Spatial dynamics of capital formation in U.S. manufacturing
Abstract
The goal of this research is to determine the importance of location factors influencing the spatial distribution of capital formation in U.S. manufacturing. The uneven distribution of manufacturing activity across space suggests that geographical location matters. In addition, factors influencing the spatial distribution of capital formation change over time in response to changes in technology, consumer preferences and globalization. The relative importance of location factors is empirically assessed utilizing different measures for capital stock, monetary as well as establishment counts. The first essay evaluates the long-run steady state of growth factors hypothesized to influence the spatial distribution of U.S. manufacturing investment. Spatial spillovers at the state level are found to be of a competitive nature, implying that a factor that attracts more investment to a particular state is associated with lower investments in neighboring states. Investment generally flows to states with higher market demand, more productive labor, and more localized agglomeration of manufacturing activity. The second essay considers location choice in the American manufacturing industry. Counts of manufacturing establishment births at the county level are used to test a conceptual model of location factors hypothesized to impact location decisions. A new spatial econometric method consistent with existing spatial autoregressive models is developed in order to model spatial dependence in establishment births. Results demonstrate the ability of the spatial lag count model to capture spatially heterogeneous trade-offs between firms achieving internal economies of scale and sharing in localized agglomeration economies. The third essay addresses changes in capital formation by evaluating the importance of location factors on the rate of establishment birth and death in U.S. manufacturing at the county level. This essay extends previous research that has only considered factors important for attracting new manufacturing investment. The theoretical concept of “localized creative destruction” is used as a mechanism to explain the dynamics impacting the spatial distribution of manufacturing establishment birth and death rates. The analysis reveals differing impacts on establishment birth and death rates in metropolitan and non-metropolitan areas. The empirical results across the three essays show that access to product markets, agglomeration economies, skilled labor, and transportation infrastructure remain important location factors in the process of capital formation in U.S. manufacturing.
Degree
Ph.D.
Advisors
Florax, Purdue University.
Subject Area
Business administration|Economics|Regional Studies
Off-Campus Purdue Users:
To access this dissertation, please log in to our
proxy server.