Discussion paper KDPE 1910 by Nicholas Crafts (University of Sussex) and Alexander Klein (University of Kent), December 2019.
Non-technical summary
It is well-known that patterns of regional specialization and the spatial concentration of American manufacturing industries have changed markedly over time. A standard narrative concerns the rise and fall of the manufacturing belt in the mid-19th century and second half of the 20th century, respectively. This is seen as a key aspect of a pattern of divergence followed by convergence of U.S. regions. Kim (1995) provided a much-cited quantitative account of these trends in which he maintained that the long-run pattern of spatial concentration had an inverted U-shape curve peaking in the interwar years.
In this paper we seek to re-examine and improve on these accounts. First, we take advantage of improved measurement techniques to estimate the extent of spatial concentration allowing for industrial structure and the checkerboard problem. Second, we highlight the importance of changing locations patterns within the manufacturing belt, and the propensity of manufacturing to move outside the manufacturing belt already before World War II. This leads us to a very different picture of long-run trends in spatial concentration from that which was found by Kim (1995); we do not find an inverted-U shape. Although spatial concentration fell more rapidly after World War II, a significant decrease had already taken place by 1940 in the context of an early decline in the importance of the manufacturing belt and a switch towards the mid-west within the manufacturing belt.
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