The following excerpt is from Chapter 2 of "New York - World City," by Masha Zager Sinnreich, published by Oelgeschlager, Gunn and Hain, 1980, copyright Twentieth Century Fund.

New York's Export Base: A Detailed Look

Although New York has been subject to all the ills of urban America, it is, economically speaking, a very unusual city. Because of its size, density, and history, it comes closer than any other American city to being a national and even an international capital. A large portion of its export activity serves national or international markets, rather than regional ones, and these activities tend to be of the most specialized nature. New York is the locus of more, and farther reaching, organizational, financing, and marketing decisions than any other American city.

New York's areas of specialization roughly approximate what can best be described as its "export base." The city has always been more suitable for light manufacturing than for heavy manufacturing, and it still retains some export functions in the former category. Among these, several industries have high location quotients: watch and clock making; apparel, especially luxury items and hats; knit textiles; printing and publishing, especially periodicals and commercial printing; leather goods, especially handbgs; jewelry and silverware; toys; office and art supplies; and soaps and cosmetics. These industries nearly all produce consumer goods, specifically small, nonstandardized items. They are particularly well suited to New York because of the city's unusual cost structure. Space is expensive in New York, which has more than twice the population density of any other city in the United States. The industries locating here are among the least capital intensive of all industries; that is, the amount of plant and equipment (and hence, space) per worker is very low.

Consolidated Edison, the utility serving the city, changes the highest electric rates in the country, partly because New York is at the end of the fuel pipelines (it is more dependent on oil than most other populous cities), partly because high population density necessitates strict environmental standards, and partly because excess capacity is required to meet the extreme swings in demand. New York's industrial specialties are low consumers of energy.

Transportation costs are high in New York, and rail and highway access to the city's manufacturing plants (many of which are still located in the extremely dense and congested central business district) is poor. Accordingly, all of the items in whose production New York specializes are small finished products of high value compared to their weight and bulk; transportation costs are a minimal part of the total costs of such items.

Printing appears to be an exception to this rule; it is more capital intensive than other specialties, and some printed products are quite heavy compared to their value. But from 1965 to 1975, the location quotient of printing dropped considerably; moreover, the remaining heavy concentration of printing is not directly an export industry but an adjunct to New York's highly labor-intensive publishing, legal, and advertising businesses. Transportation costs for such printing are negligible because the distances that printed products must travel are close to zero.

Labor costs are somewhat more complex. The industries located in New York typically have low wage scales, but the wages paid by these industries in New York are higher than elsewhere. For example, in 1976, New York's apparel workers earned about 25 percent more than the national average, and New York's printers earned 42 percent more than printers in other cities. But New York cannot generally be considered an expensive labor market. Production workers in the few high-wage-industry plants in the city are actually paid less than their counterparts elsewhere. Fabricated metal workers, for example, earned 22 percent less than the national average. Clerical, technical, and maintenance workers are well but not exorbitantly paid; they could earn as much in Detroit, Atlanta, and many other cities. And industries do not behave as if labor were expensive in New York; the city specializes in labor-intensive industries. Most likely, these businesses are located in New York not because they are labor intensive but because they are information intensive. Information is the one commodity that is cheaper in New York than anywhere else - the one remaining economic advantage of the city's size and density.

The apparel and printing companies that find it worthwhile to remain in New York seem to be those that produce specialized items or lines where fashions change very rapidly and up-to-the-minute information is a vital necessity. Of course, these businesses - haute couture, for example - also require more highly skilled labor. Thus, the wage diffeentials in these industries frequently reflect differences in skill. Companies producing more standardized items can afford to make more capital investments and to hire less skilled workers; they usually prefer out-of-town locations.