T nHE concept of basic and nonbasic employment and the notion of the importance of the ratio between them arose during the 1930's. It was developed as an analytical tool in the study of cities, primarily the study of cities for planning purposes. During the ensuing years, however, interest in the concept has become increasingly widespread among planners, economists, geographers, and others concerned with areal matters (particularly urban areas) as evidenced by a gradually increasing volume of studies oriented around the concept' and by the lively discussions centering on the basic-nonbasic concept at the last two national meetings of the Association of American Geographers. Some studies done recently by the authors in connection with the work of the Area Development Division of the U. S. Department of Commerce have led us to some conclusions as to its use as an analytical device for the study of areas. They form the body of these notes. First of all, we may note that the basic-nonbasic employment ratio has meaning only for a definitely circumscribed area. It is a conceptual device for the study and presentation of certain limited aspects of the economic life of a definitely delimited area, and any data which we may create (not discover) for any delimited area may change, chameleon-like, if the area is delimited differently. The notion of a definitely circumscribed area is of course, inherent in the very definitions of basic and nonbasic. Roterus in his study of Cincinnati defined basic employment as that which produces goods and services for export beyond the adopted area. Although some minor variations in terminology have subsequently been suggested, export employment. is still the guide to defining basic employment. The relationship of basic-nonbasic employment to areal delimitation can be made most sharp if we consider the actual process of establishing such a ratio in detail. Since the basic-nonbasic employment ratio has been almost universally applied to cities, we will begin by extending the reasoning logically to an extreme case. Let us assume a cross-roads hamlet-consisting of a tavern, a filling station, and a grocery store-whose market area is the township. Let. us assume further that none of the business owners or their employees trade at any of the other hamlet stores. If we calculate the basic-nonbasic employment ratio we discover that all the gainfully 1A spate of recent articles includes: Hoyt: Homer Hoyt on Development of Economic Base Concept, Land Economics, Vol. 30, 1954, pp. 182-191. Richard B. Andrews: Mechanics of the Urban Economic Base. Land Economics, Vol. 29, 1953. John Alexander: The Basic-Nonbasic Concept of Urban Economic Functions, Economic Geography, Vol. 30, 1954, pp. 246-261. The Hoyt article contains citations to numerous other studies involving the concept.