VARIATION IN STATE ECONOMIC-GROWTH - DECOMPOSING STATE, REGIONAL, AND NATIONAL EFFECTS

Previous research on the impact of the political system on economic conditions in the American states has assumed the dominance of endogenous factors (i.e., those unique to the states) in determining levels of economic growth. However, because state economies are interdependent and responsive to national and regional economic trends, such an assumption is unrealistic. In this paper we employ the variance components approach utilized in research on electoral nationalization by Stokes (1967) and others to decompose variance in state economic growth from 1945 to 1984 into its national, regional, and state components. Our findings suggest that the state component of state economic growth is dominant for the period of our study, but that the state component declined sharply during the 1960s as the national and regional components were increasing. We conclude that a substantial proportion of the variance in state economic growth is unique to each state, but that in the postwar era exogenous national and regional factors have a strong, growing impact on state economic performance. © 1991, Southern Political Science Association. All rights reserved.