Economic Base Theory Research Articles

The simple, efficient, elegant, and effective model (SE3M) of land use and transportation

Integrated land use/transportation forecasting models add significant policy and infrastructure alternatives analysis capabilities to the urban planning process. Historically, the financial, time, and staff requirements to develop one of these models has put them beyond the reach of most small- to medium-sized urban areas. The purpose of this paper is to present the large zone economic submodel of SE3M, an integrated model – founded upon economic base theory and bid-rent theory – that is reasonably accurate, yet simpler in form, function, and implementation than competing models. The US territory of Guam is used as the case study/proof of concept implementation for this model framework. The submodel presented here was validated against a horizon year with known data for zonal level population and employment totals together with control totals for the island as a whole. The model was able – across two base years and one validation, horizon year – to locate all jobs and a high percentage of the population on each zone on the island.

Beyond Economic Base Theory: The Role of the Residential Economy in Attracting Income to Swiss Regions

Segessemann A. and Crevoisier O. Beyond economic base theory: the role of the residential economy in attracting income to Swiss regions, Regional Studies. Regional development theories are mainly focused on export-based activities to explain regional competitiveness. The increasing mobility of workers and residents leads to a reconsideration of this approach. Residential economy has become a strategic issue to generate incomes within regions. With this view, the paper analyses the link between economic activities and incomes from workers and annuitants residents. A spatial typology breakdown is compiled for Swiss regions using a hierarchical cluster analysis (HCA). Empirical results highlight various regional development profiles. Conversely to export-based theories, regions with higher income are those with strong residential economy, thus opening new avenues for local governance.

Economic base model for the Guadiana estuary, Portugal an application for Integrated Coastal Zone Management

The concept of base-multiplier analysis is that export activities constitute the economic base of a region, whereas the other economic activities that sell their goods and services to the local residents grow or shrink depending on the performance of the base activities. These concepts, with origins extending at least as far back as the early 1900s, have reached maturity and are widely applied. The attractiveness of an economic base model (EBM) draws in its simplicity in expressing the power of demand in regional income determination. Extensive literature has grown up around the economic base theory, however, systematic publications concerning empirical application are scarce and focus mostly on the socio-economic dimension of the analyzed system. Such territorially oriented economic models are useful in a variety of decision making procedures; preparation of annual budgets, short-run market demand forecasting, longer-term growth strategies. The purpose of this article is to present a practical application of EBM to the geographical area of the Guadiana Estuary, on the south coast of Portugal. The interest of the EBM application in this case study includes its integration in a broader project that applies a Systems Approach Framework (SAF) towards Integrated Coastal Zone Management (ICZM). There are three pillars of sustainability considered here: social, ecological and economic, hence, the article not only describes EBM application but also how it has been use to demonstrate a chain of events resulting from the interaction between the ecological and the socio-economic sub systems of the area. The results obtained will probably raise the usual criticism to which the economic base model has been exposed previously; however it provides unequivocal evidence that a truly interdisciplinary approach to a given territorial target can be successfully shared with end users and the research community.

BASE ECONÔMICA E DESENVOLVIMENTO LOCAL: ESTUDO DE CASO MÚLTIPLO EM MUNICÍPIOS CANAVIEIROS

This paper has the purpose of comparing and analyzing the Sugarcane Agroindustry importance as economic base, in job generation and local development in two cities, Mirandópolis-SP and Engenheiro Beltrão-PR. For this purpose, the model of Economic Base Theory was used as a way of estimate the base employment and its multiplier effect over the non-base employment. The two cities have potentials that allow specialization in the production of sugar cane derivatives, being able to generate a surplus for export. The multiplier of calculated employment was about 2,36 in Mirandópolis-SP and 1,93 in Engenheiro Betrão-PR. The evolution of local development indicators has also shown more favorable in Mirandópolis-SP, comparing to Engenheiro Beltrão-PR.

Pay Gap and Performance

The growing pay gap between executives and employees has been subject to much media publicity and political attention in recent times. We examine how the executive and employee pay components of the pay gap drives firm performance. Economic theories of matching and managerial talent suggest talented executives who can generate relatively better firm performance receive wage premiums, implying a positive relation between the pay gap and performance. Alternatively, wage premiums to skilled employee talent suggest a negative pay gap - performance relation, consistent with efficiency wage theory Sociological theories suggest that the inequity implied by larger pay gaps lowers firm performance through the adverse effects on employee morale and productivity. To test these alternative theories, we utilize pay gap data from China that provides a setting with strong national preferences towards equity but also with a scarcity of experienced managers and abundance of low cost labor. Our results strongly support economic-based theories – firm performance is largely driven by pay premiums for executive talent. Additional tests using a smaller sample of US firms with pay gap data are consistent with our primary findings. Our study is likely to be of interest to politicians, regulators and company executives responsible for understanding and evaluating pay gap and executive pay.

Sustainable urban development in water-constrained Northwest China: A case study along the mid-section of Silk-Road – He-Xi Corridor

The urbanization process in the middle section of Silk-Road (He-Xi Corridor) bears noticeable inscriptions of its fragile physical environment. This paper develops an integrated research approach to examine urban growth under severe water shortage and to quantify the dynamic relationship between sustainable urbanization and restricted water supplies. This new approach is synthesized from the field survey often adopted in regional studies of resource management, the policy study of sustainable urban development and rational water utilization, and the regional predictive analysis of economic and demographic growths based on the economic base theory. The total available water resources and the water quotas by major economic sectors at present were calculated from the field survey. The water quotas and their change rates by economic sectors over the period of 2000–2030 were estimated on the basis of policy study of regional development goals and future trends of water usages and changes. Finally the water quotas and their change rates were integrated with regional models of demographic and economic predictions to compute sustainable economic development by economic sectors, and then to derive total population and urban population. Therefore, a sustainable urban growth under the limitation of insufficient water supplies in He-Xi was determined.

Foreign Affairs and the 2008 Election

Much of the commentary in the wake of last month's presidential election has focused on the magnitude and historic aspects of Barack Obama's victory and the deteriorating economic environment in which it played out. Little thought has been given to the influence of foreign affairs in the election. Yet even in this year's contest, which appears to lend considerable support to economic-based theories of elections, international events clearly played an important role by shaping the nomination process for both major parties and in Obama's selection of Joseph Biden as his running mate.

Impact of Tourism Infrastructure on Regional Development: The Implantation of a Center Parcs Resort in Northern France

This paper assesses the impact of the implantation of a major recreational resort (670 new direct jobs planned) on the local economy of an isolated rural area in northern France. To estimate the induced effects, an original hybrid model combining Keynesian and economic base theory was used to take into account the predominant role of the first wave of spending in the tourism sector. At the local level, this resort has the potential to create between at least 70 and 80 indirect and induced jobs, provided support is lent by synergy in local policymaking (especially in training and habitat).

Contribution of High-Technology Industry to Regional Economic Growth at Different Positions In The Distribution of A Region’s Size

This study investigates how high-technology industry leads to regional economic growth at different positions in the distribution of a region’s size by using the MSA data in the United States. For measuring the possible effect by the employment growth of a whole region (not within ahigh-technology industry), ahigh-technology industry is considered as a part of the export sector based on an economic base theory. Among several possible variations associated with the contributions of the high-technology industry, this study focuses on the region’s size on the grounds that the formation of multiplier effects depends on the scope and the scale of a region. Empirical results show that the high-technology industry generates a statistically significant and positive influence on employment growth in the whole region. Although it is weakly significant, this type of influence is unevenly distributed among different-sized cities. In particular, the influence tends to be substantially weak in medium-large cities.

The Growing Localness of the Canadian City, or, On the Continued (Ir)relevance of Economic Base Theory

The past 50 years have brought massive changes in the patterns of economic activity around the world. Not only has global trade increased, but, precisely because of this, many scholars suggest that local (and regional) networks of production and exchange have become more prevalent and important. The nature of local economic development has, as a result, changed quite substantially. And yet theoretical approaches to it largely have not. Fifty years after Douglass North introduced economic base theory - asserting that economies grow only through increased exports - it remains the familiar refrain, if not the basis, of local economic development theory. We think it is about time to reassess the merits of base theory as an approach to, and explanation of, local economic development. Accordingly, in this article, we review briefly North's argument for base theory and the debate it stirred up early on. Then we present two evaluations of its current relevance. The first is theoretical: we consider whether changes in the patterns of economic activity in the global north, including the emergence of local/regional networks of production and exchange and the growth of consumer services, have made it possible to achieve economic growth without increasing exports. The second is empirical: using the minimum requirements method, we examine whether the economies of Canada's cities have become more locally oriented and, if so, whether they have grown. Both evaluations indicate that economic development is indeed possible through increased local activity (although exports remain important). We conclude that it is time to consider more nuanced models of local economic development that accommodate the multiple ways in which development can be achieved.

Work, Wages and Gender in Export‐Oriented Cities: Global Assembly versus International Tourism in Mexico

Drawing on a rich source of urban labour market data, the Mexican National Urban Employment Survey of 1998, this article addresses the question of how dissimilar export‐oriented industries shape urban labour markets, particularly with respect to women workers. It compares Ciudad Juárez, which has an economy based on global assembly production, and Cancún, whose economy is based on international tourism. Employing economic base theory and location quotients, the analysis isolates the impact of the export sectors on the local labour markets.Results show that global assembly and international tourism encourage a mix of occupational and income prospects for both men and women in each of these Mexican cities. Female employment tends to be concentrated in the export‐oriented sector in both cases, but the types of occupational and income opportunities therein vary. Overall, the analysis challenges common exploitation arguments that tend to stress the universally shared deleterious working conditions and low wages that result from global integration and export‐led industrialisation in contemporary Latin America. It suggests that we pay closer attention to the diverse nature of outward oriented industries, which will tend to differentiate the labour market implications of increasing economic globalisation.

Unearned Income and Local Employment Growth in North Carolina: An Economic Base Analysis

Economic base theory has long provided a basis for understanding regional growth and decline. Structural change, both economic and demographic, alters the composition of a community's economic base and influences rates of employment and population growth. The same factors affect the composition of income. In particular, unearned sources of income such as transfer payments, interest, dividends and rents have been increasing and now account for a significant proportion of total personal income. As such, they represent a substantial economic stimulus to many counties and a significant boost in local demand. This paper examines the impact of unearned income on employment growth within an economic base framework for the counties of North Carolina covering the 1969-1994 period. Results from pooled cross-section time series regression indicate that, among other things, higher proportions of local income from interest, dividends and rents are associated with faster annual rates of nonbasic employment growth, while slower rates of employment growth are associated with dependence on transfer payments.

Les apports potentiels des modèles de la base économique pour guider la décision publique

Résumé Considérée pendant les années 70-80 comme un cadre conceptuel d’analyse du développement régional, la théorie de la base économique représente aussi un outil au service du décideur public notamment grâce au renouvellement des concepts et des outils qu’elle mobilise. Ainsi, les modèles de la base sont susceptibles d’apporter des éléments de réflexion sur quatre points principaux : l’identification des potentialités de développement, la comparaison des principaux secteurs basiques, l’estimation de leurs effets induits et l’évaluation des retombées d’une politique publique. Une fois renouvelés et appliqués aux quelques petites régions rurales françaises et aux régions administratives du Québec, ces modèles de la base ont donné un certain nombre de résultats pouvant intéresser le décideur public. Par exemple, les études menées en France montrent l’importance des activités d’accueil (retraités, touristes) parmi les activités motrices. Pour cette raison, des politiques en faveur de l’accueil de nouvelles populations mériteraient d’être développées.

Why Some States Grow Faster than Others: New Growth Models for State Economic Policy

Recent studies have identified factors statistically related to differences in state economic growth. These findings relate to regional policy because they appear to identify political options that could then be justified as improving growth. This paper evaluates the reliability of these studies as policy guides. It finds that most statistical conclusions are fragile and are ttherefore risky policy guides Economic base theory performs well, and provides the most reliable state level policy options. These policies, however, have to be crafted carefully to avoid pitfalls associated with traditional (and perhaps unpopular) basic industries.

A Methodology for Identifying the Drivers of Industrial Clusters: The Foundation of Regional Competitive Advantage

This article presents a theoretically based method for identifying the clusters of industries in which a region has a competitive advantage. The method combines cluster analysis with discriminant analysis, using variables derived from economic base theory and measures of productivity, to identify the industries in which a region has its greatest competitive advantage. These industries are called driver industries because they drive the region’s economy. The driver industries are linked to supplier and customer industries with information from a region-specific input-output model to form industry clusters. After introductory comments about cluster-based approaches to understanding regional economies, the authors present an overview of their method and the variables used. They then apply this method to the Cleveland-Akron Consolidated Metropolitan Statistical Area.

Integrating Economic Base Theory with Regional Adjustment Models: The Nonmetropolitan Rocky Mountain West

ABSTRACT Interest in the use of adjustment models has recently increased as analysts have come to see the value of these models in the study of regional growth processes. Adjustment models are especially useful in clarifying the nature and direction of population‐employment interactions. However, other models of regional growth suggest that employment should not be treated as a single homogeneous variable, as is the usual assumption in regional adjustment models. This paper looks at the issue of employment disaggregation, and suggests that adjustment models can be alternatively specified by making use of economic base theory to separate employment into at least two broad sectors. Alternative economic base specifications are tested using data for the nonmetropolitan counties (n=254) of the US. Rocky Mountain West during a recent time period. The results show that an economic base version of the adjustment model provides insights to regional change that are not available from the traditional version of the model.

Estimating the direct and indirect impact of residential and recreational functions on rural areas: An application to five small areas of France

It is shown that the growth in employment due to the development of residential and recreational functions in five rural areas of France only partly offsets the decline in agricultural and industrial employment. The direct and indirect effects of residential and recreational functions are evaluated by an extension of Keynesian theory: economic base theory. Different techniques (surveys, minimum requirements method) provide estimates of the direct effects. The study reveals marked inter-regional and inter-sectoral differences in multiplier effects. Important caveats related to the methodological assumptions and data are expressed.

Spatial scale, backward linkages, and economic multipliers

Many empirical analyses of economic impacts are complicated by the use of different spatial scales. In the context of economic base theory, backward linkages from an event being studied can extend from the local to the global scale, inducing varying degrees of leakages and hence different estimates of multiplier effects. This article opens with a review of the ways in which scale, linkages, and multipliers are intertwined. Second, it offers a case study using an input–output analysis of the closure of Homestead Air Force Base in Florida to illustrate how the choice of different spatial scales can dramatically alter empirical results. The conclusion discusses criteria that may assist applied geographers in choosing the optimal spatial scale to deploy. © 1998 John Wiley & Sons, Inc.

Migration, Sources of Income, and Community Change in the Nonmetropolitan Northwest

During the late 1980s and the first half of the 1990s, the nonmetropolitan Northwest grew quite rapidly, narrowing the gap between the growth rates of the metropolitan Northwest, and oupacing national rates. This growth was largely the result of in-migration from regional and national metropolitan areas. Traditional economic base theory does not explain the recent growth, as employment levels in in the region's basic industries continue to stagnate and decline, and the sources of income for these in-migrants remain a mystery. This paper utilizes data from the 1990 Public Use Microdata Sample (PUMS) to determine the extent to which metropolitan-origin migrants are measurably different from oldtime nonmetropolitan residents on certain socioeconomic variables, in an attempt to understand the ways in which the newcomers survive financially. Analysis of variance (ANOVA) shows that newcomers are younger, earn less in wages and salary, receive more nonearnings income, and reside in more valuable housing compared with the resident population. Discriminant analysis shows that differences in the earned income measures are largely explained by age differences, while the nonearnings income and value of residence remainsignificantly higher for the metropolitan origin migrants even when age and earned income are controlled. While the analysis indicates that measurable socioeconomic differences do exist between the two populations, it appears that the current wave of growth and change in the nonmetropolitan Northwest is much more complicated than a simple newcomer-oldtimer dichotomy.

Exports' Contribution to Economic Growth: Empirical Evidence for California, Massachusetts, and Texas, Using Employment Data

The paper shows an interregional trade model from which testable parameter restrictions for economic base theory, shown to be equivalent to the hypotheses of the Granger causality test, are derived. The results of the tests for three states, based on various bifurcation methods, suggest that economic base theory holds strongly for the crudest definition of the base, but not for others. The frequency analysis indicates a likely association between inherent cyclicalities in employment growth data and economic base theory. The regional multipliers and the timing of economic adjustments to exogenous shocks are also discussed.