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Regional Business Climate and Interstate Manufacturing Relocation Decisions

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  • Conroy, Tessa
  • Deller, Steven
  • Tsvetkova, Alexandra

Abstract

Using a panel (2000-2011) of cross-state relocation patterns of manufacturing firms from the National Establishment Time Series (NETS) database we estimate a state-to-state relocation model for all manufacturers and separately for three groups of industries defined by knowledge intensity. The analysis of the data suggests that very few manufacturing firms relocate across state lines in any given year and the vast majority of those that do are small in size and move to adjoining states. Econometric results reveal that regional determinants of relocation decisions vary by type of manufacturing firm. Whereas a number of factors considered in this study are significant in the models, estimated marginal effects at the mean are infinitesimal. This implies that states attempting to encourage manufacturing firms to relocate from other states via traditional perspectives on business climate are unlikely to be successful.

Suggested Citation

  • Conroy, Tessa & Deller, Steven & Tsvetkova, Alexandra, 2015. "Regional Business Climate and Interstate Manufacturing Relocation Decisions," MPRA Paper 66748, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:66748
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    More about this item

    Keywords

    business climate; manufacturing; firm relocation;
    All these keywords.

    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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