State-Level Locational Determinants of Biotechnology Firms

The biotechnology industry has experienced remarkable growth since its inception, and growth prospects are strong for the remainder of the decade. In this article, the authors develop a formal model to discern factors affecting the location of biotechnology firms. The number of biotechnology firms per million residents in 1990, in each of the 50 states, is used as the dependent variable. Explanatory variables include traditional business-climate variables thought to influence firm location, as well as a set of variables hypothesized to specifically affect location in the biotechnology industry. In the estimation procedure, the authors separate variables that (a) affect the probability that a state has a biotechnology industry from those that (b) affect the number of biotechnology firms in a state, conditional on the state having such an industry.