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

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.