Manufacturing Location: The Impact of Human Capital Stocks and Flows

Abstract

National attention has been focused on the importance of education to rural economic development by several recent studies. Manufacturing location and employment growth studies, however, have presented conflicting evidence about the relationship between human capital and local economic development. While insight into this relationship holds important education policy implications for all levels of government, it is particularly critical for rural governments as rural communities attempt to stabilize and strengthen their economic bases. This paper reports the results of a manufacturing firm location study that incorporated measures for both human capital stocks and flows into a statistical model of community attributes that were hypothesized to influence firm location decisions. The results indicate the complexity of evaluating the impact of human capital investment on local or regional economic growth. Given the significance of the human factors to the location decisions of firms, it is surprising that so little attention has been given to these issues.