Can Industrial R&D Survive the Decline of Production Activity: A Case Study of the Chicago Area

By distinguishing industrial R&D from manufacturing production, this study identifies a local economy's comparative advantage by activity rather than by product. The Chicago area's comparative advantage has shifted away from production and toward R&D activity during the 1976 to 1985 period. Underlying the Chicago area's overall manufacturing decline, those Chicago area R&D activities associated with its mainstay industries have survived and grown. The product cycle paradigm provides a behavioral framework with which to interpret the underlying revival in R&D activity. Production activities have moved away in search of low-cost environments while attendant R&D facilities have continued to display an attraction for Chicago's urban resources. So too, Chicago's past development has left a legacy of technological infrastructure, which some outside industries have found attractive in locating their R&D facilities.