Evaluating Regional Economics Using The Economic Base Multiplier And Shift Share Analysis

Evaluating Regional Economics Using The Economic Base Multiplier And Shift Share Analysis

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4.6 Evaluating Regional Economics Using the Economic Base Multiplier and Shift-Share Analysis
Economic impact studies most of the time evaluate the regional economy changes in a selected major variable. Some examples of these variables are employment, income, or output and this is after an initial exogenous change. The thing that that economic developers are the most concerned about is how to estimate the total impact on one of the variables after a change. There is a ripple effect that is created after there is an increase or decrease in the demand for a region’s goods and services, which will effect on the economic activities past the initial external factors of the inflow of spending.
4.6.1 The economic Base Multiplier
Each economy can be separated into two different sectors, which are a basic sector and a non-basic sector. The basic sector relies on mainly the conditions that are outside of the study region. The non-basic sector relies on the conditions inside the region. Usually if we are just thinking of a basis and non-basic sector we presume that he basic sector is what sets in motion the regional economy. This means that the exports will increase and will intern result in more economic development. Then non-basic activities will rise, which will lead to general growth of the region’s economic activities. This domino effect of economic activities that concerns the ripple effect, which follows external factors is shown in the economic base multiplier.
4.6.1.1 The Employment Multiplier
The employment (EM) is the ratio of total employment € over basic employment (b) for a study region. It is set up as such:
EM=e/b=total employment/basic employment
It signifies the ratio of total over basic employment. We can use the multi...


... middle of paper ...


...mi): Interprets economic change credited right to the regional industry mix (im).
imi = eti * (Gi t→t+n - Gt→t+n)
• imi - the regional industry mix share in industry i
• Gi t→t+n – growth rate for employment in industry i in the benchmark region for the time interval t→t+n
3. regional growth share (rgi): Takes into reference for the difference in growth between the study and the reference regions that can be attributed only to regional factors.
rgi = eti * (gi t→t+n – Gi t→t+n)

• rgi – the regional growth share in industry i
• gi t→t+n – growth rate for employment in industry I in the study region for the time interval t→t+n
The final result of adding up all three parts of growth is the total growth (tgi).
tgi = ngi + imi + rgi

Wang, Xinhao, and Rainer Vom Hofe. Research Methods in Urban and Regional Planning. N.p.: n.p., n.d. Google Play. Web. 30 Oct. 2016. .

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