Written by: Nicolas Costa
The United States has a population of about 330 million people spread over an area roughly the size of the continent of Europe. In addition, the United States has the largest economy in the world by GDP and one of the highest GDP per capita. The United States economy, large as it is, is rather diversified. Several industries dominate the American economy, but these industries are not uniformly distributed across the country. Most industries are anchored to a specific city or region. Ever wondered why the entertainment industry is centered in Los Angeles? Or why the financial industry is centered in New York City? Let us begin our exploration of the economic geography of the United States.
The Financial Industry
It is no secret that New York City is the financial capital of the United States – and arguably the world, with London, Shanghai, Tokyo, Singapore, and Hong Kong as its rivals. New York City is famous for Wall Street – a term that encompasses all of the large banks, hedge funds, and other financial institutions of the country. Banks like Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Citigroup are all headquartered in Manhattan, along with a variety of other large, medium, and small banks and hedge funds. The entire history of the New York City metropolitan area has been shaped by the financial industry.
The American financial industry was first centered in nearby Philadelphia due to its former prominence in the politics of the country, even serving as the capital. The first central bank was created in Philadelphia.
New York City overtook Philadelphia in prominence as it became the center of American trade in the early 1800s due to its amazing natural harbor and the construction of the Erie Canal, connecting the city to the Great Lakes region in a time when steamboats were the best form of transportation. The New York Stock Exchange was eventually opened in 1817, and the financial industry quickly moved in.
Much of New York City’s status as the financial center of the country can be attributed to its geography. It is located in a geographically-protected harbor that was more suitable and navigable than the harbors of its competitors – Philadelphia and Boston. The city eventually became the first port of entry for immigrants, leading to a boom in population that further contributed to its status.
Today, New York City remains the most prominent American city. Ever since it was recognized for its amazing geography, the financial and commercial industries never left (Investopedia).
The Technology Industry
The San Francisco Bay Area has come to dominate the technology industry – with Silicon Valley becoming a term similar to Wall Street to refer to the large technology companies headquartered in the Bay Area – particularly in the southern portion. Apple, Google, Cisco, among other companies, are all headquartered in Silicon Valley. Much of the Bay Area’s prominence in the technology industry can be attributed to two factors – World War II and prestigious local universities.
The Bay Area has been a historically significant base for the US Navy, and during World War II, the US government sought technological development with the aid of local universities like Stanford and UC Berkeley. At the time, Boston was the center of the technology industry, then in its infancy. However, due to Boston’s unfavorable street patterns and topography, travel was complicated. This led to the US government leaving the area in favor of Silicon Valley, which was primarily agricultural at this time. Development of the area began, and the nearby presence of insane talent at Stanford and Berkeley allowed the technology industry to boom (San Jose State University).
Nowadays, the region is famous for its large technology companies, small startups, and wealth.
The Entertainment Industry
Los Angeles is America’s second-largest city and is the center of the American, and arguably world, entertainment industry. Los Angeles is synonymous with celebrity, glitz, and glamor – all qualities that it did not necessarily have in the early 1900s.
Hollywood is the Los Angeles equivalent of Wall Street and Silicon Valley, referring to the multitude of entertainment companies and celebrities of the city.
Up until the 1900s, Los Angeles was lightly populated farmland. The film industry itself did not begin until Thomas Edison’s various inventions. Edison, who held the film patent, implemented strict rules and regulations, causing the infant film industry to flee New Jersey, Edison’s home state, to Los Angeles.
Why Los Angeles? As with most industries explored in this article, at all comes down to geography. Los Angeles is located on a series of basins and valleys anchored by the Pacific Ocean on one side and mountains and deserts on the other. This allowed film companies access to a variety of geographic areas that would be useful in filming many different types of movies in an age before CGI. Southern California is also famous for its sun and great weather – conditions perfect for filming. These companies were able to purchase cheap land in what would become Hollywood and the Valley and use lax labor laws to construct their studios. Ever since, the film industry has been centered in Los Angeles, with other forms of entertainment, like music, moving to the city as well. To this day, Los Angeles is synonymous with the film and music industries – some of the largest American industries (The Wrap).
Government and Law
Washington DC is the capital of the United States, and from that it follows that the federal government and legal industry are headquartered in the metropolitan area. The United States federal government spends a vast amount of money annually and employs millions of people across a variety of departments. Washington DC was a centrally planned city, chosen for its location between the North and South to unify the nation.
The legal industry, as follows, is largely centered around Washington DC, though the corporate legal industry is centered more so in New York City for obvious reasons.
The Media Industry
The media industry is largely split between three cities – Washington DC, San Francisco, and New York City.
The news industry is centered in New York and Washington and includes America’s largest news networks and newspapers like CNN, the New York Times, Bloomberg, and Fox. The reasoning behind this industry’s geography is quite simple: they want to be close to the economic and political centers of the country.
The social media industry, on the other hand, is largely headquartered on the west coast due to a desire to be in proximity to the center of both the technology industry (for these company’s software engineering needs) and entertainment industry.
The Automotive Industry
The American automotive industry has been historically tied to Detroit. A lot of this comes down to the sheer fact that Henry Ford, the man who created the automotive industry, was a Michigander. Detroit already had a lot of manufacturing capital, allowing for the car industry to flourish there. In addition, Detroit’s had a strategic location. First, it is located on the Great Lakes, giving good access to water-dominated transportation routes. Second, it is located between Chicago and New York – both centers of American population – thus allowing for access to many markets (Slate).
The Healthcare Industry
While the medical industry is distributed proportionally by population for obvious reasons, much of medical research and top-tier care is located in Boston. Anesthetics and the smallpox vaccine all trace their origins to Boston.
Much of Boston’s success in the medical industry can be attributed to education. Boston, and Massachusetts at large, is one of the most educated parts of the country. Some of the nations finest universities, medical schools, and hospitals are located in the city. It makes sense, therefore, that the medical industry would flourish in the city.
Natural Resources
Natural resources are spread throughout the nation – sometimes in the most unpopulated regions. The industries follow the resources. These industries tend to organize themselves in a nearby city from where the resources themselves reside.
It is no secret that Texas is home to the oil industry – Houston particularly. Much of this has a simple explanation: the oil is literally right off the coast, in the Gulf of Mexico.
The mining and steel industries are largely located in Pittsburgh and other Appalachian cities. This, like Texas, is because those resources are directly extracted from the region that these cities anchor.
Agriculture, Farming, and Livestock
Farming in the United States is largely distributed between California, the Midwest, Texas, and portions of the South. It thus follows that, similarly to natural resources, much of the corporate-side of the farming industry is anchored to the largest cities of these regions: Minneapolis for Cargill, and some smaller cities like Springdale, Arkansas for Tyson Foods.
Conclusion
The United States economy is largely segregated by region, and the reasons behind each industry’s specific location are interesting to study. In a post-COVID world, where location matters less than it did before, we may see a diffusion of these industries into other parts of the country. Furthermore, as transportation infrastructure improves, as perhaps we will see with Hyperloop, we may see a similar effect. It seems that the 21st century will bring regional diversification.
Appendix
Johnston, Matthew. “How New York Became the Center of American Finance.” Investopedia, Investopedia, 4 Nov. 2020, www.investopedia.com/articles/investing/022516/how-new-york-became-center-american-finance.asp.
The Regional Advantage of the Silicon Valley and Its History, www.sjsu.edu/faculty/watkins/regadv.htm.
Thewrapnews, director. How Did Hollywood Become the Center of the Entertainment Industry? YouTube, YouTube, 5 Apr. 2018, www.youtube.com/watch?v=ZfJphArBevo.
Palmer, Brian. “Why Are All the Big American Car Companies Based in Michigan?” Slate Magazine, Slate, 29 Feb. 2012, slate.com/news-and-politics/2012/02/why-are-all-the-big-american-car-companies-based-in-michigan.html.