Making sense of the manufacturing belt: determinants of U.S. industrial location, 1880–1920

Abstract

This article investigates industrial location in the USA around the turn of the 20th century using a model which subsumes both market-potential and factor-endowment arguments. The results show that market potential was central to the existence of the manufacturing belt, that it mattered more than factor endowments, and that its impact came through interactions both with scale economies and with linkage effects. Market potential was generally much higher for states in the manufacturing belt. Natural advantage played a role in industrial location decisions in the late 19th century but its importance then faded away.