Bottom-Up Convergence? Explaining Uneven Income Growth in the New South

Abstract

abstract: The southeastern United States has experienced rapid economic and population growth relative to the stagnation and decline of established manufacturing regions. The Rust Belt-Sun Belt literature has relied on a range of factors to explain southern growth (e.g., low wages, regional amenities, technological advances, market proximity, and the Civil Rights Movement). More recent work has cast growth in terms of bottom-up convergence and providing a conceptual framework consistent with the region's experience as the recipient of northern capital seeking a low-cost region. Within the region, uneven development remains. While the neoclassical framework can explain regional capital inflows, questions remain regarding how local and spatial contexts influence the trajectories of individual southern economies. To address these issues, this paper utilizes a conditional convergence model to explain southeastern county-level growth from 1990 to 2018 to understand how the balance of neoclassical processes and localized factors have affected the region's growth. Results highlight a transition away from low-cost manufacturing toward an increased importance of new, knowledge economy sectors. While new economy sectors are identified as significant drivers, results also suggest future challenges for sustained growth due to a suburbanized growth pattern, weak spillover effects, and a lack of urbanization economies.