The Birth, Death, and Persistence of Firms: Creative Destruction and the Spatial Distribution of U.S. Manufacturing Establishments, 2000-2006

• Published in: Economic geography 2013-07, Vol.89 (3), p.203-226
• Main Authors: Brown, Jason P., Lambert, Dayton M., Florax, Raymond J. G. M.
• Format: Article
• Language: English
• Subjects: 21st century; Bgi / Prodig; Birth; Childbirth & labor; Companies; Death; Death & dying; Destruction; Economic models; Enterprises; Geography; Geography of industry and energy; Human geography; Industrialization, industrial space; L60; location; location factors; Manufacturers; Manufacturing; Manufacturing industry; Mortality; partial adjustment model; R11; R12; Spatial analysis; Spatial distribution; Studies; U.S.A
• ISSN: 0013-0095; 1944-8287
• DOI: 10.1111/ecge.12014

This article deals with the dynamics of the U.S. manufacturing sector, analyzing the birth, death, and ongoing existence of firms in the beginning of the twenty-first century. Schumpeter's notion of creative destruction is hypothesized to explain the spatiotemporal dynamics of the distribution of manufacturing establishments. We implemented a partial adjustment model that accounts for spillover effects between counties, unknown forms of heteroskedasticity, and spatial autocorrelation. The steady-state equilibrium birth and death rates converged to 6.8 percent and 6.1 percent per year, respectively, during the 2000-06 period. We found that firm birth and death were not decisively affected by a creative destruction process during that period, but firm birth and death positively affect the survival (or persistence) rate of single-unit manufacturing firms.