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Do primary energy resources influence industry location?

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  • Jason P. Martinek
  • Michael J. Orlando

Abstract

By choosing to locate in a particular place, firms create employment opportunities for workers living there. And the wages they pay increase demand for local goods and services, creating additional job opportunities and further increasing the tax base. Consequently, state and local governments go to great lengths to encourage firms to locate within their boundaries.> In recent years, volatility in energy markets due to deregulation and events in the Middle East have increased the role that energy resource endowments may play in firm location. Thus, economic development agencies in energy producing states have highlighted their natural advantages as a way to attract and retain businesses. Yet there is scant evidence that firms base their location decisions on the availability of primary energy resources, such as coal, oil, and natural gas.> Martinek and Orlando explore the role of primary energy resources in industry location. They examine the relationship between state energy supplies and employment in energy-intensive industries and suggest there is a limited relationship between the production of primary energy resources and industry location. State energy supplies are associated with the location of only the most energy-intensive firms. In other energy-intensive industries, firm location decisions appear largely unresponsive to state energy conditions.

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Bibliographic Info

Article provided by Federal Reserve Bank of Kansas City in its journal Economic Review.

Volume (Year): (2002)
Issue (Month): Q III ()
Pages: 27-44

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Handle: RePEc:fip:fedker:y:2002:i:qiii:p:27-44:n:v.87no.3

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Keywords: Industrial location ; Natural resources ; Employment (Economic theory);

References

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  1. Alicia H. Munnell & Leah M. Cook, 1990. "How does public infrastructure affect regional economic performance?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 11-33.
  2. Hanson, G.H., 1999. "`Market Potential, Increasing Returns, and Geographic Concentration," Working Papers 439, Research Seminar in International Economics, University of Michigan.
  3. Timothy J. Bartik, 2003. "Local Economic Development Policies," Upjohn Working Papers and Journal Articles 03-91, W.E. Upjohn Institute for Employment Research.
  4. Helms, L Jay, 1985. "The Effect of State and Local Taxes on Economic Growth: A Time Series-Cross Section Approach," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 574-82, November.
  5. Michael J. Orlando, 2000. "On the importance of geographic and technological proximity for R&D spillovers : an empirical investigation," Research Working Paper RWP 00-02, Federal Reserve Bank of Kansas City.
  6. Anderson, John E. & Wassmer, Robert W., 1995. "The decision to 'bid for business': Municipal behavior in granting property tax abatements," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 739-757, December.
  7. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle.
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