Investment and Disinvestment in New York, 1960-80

Job loss and plant closings have, until recently, been considered part of the inevitable cycle adjustments of economic growth. Since the late 1970s, however, a multifaceted debate has developed relating to the possible permanence of industrial decline in the American Northeast. Postindustrial and product life-cycle theories maintain an optimistic perspective predicting offsetting job gains in new sectors; while capital mobility theory predicts accelerated job loss and long-term depression. Evidence from the New York State Industrial Migration File offers little cause for optimism. Between 1960 and 1980, state job capacity declined by 200,000, a result of both an increase in disinvestment and a decrease in new investment. Contraction took place in every region and industrial sector. There is questionable evidence of compensatory expansion to offset contraction during most years as a consequence of physical changes in plant and equipment investment. Multilocal firms showed a much greater propensity to disinvest than local firms, suggesting support for capital mobility theory.