Federal Investments and Economic Stimulus at the End of the Cold War: The Influence of Federal Installations on Employment Growth, 1970–1990

A growing body of evidence points toward the distinctiveness of the state's political and military policies and of the impact of these policies on economic processes. Regional scientists have been stressing the importance of new industrial districts, with an emphasis on interfirm relationships and the regional economy in which firms are embedded. In this paper, we document the state's role in regional growth and offer a reminder of the external and political actors which have influenced growth of industrial districts. We have acquired information from the US General Services Administration on each piece of property owned by the United States, including data on the agency controlling the installation and the functions performed at this location. Our examination of employment growth from 1970 to 1990 provides evidence that federal installations did stimulate growth in the regions in which they were located. More specifically, we find that NASA installations and the military's industrial facilities exerted a positive influence on employment growth over the period. However, despite the large budgets commanded by Department of Energy installations and their highly educated labor force, we found that the Department of Energy installations inhibited employment growth.