Remaking economic development 5 development system includes a wide range of policies and strategies that enable industries, workers, and communities to contribute productively to the economy. The value of the multiplier varies from place to place and is impacted by other factors as well. It addresses the economic aspect of the regional problems that are spatially analyzable so that theoretical or policy implications can be derived with respect to regions whose geographical scope ranges from local to global areas. Central place theory is specific about the nature of the citys market, but the specification is restrictive. Theories of regional growth 12 trade theory 12 location theory 18 export or staple theory 19 growth forecasting 21 shift analysis the spatial allocation approach 21 economic base analysis 23 intersectoral inputoutput analysis area accounts and multipliers 24 interregional intersectoral inputoutput analysis 26. The idea that essentially the export base is the necessary and sufficient condition for regional economic growth may be, by definition, a true statement.
Put another way, it is possible to define the necessary condition for regional economic growth as the creation of an export base. The export base model states that development depends on production activities that sell products outside the region. The recent experience of greece manolis christofakis department of economic and regional development, panteion university, athens. Regional economic integration may be a precondition for, rather than an obstacle to, integrating developing countries into the world economy by minimizing the costs of market fragmentation. Hoover, edgar malone giarratani, frank an introduction to. Economic base theory is the notion that a regions economy is divided into two sectors the base and nonbase sectors. Regional economics an overview sciencedirect topics. Regional integration may also be pursued to provide the policy credibility which is. In regional economics we deal with an open economy with a highly elastic supply of labor. The basic idea is to understand the theories that explain how economic development takes place in a community.
Integrating economic base theory with regional adjustment models. Economic base theory nurul dillah persiwi 125020107121020 2. North born 1920 who in the 1950s refused gradualist theories of regional development, which advocated a gradual transfer between primitive forms of economy to developed forms, and advanced that the key role in the development of individual regions in the usa was played by the demand for the products which could be produced locally. Regional development, economicbase theory, residential. Envisioning economic prosperity for clay center theories of economic development. The assumption that there is a uniquely correct or at least a uniquely appropriate definition of economic growth, openly invites a very fundamental type of criticism. The basic product theory, which explains longterm factors of economic growth, refers to the concept of economic base. This multiplier estimates that for every one basic sector job created, 1 nonbasic sector jobs are created. To sum up, an understanding of spatial and regional economic problems can be built on three facts of life. This paper demonstrates the potential of metaanalysis as a comparative research tool in rural and regional economics. Definition o basic view of the economic base theory that the rate of economic growth of a region is determined by amount of the increase in exports from the region. An economic base analysis divides regional economic activity into two categories. Simple economic base theory economic base concepts economic base concepts originated with the need to predict the effects of new economic activity on cities and regions. Geography military bases have had a profound impact on urban and regional economic growth.
Economic base theory unhelpful, impractical business. North born 1920 who in the 1950s refused gradualist theories of regional development, which advocated a gradual transfer between primitive forms of economy to developed forms, and advanced that the key role in the development of individual regions in the usa was played by the demand for the products which could be produced. Readings analyzing and accounting for regional economic. A key aspect of local economic development is job creation. These findings are the basis for the development alternatives in the highest and best use planning study. In an early discussion with north on the merits of the export base theory, tiebout stated. Balessa defines economic integration as a process and as a state of affairs. Regional economics is a subdiscipline of economics and is often regarded as one of the fields of the social sciences. It is commonly assumed by rural economic development proponents. A case study of three military bases in two metropolitan statistical areas by kenneth e hawkins may 2005 chair. An assessment of the economic base of distressed and neardistressed counties in appalachia.
Understand regional economic growth make short and long term forecasts identify potential growth sectors identify potential problem areas according to economic base theory, any local economy may be divided into basic and nonbasic industries. The export base model continues to be one of the most widely used in regional economic analysis. It is now imperative that we take measures to ensure a similar loss of competitiveness does not occur in the coming years. Fritz machlup, a history of thought of economic integration london.
It is not just an intellectual pursuit for its own sake, but it plays an essential part in economic research. Report to the appalachian regional commission pdf 1. At the center of most regional and state level economic impact analysis is an estimation method known as an inputoutput model. The export base and development stages theories of regional. Economicbase theory earns its namesake from a strict dichotomy between two distinct sectors of the economy. O economic activities are grouped on the basis activities and the non base activities. This collective decisionmaking can cover a varying number of functional areas scope.
According to the theory, regional development is achieved through gradual specialisation of selected products, competitive on the foreign markets. We discuss the economic base theory which is more widely accepted. Understanding your regional economythe economic base theory. In entrepreneurship, firm growth, and regional development in the new economic geography. The following graph shows the composition of the regions economic base in 2007 in terms of industry sectors, which represent general categories of economic activity. Basic industries are those exporting from the region and bringing wealth from outside, while nonbasic or service industries support basic industries. The model is built on the observation that production is either sold locally or exported to other regions or countries.
The second edition of this book represents a reediting and in some cases signi cant rewriting of the original book published in 2001. Regional prosperity is achieved by building up the base through exporting more goods from the base or preventing fewer imports. The economic base of the state of new mexico prepared. Economic base analysis was developed in 1928 when robert haig was working on a plan for the regional economic development of new york. Based on traditional industry sector definitions, the. Understanding your regional economy the economic base. Xxiv customs union 6 8 customs union accession 0 6 economic integration agreement 80 economic integration agreement accession 3 free trade agreement 10 158 free trade agreement accession 0 1. Download limit exceeded you have exceeded your daily download allowance. The economic base of the state of new mexico prepared by.
Economists and other social scientists jealously guard their right to define concepts as they see fit. Note that a regions economy is not the same as that of a county or community. Different perspectives on economic base usda forest service. Bruton center for development studies, the university of texas at. Some figures on regional trade agreements notified to the gattwto and in force dr katarzyna sledziewska enabling clause gats art. A relatively loose definition may be better for comparative studies. The economic base theory has two central assertions. Pdf integrating economic base theory with regional. Simple economicbase theory economicbase concepts economicbase concepts originated with the need to predict the effects of new economic activity on cities and regions. Imagine that a car manufacturer is planning to build a car distribution center in the greater cincinnati metropolitan region. Understanding your regional economy the economic base theory. In an early discussion with north on the merits of the exportbase theory, tiebout stated.
Location theory forms a central element in regional economics and economic geography. Bruton center for development studies, the university of texas at dallas, 2000. First, the book provides the reader with an overview of key theoretical and conceptual contexts within which the economic development process takes place. Pdf integrating economic base theory with regional adjustment. As a concept, growth poles are based on perrouxs assumption that, for an economy to attain higher income levels, that economy should first develop within itself one or several regional centers for economic strength. The metamodels constructed from these results were analysed using two methods. Apr 24, 2017 economic base theory economic base theory has several advantages as an explanation for how the economy works, and how a region can generate prosperity, and it is easy to explain in a nontechnical way. Strategically, this would be a good choice for the car manufacturer, given that interstate highway 75 175 is the main artery of the national car industry and ohio lies in. But the model is contested by modern growth theory, and there has been surprisingly little research about its empirical relevance. This theory also suggests that economic growth depends on sectors that export goods and. Feb 08, 2016 economic base theory is the notion that a regions economy is divided into two sectors the base and nonbase sectors.
Many oecd countries are seeing widening gaps in the geographic distribution of skills and jobs. The main representative of export base theory was douglas c. The exportbase model continues to be one of the most widely used in regional economic analysis. Introduced by the economic geographer john alexander in the mid1950s, the theory proposes that regional economic growth is largely a.
Terms in this set 17 economic base model first assumption. Hoover, edgar malone giarratani, frank an introduction. The recent experience of greece 5 theoretical and empirical researches in urban manag ement volume 6 issue 2 may 2011 the growth poles strategy in regional planning. Various theories related to urbanization are linked to explain the regional differences in urbanization as well as the size distribution of cities in india simultaneously. As originally formulated, the economic base model focused on regional export activity as the primary source of localarea growth. This article examines inputoutput modeling in more detail to provide a general description of economic impact. Understand regional economic growth make short and long term forecasts identify potential growth sectors identify potential problem areas. Substantial editing occurred and new material has been included in the introductory chapter and in chap. It is appropriate to start this chapter first with a look at. Regional economic development analysis and planning.
The essential theme of this essay that economics is a policy science and, as such, the contribution of economic theory to economics should be measured on how well economic theory. Readings regional socioeconomic impact analyses and. In this context, regional economics represents a framework within which the spatial character of economic systems may be understood. We introduce the economic base concept and present two methods for. The book is about the analysis of regional economic performance and change, and how analysis integrates with strategies for local and regional economic development policy and planning. Although it has been widely criticized for its theoretical weaknesses lewis, 2005, it remains one of the most widely accepted economic models utilized by economic development practitioners and regional economic policy analysts for regional growth. By supporting quality job creation from within and ensuring that all residents can benefit from and contribute to growth, local development is a key tool for addressing this problem oecd. Economicbase theory chapter 3 waschaffer 1 draft 5112010 regional models of income determination. Growth momentum in subsaharan africa remains fragile, marking a break from the rapid expansion witnessed since the turn of the millennium. Regional prosperity is achieved by building up the base through. Economic base analysis is a theory that posits that activities in an area divide into two categories. The economic base model and the associated local multiplier were developed during the twentieth century and may now be considered basic tools in urban and regional economics. Metaanalysis is applied to the results of economic base modelling 400 study areas designed for the estimation of multiplier effects in small regional economies.
Regional and local economic analysis for practitioners. Economic base studies for urban and regional planning in the profession of city planning. Location and trade were already regarded by the grandfather of economics, adam smith, as two interwoven phenomena. The nonmetropolitan rocky mountain west article pdf available in growth and change 304. A sector is comprised of industries and firms that do similar work, make similar products, or provide similar services. Understanding economic base analysis property metrics. According to economic base theory, any local economy may be divided into basic and nonbasic industries. Use of metaanalysis for the comparison and transfer of. Economic base theory chapter 3 waschaffer 1 draft 5112010 regional models of income determination. Part i hypotheses and factors in the analysis of regional onomic growth the purpose of part i is to put forward a set of useful concepts and. O economic activities are grouped on the basis activities and the nonbase activities. In general,the importance of local specificities has increased rather than being marginalised in a context of increasing globalisation and functional economic integration storper, 1995. Economic base theory economic base theory has several advantages as an explanation for how the economy works, and how a region can generate prosperity, and it is easy to explain in a nontechnical way. A critical examination of the exportbase theory of urban.
The theory is no more a theory of growth than economic base theory. Economic base the economic base of an area consists of those activities that provide the core employment and income on which the rest of the local economy depends. Ireland has emerged from a major economic crisis following a period during which the economy suffered a significant loss of competitiveness. The spatial distribution of economic base multipliers.
Assumes that the export sector is the primary cause of local economic growth. However, it seems fair to say that collective decisionmaking is an important aspect of all regional integration efforts. Strategically, this would be a good choice for the car manufacturer, given that interstate highway 75 175 is the main artery of the national car industry and ohio lies in the midst of it. The main representative of exportbase theory was douglas c. Ireland has, thankfully, returned to strong economic and employment growth. The specific purposes of economic base studies include. It counts increased specialization as production of new goods and excludes geo graphic specialization resulting from unequal resource endowments.
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