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Manufacturing Transition in Local Economies: A Regional Adjustment Model

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  • Brown, Jason P.
  • Lambert, Dayton M.
  • Florax, Raymond J.G.M.

Abstract

This paper addresses changes in capital formation by testing the importance of location factors with respect to the rate of establishment births and deaths in U.S. manufacturing, 2000–2004. A theoretical concept called “localized creative destruction” is tested as a mechanism to explain the dynamics impacting the spatial distribution of manufacturing establishment birth and death rates. While no support of this process was found, results identify a convergence process occurring where counties with high initial birth/death rates have smaller changes in firm birth and death rates. The interpretation is that counties become more equally competitive in terms of firm formation dynamics in lieu of successful counties increasing their lead in the short run. This is potentially relevant to policymakers and economic development practitioners who are concerned with business retention and the impact of new manufacturing establishments on their existing base.

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File URL: http://purl.umn.edu/61130
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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 61130.

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Date of creation: Apr 2010
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Handle: RePEc:ags:aaea10:61130

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Related research

Keywords: location determinants; manufacturing; adjustment models; Community/Rural/Urban Development; L60; R11; R12;

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  1. Paulo Guimaraes & Octávio Figueiredo & Douglas Woodward, 2004. "Industrial Location Modeling: Extending the Random Utility Framework," Journal of Regional Science, Wiley Blackwell, vol. 44(1), pages 1-20.
  2. Henri L.F. de Groot & Jacques Poot & Martijn J. Smit, 2007. "Agglomeration, Innovation and Regional Development: Theoretical Perspectives and Meta-Analysis," Tinbergen Institute Discussion Papers 07-079/3, Tinbergen Institute.
  3. Thomas de Graaff & Raymond J.C.M. Florax & Peter Nijkamp & Aura Reggiani, 2001. "A General Misspecification Test for Spatial Regression Models: Dependence, Heterogeneity, and Nonlinearity," Journal of Regional Science, Wiley Blackwell, vol. 41(2), pages 255-276.
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