Regional Industrial Structure Concentration in the United States: Trends and Implications

Abstract

In a seminal article, Chinitz (1961) considered the effects of industry size, structure, and economic diversification on the performance of firms and regional economies. His inquiry suggested a related but conceptually distinct issue: how does the extent to which a regional industry or industrial sector is concentrated in a small number of firms affect the local performance of that industry? The question has not been addressed systematically in empirical research other than case studies, principally because accurately measuring regional concentration requires firm‐level information. This exploratory study uses confidential plant‐level data to gauge concentration in manufacturing industries at the regional scale across the continental United States, to explore changes over time in geographic patterns of concentration, and to investigate associations between regional industrial structure concentration and changes in employment. The implications for understanding the impacts of regional industrial structure on economic development processes are discussed.

The Influence of Multiple Specializations on Economic Performance in U.S. Metropolitan Areas

“…Glaeser et al [3] measured specialization using a location quotient, and showed a negative effect of specialization on employment growth. Similarly, it is revealed that regional industrial dominance of the manufacturing sector is negatively associated with employment growth in the U.S. metro areas [24]. In contrast, using a location quotient to measure specialization, Shuai [15] found that specialization has a positive effect on the employment growth of major sectors in Virginia.…”

“…The Herfindahl index, introduced and developed by Herfindahl [47] and Hirschman [48], has been widely applied in the field of industrial economics to measure market concentration [49]. This index has also been used by researchers (for example, Drucker [24], Izraeli and Murphy [25] and Mizuno et al [50]) to measure the level of specialization. The Herfindahl index is defined as:…”

“…While regional industrial specialization may possibly reduce a region's flexibility to react to economic changing conditions [24], the diversity is generally believed to promote economic stability. According to McLaughlin [36], because industrial sectors in a region usually have different patterns of seasonal or cyclical fluctuations, the downturn of one sector can be compensated by the upturn of other sectors in the same region, resulting in low variation in regional economy.…”

“…Often, specialization and diversity were treated as exact opposites. One indicator was used to measure both specialization and diversity, assuming increasing in one means decreasing in the other [23][24][25]. In reality, being specialized does not mean lack of diversity.…”

Demand pull or supply push? Metro-level analysis of start-ups in the United States

“…First, Losch (1954) deeply examined localization economies, which are external to a firm but internal to an industry within a geographical region. Second, Chinitz (1961) added the importance of industrial structure and dominance, which sparked a series of studies to test the effect on aggregate regional growth of the region's average firm size (Drucker, 2011;Drucker & Feser, 2012;Evans, 1986;Norton, 1992) and the diversity of regional industries (Glaeser, Kallal, Scheinkman, & Shleifer, 1992;Henderson, 1986Henderson, , 2003. These studies of localization economies have led to the continuing interest in industry clusters as the major focus of local economic development practice in the United States (Porter, 1998).…”