Empirical evaluation of factors influencing location decisions of manufacturing firms in rural Maryland: A case study of the lower eastern shore

Most government rural development policy makers have tried to design industrial location policies to address the issue of regional economic imbalance. However, such policies are devised without a strong base of empirical studies about factors that influence industrial location. This study is an attempt to empirically study factors that influence location decisions of manufacturing firms. It first reviews previous studies and exposes common methodological problems and theoretical weakness they confronted. By pulling together literature from industrial location and local development studies, it develops and applies an analytical framework for evaluating industrial location factors. Next, it conducts a survey of 167 manufacturing to study factors that enter into their location decisions using logit analysis technique. Finally, it evaluates the potentials of the study area in attracting and maintaining manufacturing. The findings indicate that both economic and non-economic factors play important roles in the location decisions of manufacturing. Important factors are skilled labor, government incentives, community attitude toward industry, space for expansion, transportation, crime, personal preferences, quality-of-life, raw materials, and firm size, and, are also significant factors determining distribution of industries in the study area. The findings support a conceptual framework of linkage between plant location factors and rural development. The implication for industrial development and possible policy recommendations are suggested to county economic development agents.