Local Economies and Economic Growth, Does Location Matter? A Spatial Analysis in the Great Lakes Region

We examine the growth rates of county per capita personal income in the ve-state region of the Great Lakes using data between 2010 and 2018. Our analysis reveals a clustering of slow-growing counties mostly in Illinois and relatively fast-growing counties in Indiana, Michigan, Ohio, and Wisconsin. Using spatial regressions, we nd evidence suggesting relatively low levels of human capital and innovation drive growth in the initial period of expansion, whereas high levels of human capital and a business environment conducive to entrepreneurship drive growth towards full employment. Location of counties does matter for income growth. Between 2016 and 2018, we nd signicant negative spillover eects of Some College on local growth while business conditions conducive to entrepreneurs had positive spillover eects. Our results imply that there is value to a regional approach to economic development policy, coordinating local policies across independent, adjacent jurisdictions.