GEOGRAPHIC CONCENTRATION IN US MANUFACTURING-INDUSTRIES - A DARTBOARDAPPROACH

This paper discusses the prevalence of Silicon Valley-style localizati ons of individual manufacturing industries in the United States. A mod el in which localized industry-specific spillovers, natural advantages , and pure random chance all contribute to geographic concentration is used to develop a test for whether observed levels of concentration a re greater than would be expected to arise randomly and to motivate ne w indices of geographic concentration and of coagglomeration. The prop osed indices control for differences in the size distribution of plant s and for differences in the size of the geographic areas for which da ta are available. As a consequence, comparisons of the degree of geogr aphic concentration across industries can be made with more confidence . Our empirical results provide a strong reaffirmation of the previous wisdom in that we find almost all industries to be somewhat localized . In many industries, however, the degree of localization is slight. W e explore the nature of agglomerative forces in describing patterns of concentration, the geographic scope of localization, and the coagglom eration of related industries and of industries with strong upstream-d ownstream ties.