Beyond Local and Traded: Evidence for a Third Industry Market Area Type and Implications for Regional Economic Development

Abstract

Geographers, economists, and urban planners have long distinguished between “local” industries that serve geographically proximate customers and “traded” industries that serve customers around the country or across the globe. This study uses newly developed, high-quality data to provide evidence of a third major industry market area type, which the authors term “regional” industries. Regional industries serve market areas larger than a U.S. county and smaller than a state, with employment found in most metropolitan areas, but spatially concentrated within each metro area. Paradigmatic regional industries include business-to-business services, like facilities maintenance and logistics, and some types of manufacturing, like craft brewing. Regional industries have a distinct economic profile: their customers are often other businesses rather than consumers, they pay higher average wages than local industries, and they offer more entrepreneurship opportunities than traded industries. In total, regional industries accounted for an estimated 31% of U.S. employment and 33% of gross domestic product in 2021.