Colocation of Production and Innovation: Evidence from the United States

Manufacturers perform the majority of US patenting and R&D. The decades-long decline of US manufacturing employment raises concerns that US innovation will falter. We investigate the relationship between between physical production and innovation by constructing a new dataset linking all US firms and their establishments to location geocodes and innovative activities. Pre- liminary results indicate that while firms with both manufacturing and innovation establishments exhibit higher patenting when these facilities are more spatially proximate, manufacturing firms’ overall contribution to US innovation declines steadily and substantially over time. Moreover, cohorts of firms permanently exiting manufacturing in the 1990s and 2000s continue to patent at their prior pace.