Do knowledge spillovers contribute to U.S. state output and growth?

Article Abstract:

A study examined the impact of interindustry and interstate knowledge spillovers on comparative advantage throughout the US states. It also aimed to determine the role of knowledge spillovers in the output and growth of the manufacturing industries in different states. These goals are achieved by formulating a technique for monitoring knowledge spillovers within the output equations of the Heckscher-Ohlin trade model, using the Heckscher-Ohlin model to the identification of intranational spillovers in the US, and developing patent stock measures of state knowledge endowments. Empirical analysis demonstrates that interstate knowledge spillovers have a significant effect on state output and growth in the manufacturing sector. These interstate spillovers are sufficiently powerful to lead to a reversal in the comparative advantage described by the Heckscher-Ohlin model. Interindustry spillovers were not found to have a major impact.

Regional economics, Patents, Diffusion of innovations, Technology transfer

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Regional competition for domestic and foreign investment: evidence from state development expenditures

Article Abstract:

A model that describes the spending patterns of state governments is presented. This model suggests that spending behavior by states is aimed at generating capital to optimize the local net wage. Empirical results provide strong evidence to two ideas regarding state expenditure. One is that state expenditure per head is displaying a downward pattern in the state wage level. On the other hand, it is also shown that state expenditure per head is rising in the manufacturing employment share. This means that states tend to spend less on economic development as the state wage level improves but expend more on industrial development as the manufacturing share in the state labor force improves. The data also reveal two major trends in spending. Certain states actively attract and retain capital while others are not actively involved in development spending, but are comparatively active in directly attracting foreign investment.

Models, Foreign investments, Competition (Economics)

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Does state economic development spending increase manufacturing employment?

Article Abstract:

Several studies have examined the factors that affect the growth of an industrial sector in a particular state but have largely ignored the impact of the state development agency. Given the substantial spending of states on these agencies, this gap in the literature should be filled. For this purpose, a study was conducted to examine the effect of state economic development spending. Findings of this investigation revealed that state economic development expenditure indeed influences the growth of the state's manufacturing sector. The regression results gave an empirical basis to a model where capital is sector specific, which contrasts with an alternative model where capital moves between two sectors. The result is robust to several alternative specifications of the ancillary variables.

Economic aspects, Employment, State budgets

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