This paper discusses the prevalence of Silicon Valley-style localizations of individual manufacturing industries in the United States Several models in which firms choose locations by throwing darts at a map are used to test whether the degree of localization is greater than would be expected to arise randomly and to motivate a new index of geographic concentration The proposed index controls for differences in the size distribution of plants and for differences in the size of the geographic areas for which data is available As a consequence, comparisons of the degree of geographic concentration across industries can be made with more confidence We reaffirm previous observations in finding that almost all industries are localized, although the degree of localization appears to be slight in about half of the industries in our sample We explore the nature of agglomerative forces in describing patterns of concentration, the geographic scope of localization, and the extent to which agglomerations involve plants in similar as opposed to identical industries

Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach

Multinationals, multi-plant economies, and the gains from trade

This degree of geographic concentration of individual manufacturing industries in the US has declined only slightly in the last twenty years At the same time, new plant births, plant expansions, contractions and closures have shifted large quantities of employment across plants, firms and locations This paper uses data from the Census Bureau's Longitudinal Research Database to examine how relatively stable levels of geographic concentration emerge from this dynamic process While industries agglomeration levels tend to remain fairly constant we find that there is a greater variation in the locations of these agglomerations We then decompose aggregate concentration changes into portions attributable to plant births, expansions, contractions, and closures, and find that the location choices of new firms and differences in growth rates have played the most significant role in reducing levels of geographic concentration, while plant closures have tended to reinforce agglomeration Finally, we look at coagglomeration patterns to test three of Marshall's theories of industry agglomeration: (1) agglomeration saves transport costs by proximity to input suppliers or final consumers, (2) agglomeration allows for labor market pooling, and (3) agglomeration facilitates intellectual spillovers While there is some truth behind all three theories, we find that industrial location is far more driven by labor mix than by any of the other explanatory variables

Geographic Concentration as a Dynamic Process

This paper uses data from the Census Bureau's Longitudinal Research Database to describe the dynamics of geographic concentration in U.S. manufacturing industries. Agglomeration results from a combination of the mean reversion and randomness in the growth of state-industry employment. Although industries' agglomeration levels have declined only slightly over the last quarter century, we find a great deal of movement for many geographically concentrated industries. We decompose aggregate concentration changes into portions attributable to plant births, expansions, contractions, and closures. We find that the location choices of new firms play a deagglomerating role, whereas plant closures have tended to reinforce agglomeration.

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In the context of economic reforms in general and subsequent wave of M&A in particular, this paper attempts to examine the impact of M&A on the export competitiveness of firms in the Indian manufacturing sector. By using a panel dataset of 33 industries from the period of 2000-01 to 2007-08, it is found that, the wave of M&A has enhanced the export competitive- ness of firms. The industries with larger number of M&A have greater penetration in the inter - national market. The other factors that have significantly contributed to export competitive - ness include the presence of MNCs and import of foreign technology. Export competiveness is higher in the industries that have larger presence of MNCs and greater foreign technology purchase intensity. On the other hand, industries with higher capital intensity or greater selling efforts by firms have limited penetration in the international market. However, this paper did not find any significant influence of market concentration, competition from imports, in-house efforts, or profitability on export competitiveness of firms. Therefore, the findings from this paper have important policy implications in relation to the regulation of M&A and entry of MNCs as well as the import of capital goods.

/pdf/mergers-acquisitions-and-export-competitive-ness-experience-mp7be9esbq.pdf

Mergers, Acquisitions and Export Competitive- ness: Experience of Indian Manufacturing Sector

Why should manufacturing firms in many national industries maintain multiple small scale plants when they might produce the same output at a lower unit cost in a single large establishment? What specific benefits are attained through the operation of multiple plants? To address these questions, the authors conducted 125 in-depth interviews with businessmen actively involved in plant size and multi-plant operating decisions. They investigated the experience of twelve industries in six countries (West Germany, France, the United Kingdom, Sweden, Canada, and the United States).The authors develop an economic theory of plant size and multi-plant decisions and apply it to analyze the statistical and qualitative evidence on factors affecting plant size choices. They then examine the extent of multi-plant operation, its statistical correlate, and the economy actually or potentially realizable from various modes of multi-plant operation. Implications are drawn from antitrust and foreign trade policy, the evolution of scientific business management, and the development of industrial organization knowledge.

Dennis R. Murphy

Papers

The economics of multi-plant operation : an international comparisons study