market orientation—a shift that opened new policy opportunities to local governments susceptible to the threat of capital flight. The driving-force behind that trend was the steady growth in local service activities (including finance, insurance and real estate; consumer services; and business services) and relative declines in manufacturing (Table 1). While the shift away from manufacturing continues, that shift no longer need imply increasing Export Orientation and the Limits to Local Sovereignty Joseph J. Persky, Marc Doussard and Wim Wiewel [Paper first received, February 2007; in final form, April 2008] Abstract The decade 1990–2000 marked a historical turnaround for large metropolitan areas in the US. For the first time in the post-World-War-II period these metropolitan areas experienced a reduction in the local share of economic activity relative to the export share. The long-standing shift from manufacturing to services, while continuing through the decade, was no longer sufficiently large to offset the increasing export orientation of non-manufacturing industries, including many services. At first glance, the increasing share of export activity in large metropolitan economies might suggest that state and local governments will lose flexibility in determining economic policy. However, the non-manufacturing industries with growing export shares are more place-based than most of the manufacturing exports they are replacing. The paper argues that state and local policy-makers thus continue to have considerable discretion in their choice of economic agendas. 1. Introduction From before 1950 to nearly the end of the 20th century, large metropolitan areas in the US expanded their production for local markets more rapidly than their export- oriented activity. 1 They diversified their local economies and increased their regional multi- pliers. Decade after decade, metropolitan economies thus became more local in their 0042-0980 Print/1360-063X Online © 2009 Urban Studies Journal Limited DOI: 10.1177/0042098008100993 Joseph J. Persky is in the Department of Economics (M/C 144), University of Illinois at Chicago, 601 South Morgan Street, Chicago, IL, 60607-7121, USA. E-mail: jpersky@uic.edu. Marc Doussard is in the Institute for Policy Research, Northwestern University, 2040 Sheridan Road, Evanston, IL 60208-4100, USA. E-mail: m-doussard@northwestern.edu. Wim Wiewel is at Portland State University, Portland, Oregon, 97207-0751, USA. E-mail: wim@pdx.edu. 46(3) 519–536, March 2009