industries or regions. So local indices, appropriate for specific industries or selected regions, are typically estimated. But in some instances global indices would be preferable in order to assess the wider features of the entire space‐economy. This article constructs global indices from the local indices already used in assessing localization and specialization. Global localization and global specialization are shown to be identical when all local indices use the dissimilarity logic. Two‐digit standard industry codes manufacturing data, taken from the U.S. during 1958–1995, are used to illustrate the results. The values of these global coefficients, like their local constituents, are shown to vary with geographic scale. The discussion addresses spatial distributions (evenness) but not geographic arrangements (clustering).     

State Characteristics and the Locational Choice of Foreign Direct Investment: Evidence from Regional FDI in Mexico 1989–2006

ABSTRACT Despite the growing importance of foreign direct investment (FDI) in the Mexican economy, statistical evidence on the determinants of the regional distribution of foreign‐owned firms is seriously limited. In this paper, empirical findings are presented from a variety of econometric models that identify several regional characteristics influencing the locational choice of FDI. The main findings are threefold. First, several locational factors appear to be potentially important; these include regional demand, wages, schooling, infrastructure, and agglomeration economies. Second, the effect of agglomeration economies stems from several sources. In particular, the regional presence of agglomerations of manufacturing activity and of foreign‐owned manufacturing firms both have an independent positive effect on the locational decision of new FDI. Third, the locational process of maquiladora firms differs from the locational process of overall FDI. The actual findings suggest that regional demand and infrastructure, as suggested above, are not important locational factors for export‐oriented firms. Furthermore, whereas agglomeration economies from manufacturing and the presence of existing FDI attract new maquiladora investment, the presence of a regional agglomeration of services deters the location of new maquiladora firms. Finally, agglomeration economies appear to be more important in the locational process of maquiladora firms.     

Poverty,Innovation Capacity,and State Economic Development in the Knowledge Economy: Evidence from the U.S.

We examine poverty's effect in two ways. First, we study the relationship between poverty and capacity for innovation in the U.S. states; second, we study the combined effects of poverty and innovation capacity on U.S. state economic output and employment. Because many of the relationships among poverty, innovation capacity and economic performance are simultaneous, we employ the Arellano Bond Difference GMM estimator to estimate various models using panel data (1980–1999). The findings reveal a negative indirect effect of socio‐economic need (poverty) on human and U.S. state and local financial innovation capacity, though there is no empirical link between poverty and federal financial capacity. We find no statistically significant evidence of the contemporaneous effect of poverty on state economic performance, holding innovation capacity constant. This suggests that poverty primarily affects state economic performance indirectly through reduction of innovation capacity. Overall, our findings suggest that U.S. officials ought to be concerned about the role poverty plays in diminishing their state economies' capacity to innovate.     

Income Migration and Income Convergence across U.S. States, 1995–2010

In this paper we examine how internal migration redistributes earned income across U.S. states between 1995 and 2010. We examine interregional income flows by first describing the movement of earned income between U.S. states. Second, we examine the effect of income migration on spatial patterns of income inequality. The question we ask is, “does migration increase or decrease convergence income across U.S. States?” A primary contribution of this paper is that instead of using only 1 year of income migration data to explore these issues, we use yearly data from the first year the Internal Revenue Service (IRS) data started including income (1995/1996) up to the most current data available (2009/2010). Results indicate that income convergence/divergence across states varies by whether or not there is general economic expansion or contraction. Nevertheless, some high‐amenity states continually attract high‐income households.     

Globalization and Regional Change in the U.S. Furniture Industry

ABSTRACT Furniture manufacturing has experienced rapid globalization in recent years. This is mainly the result of global production networks established by large manufacturers and retailers seeking to reduce costs in a highly competitive environment. The industry's globalization has been facilitated by technological innovations and the global reduction of trade and investment barriers. In the U.S., furniture‐producing regions are experiencing tumultuous change. Growing numbers of firms are outsourcing production to China, which is now responsible for about half of all U.S. furniture imports. Employment levels have plummeted. However, an analysis of spatial patterns of employment, output, and capital investment in U.S. furniture manufacturing shows that regional change is not uniform. Southern regions characterized by larger firms specializing in wooden case goods production have been especially vulnerable to job loss.     

Great Recession and club convergence in Europe: A cross-country,cross-region panel analysis (2000–2015)

The paper aims at investigating the impact of the Great Recession on per capita GDP convergence process across European regions and countries. Using the time-varying factor model developed by Phillips and Sul for the period 2000–2015 and two different merging procedures to identify clubs, we provide evidence of the diverging impact of the Great Recession “between” the higher and the lower convergence clubs at both regional and country levels as well as of the strengthening of the convergence process “within” most clubs. In addition, we add further evidence to the common belief of a “multi-speed” Europe by contrasting Eastern European countries' and regions' behavior vis-à-vis original European members' one, and by identifying the factors that affect club membership and resilience to the recent economic downturn. We find that the membership in the higher clubs and resilience to the Great Recession are positively affected by the presence of several local-specific factors and macroeconomic characteristics.