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

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

Length: 826 words (2.4 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

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. 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. .

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

The Impact Of Economic Climate On Business And Consumer Confidence Essay

- “The reality is that business and investment spending are the true leading indicators of the economy and the stock market. If you want to know where the stock market is headed, forget about consumer spending and retail sales figures. Look to business spending, price inflation, interest rates, and productivity gains” - Mark Skousen The economic climate is a depiction of general economic patterns or moods both on a global level and on a regional level. It takes into account how the stock market is coping, unemployment levels and more....   [tags: Inflation, Economics, Investment, Macroeconomics]

Better Essays
1124 words (3.2 pages)

Essay about What is the Multiplier Effect?

- During the time of economic crisis starting around 2010 different rationalities have been taken to try and continue economic growth while maintaining a stable government system that is helping and not hurting. When examining government spending and how it affects the growth of the Gross Domestic Product (GDP) there seems to be disagreements on if it was helping or damaging the prospective growth that could be made. By using the Multiplier Effect the government can estimate how to adjust their government spending and how it effects the spending of the consumer, investments and spending of country’s exports....   [tags: economic growth, crisis, cut spendings]

Better Essays
1296 words (3.7 pages)

A Comparative Study of Regional Planning in Britain and the Netherlands Essay

- The first selected article is “A Comparative Study of Regional Planning in Britain and the Netherlands” which is written by Ashok K. Dutt in 1970. While there is not any guiding question asked in the paper, author highlights the importance of the developments in Regional Planning after World War II. He believes that the organic integrations of cities are over, and an era of a more integrated and comprehensive planning has started. Within the development process of comprehensive regional planning, he emphasizes on two country systems (Dutt, 1970)....   [tags: regional planning]

Better Essays
1531 words (4.4 pages)

The Keynesian-Type Income Multiplier Essay

- According to Hassan, Pervez (1960) the Keynesian-type income multiplier has little relevance for an underdeveloped country having extremely low elasticity of output, any boost in autonomous investment is likely to result in the rise in prices. This assumption is not true in its applied nature; Keynesian model is equally applicable to all countries irrespective of its nature of development. This the major gap in this study. We a have applied Keynesian model on developing country like Pakistan and the study of Behrman, Jere (1975) supports our point of view Behrman, Jere (1975) considered a nine-sector model with capacity creation and utilization, import, export, price and wage determination....   [tags: Economics]

Better Essays
1413 words (4 pages)

Essay on Economic Geography and Regional Development

- Introduction We observe, more often than not, large differences between the incomes of different regions within the same country. The same is observed even between towns within a state, districts within a city, areas within district and so on and so forth. While reasons for such differences are more obvious at national and sub national levels, they become more complex as and when we get to smaller and smaller zones. This has caught the attention of many in the past and has generated enormous amounts of literature....   [tags: Economics]

Better Essays
1839 words (5.3 pages)

Integration between Regional Economics and International Trade Essay

- As portrayed by (Dogruel and Karahasan) there exists a growing interest in the integration between regional economics and international trade. With the contributions of new economic geography, different dimensions of the obvious regional variation of economic activity and economic growth have been explained on the grounds of importance of location and in terms of the geographic proximity. Thus, the framework demonstrates the fact that identification of the major motivations or obstacles of regions as somehow affecting the decisions of productive units has become an important issue as (Dogruel and Karahasan) explain....   [tags: Dogruel and Karahasan, new economic geography]

Free Essays
517 words (1.5 pages)

Essay about Advantages Of Regional Economic Integration

- ADVANTAGES OF REGIONAL ECONOMIC INTEGRATION Regional economic integration enhances political cooperation. Several group of nation can have significantly greater political influence than each nation would have by individually. This integration is an essential strategy to address the effects or issues of conflicts and political instability that may affect the region. Improved political cooperation due to regional economic integration is also useful tool to handle the social and economic challenges associated with globalization....   [tags: International trade, Investment, Economics]

Better Essays
1026 words (2.9 pages)

Is Regional Policy Really Needed? Essay

- Despite being one of the wealthiest areas in the world, the EU faces the growing problem of prolific inequality in wealth and competitiveness across the diverse group of countries. This is dramatically represented in the differences of income between Europe’s richest and poorest regions: inner London and Romania. Inner London’s per capita income is a staggering 290% of the EU’s average versus Romania with a per capita income of a meager 23% of the EU average. The European Union has recognized this problem and has taken action by implementing “Cohesion” policies intended to encourage economic convergence, competiveness and financial unity....   [tags: Economics]

Better Essays
1169 words (3.3 pages)

Regional Integration In The Caribbean Essay

- Regional Integration is when an economic alliance or trade agreement is formed among countries that are located geographically close to one another. This paper analyzes the role of regional integration in promoting global business, discusses the advantages and disadvantages of regional integration using a trading block as an example, and compares the economic development stages of two countries within a chosen region and discusses the ramifications of the region’s economic development for global business....   [tags: Economics]

Better Essays
1321 words (3.8 pages)

Mercosur: Regional Integration Essay

- Regional Paper - MERCOSUR Regional integration is the process by which countries agree to reduce or eventually remove tariff and non-tariff barriers to promote the free flow of goods and services amongst countries. Global business is accomplished when organizations conduct business internationally and are not committed or bounded to a single home country. Regional integration combined with global business supports organizations conducting business globally amongst a variety of countries by removing restricting barriers and other obstacles....   [tags: Case Study Mercosur Regional Integration]

Better Essays
1107 words (3.2 pages)