Lesson 5 - Quantitative Analysis (Economic Analysis) Flashcards
Economic base analysis
looks at basic and non-basic economic activities. Basic activities are those that can be exported, while non-basic activities are those that are locally oriented. The exporting industries make up the economic base of a region.
Location Quotient (Economic base analysis)
In order to identify economic base industries, a location quotient is calculated for each industry. The location quotient is the ratio of an industry’s share of local employment divided by its share of the nation (or other level of government). A location quotient of less than one indicates an importing economy. If the quotient is greater than one then the area is an exporting economy.
Shift-share analysis
analyzes a local economy in comparison with a larger economy. This analysis looks at the differential shift, proportional shift, and economic growth.
This method uses employment information by sector for two points in time. For example, one may wish to compare employment by industry between 1990 and 2000. The total employment change in an industry between 1990 and 2000 is equal to the economic growth plus the differential shift plus the proportional shift.
Input-output analysis
links suppliers and purchasers to determine the economic output of a region. Similar to economic base analysis in that it uses an economy’s structure to determine the economy in the future. Requires a very large quantity of data, which makes it costly. Today, input-output analysis is conducted using a computer software.
Input-output analysis can be used to determine the employment effect that a particular project has on a local economy. For instance, the construction of a major league football stadium in the City of Industry, CA. This analysis can also be used to look at the economy of the region as a whole.
Input-output analysis identifies…
- Primary suppliers do not purchase input for production. They typically purchase only final goods;
- Intermediate suppliers sell outputs to either intermediate or final purchasers;
- Intermediate purchasers buy outputs from others and use them as inputs to produce outputs;
- Final purchasers use their inputs as final goods.
Input-output analysis is composed of…
transactions, direct requirements, and total requirements.
Input-output analysis assumes…
there are no economies of scale, that technology and labor are static, that inputs are not substitutable, and that each industry only produces one group of goods. Consumption of inputs is constant and there are no national imports or exports. An economy’s total output is equal to total production plus intermediate sales.
Spin-off employment (input-output analysis)
Based on the input-output analysis, a series of multipliers are applied to determine the spin-off employment. They are numerical coefficients which relate a change (a component of aggregate) in demand (or employment) to a consequent change in total income (or total employment). Thus, a “regional employment multiplier” relates a change in a region’s export employment to the resulting total employment change. In the input-output analysis, there are many different multipliers. One multiplier is the ratio of the direct, indirect, and induced effects to the direct (i.e., the initial) change itself.
International Council of Shopping Centers
provides information about trends in real estate and provides a classification of shopping centers.
Community Economic Toolbox
http://economictoolbox.mit.edu
depreciation, acquisition cost, and fair market value.
North American Industry Classification System (NAICS)
the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data about the U.S. economy. NAICS was developed by the Office of Management and Budget and in 1997 it replaced the Standard Industrial Classification (SIC) system. IT was developed in partnership with Canada and Mexico to allow for a high degree of comparability of business statistics throughout North America.
NAICS Numbering System
The NAICS numbering system employs a six-digit code at the most detailed industry level. The first five digits are generally (although not always strictly) the same in all three countries. The first two digits designate the largest business sector, the third digit designates the subsector, the fourth digit designates the industry group, the fifth digit designates the NAICS industries, and the sixth digit designates the national industries. The NAICS codes allow for planners to be able to select industry segments to analyze, for example conducting a shift share analysis on a particular NAICS designated industry.
