History and Industry Location: The Case of the Manufacturing Belt

Path dependence in economic geography is illustrated by describing a particular historical example, the persistence of the US manufacturing belt, and a simple model that helps make sense of this example. A core-periphery pattern like that of industrial America emerges from the interaction of increasing returns, transportation costs, and demand. During the 2nd half of the 19th century, manufacturing economies of scale increased, transportation costs fell, and the share of the population in nonagricultural occupations rose. The result was that the initial advantage of the manufacturing belt was solidified. For 3/4 of a century, the pull of the established manufactured areas was strong enough to keep the manufacturing core virtually intact. The history of manufacturing location is significant in relation to the US economy in general, suggesting that increasing returns and cumulative processes are pervasive and give an often decisive role to historical accident.