State economic growth and international export orientation

Abstract

This paper examines the relationship between the degree of state international export orientation and US state industrial growth rates. Both export orientation variables as well as domestic factors were used to analyse the extent of their effect on state industrial growth from 1977 to 1987. The results indicate that state export promotion expenditures were not significant in influencing domestic employment growth, while the variable was negatively correlated with export employment growth. However, a high proportion of exports to total shipments in the initial year, was significant in explaining state industrial growth rates. An important result was that states exporting to growing regions experienced higher growth rates, indicating that world demand influences state economic growth. Furthermore, the domestic market potential had a strong positive influence on all measures of growth including the export sector, providing support for the notion that US economic growth is largely driven by the domestic market. A surprising result was that relative capital endowment was not significantly correlated with growth in the export sector, while it was negatively correlated with domestic and total employment growth rates.