Indiana's Export Base: A Comparison of Export Industries Across Indiana's Metropolitan Statistical Areas

Abstract

Historically Indiana has been known as a rust belt state heavily influenced by manufacturing. Many of those manufacturing jobs disappeared in the 1950’s and 1960’s, with the intensity of job losses increasing dramatically during the late 1970’s and early 1980’s. During those years of deindustrialization, some researchers argued that Indiana’s export base had changed away from manufacturing towards exportable services, for example, health care. Most of the evidence to support these claims has been anecdotal, however. This study uses the location quotient method to estimate export employment in Indiana’s metropolitan statistical areas. The location quotient is calculated as the ratio of the percentage of local employment in a given industry to the percentage of national employment in that industry. Location quotients larger than one imply some part of local production is going outside the local area. For example, a location quotient of 1.5 would suggest that one-third (0.5/1.5) of local employment is related to goods or services sold to consumers outside the local area. The location quotient results indicate that manufacturing still plays a critical role in Indiana with manufacturing exports accounting for more than 50% of all export related jobs. Nonetheless, in some MSAs exportable services such health care, accounting, finance, etc., as well as exportable retail activities such as, department stores, restaurant, etc. have become increasingly important sources of export employment.