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Local Economic Local Economic Analysis:Analysis:
A Case StudyA Case Study
Local Economic Local Economic Analysis:Analysis:
A Case StudyA Case Study
Scuddy J. LeBlancScuddy J. [email protected]@agcenter.lsu.edu
May 19, 2004May 19, 2004
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Why Conduct a Local Why Conduct a Local Economic Analysis?Economic Analysis?Why Conduct a Local Why Conduct a Local Economic Analysis?Economic Analysis?
Provides useful information for Provides useful information for decision makersdecision makers
Helps citizens understand their Helps citizens understand their community’s local economycommunity’s local economy
Could help indicate the need for Could help indicate the need for local education & research local education & research programsprograms
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Analysis of the Analysis of the Tangipahoa Parish Tangipahoa Parish EconomyEconomy
Analysis of the Analysis of the Tangipahoa Parish Tangipahoa Parish EconomyEconomy
Using:Using:
Trends and comparisonsTrends and comparisons
Location quotient analysisLocation quotient analysis
Shift-share analysisShift-share analysis
Retail trade analysisRetail trade analysis
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Acadia
Allen
AscensionA
ssumption
Avoyelles
Beauregard
Bienville
Bossier
Caddo
Calcasieu
Caldwell
Cameron
Catahoula
Claiborne
Concord
ia
DeSoto
E. BatonRouge
Evangeline
Franklin
Grant
Iberia
Iberville
Jackson
Jefferson
JeffersonDavis
Lafayette
Lafourche
La Salle
Lincoln
Livingston
Madison
Morehouse
Natchitoches
Orleans
Ouachita
Plaquemines
Rapides
RedRiver
Richland
Sabine
St. Bernard
St.Charles
St.Helena
St.James
St.John
St. Landry
St. Martin
St. Martin
St. Mary
St. Tammany
Tangip
ahoa
Tensas
Terrebonne
Union
Vermilion
Vernon
Washington
Webster
WBRW
est
Carro
ll
WestFeliciana
Winn
PointeCoupee
East
Carro
ll
EastFeliciana
Tangipahoa Tangipahoa ParishParish
LouisianaLouisiana
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Comparisons ofComparisons ofTangipahoa Parish & Tangipahoa Parish & Louisiana*Louisiana*
Comparisons ofComparisons ofTangipahoa Parish & Tangipahoa Parish & Louisiana*Louisiana*
ParishParishPopulation:Population: 100,588100,588a) Whitea) White 69.8% 69.8%b) Blackb) Black 28.4 % 28.4 %c) Hispanic c) Hispanic 1.5% 1.5%d) Asian d) Asian 0.4% 0.4%
Housing units:Housing units: 40,794 40,794a) Owner-occupied 73.3%a) Owner-occupied 73.3%b) Rentedb) Rented 26.7% 26.7%UnemploymentUnemployment 5.1% 5.1%
LouisianaLouisiana4,468,9764,468,97663.9%63.9%32.5%32.5%2.4%2.4%1.2%1.2%
1,656,0531,656,05367.9%67.9%32.1%32.1%4.3%4.3%
*Source: 2000 U.S. Census
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Economic base, Economic base, self-sufficient and self-sufficient and importing sectorsimporting sectors
Economic base, Economic base, self-sufficient and self-sufficient and importing sectorsimporting sectors
Location quotient Location quotient analysisanalysis
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Base of the Local Base of the Local EconomyEconomyBase of the Local Base of the Local EconomyEconomy
The base of a local economy are the The base of a local economy are the sectors that bring income into the sectors that bring income into the community. In general, income & community. In general, income & jobs are brought into a local jobs are brought into a local economy by:economy by:
Selling local products elsewhere.Selling local products elsewhere. Government agencies that serve Government agencies that serve
populations beyond the local level.populations beyond the local level. Income from private sources outside Income from private sources outside
the community (dividends, etc.).the community (dividends, etc.).
8
Tangipahoa Parish Earnings by Economic Sector in 2000
2%
1%
0%
6%9% 4% 6%
16%
4%
19%33%
Farming
Ag. Services, Forest., Fish.
Mining
Construction
Manufacturing
Transportation
Wholesale
Retail
Finance, etc.
Services
Government
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2000 Earnings by Economic 2000 Earnings by Economic Sector: Sector: Tangipahoa Parish – United Tangipahoa Parish – United StatesStates
2000 Earnings by Economic 2000 Earnings by Economic Sector: Sector: Tangipahoa Parish – United Tangipahoa Parish – United StatesStates
Farming: 2% -Farming: 2% -Ag services, forestry: 1% -Ag services, forestry: 1% -
Mining: 0% -Mining: 0% -Construction: 6% -Construction: 6% -
Manufacturing: Manufacturing: 9% -9% -Transportation: Transportation: 4% - 4% -
Wholesale trade: Wholesale trade: 6% - 6% -Retail trade: 16% -Retail trade: 16% -
Finance, insurance: 4% -Finance, insurance: 4% -Services: 19% -Services: 19% -
Government: 33% -Government: 33% -
1%1%1%1%1%1%6%6%16%16%7%7%6%6%9%9%9%9%28%28%16%16%
Source: BEA
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Location Quotients Location Quotients (LQs)(LQs)Location Quotients Location Quotients (LQs)(LQs)
Location Quotient is a single number Location Quotient is a single number for each local economic sector that for each local economic sector that determines if the local sector is an determines if the local sector is an economic base by comparing it the economic base by comparing it the same sector in the U. S. economy.same sector in the U. S. economy.
Location Quotient (LQ) =Location Quotient (LQ) =
County % earnings/US % earnings County % earnings/US % earnings (by sector)(by sector)
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The Base of the Local The Base of the Local EconomyEconomyThe Base of the Local The Base of the Local EconomyEconomy
Any sector that has an LQ of 1.25 or Any sector that has an LQ of 1.25 or greater is considered a base of the greater is considered a base of the local economy. Also called an local economy. Also called an exporting sector.exporting sector.
Economic SectorEconomic Sector 2000 LQ2000 LQ Farming Farming 2.492.49Retail trade Retail trade 1.871.87Government Government 2.172.17
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Self-sufficiency in the Self-sufficiency in the Local EconomyLocal EconomySelf-sufficiency in the Self-sufficiency in the Local EconomyLocal Economy
Any sector that has an LQ of .75 to Any sector that has an LQ of .75 to 1.25 is considered self-sufficient in 1.25 is considered self-sufficient in the local economy.the local economy.
Economic SectorEconomic Sector 2000 LQ2000 LQ
Ag services, forestry, etc. Ag services, forestry, etc. 0.930.93
Construction Construction 0.930.93
Wholesale trade Wholesale trade 1.091.09
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Leaks in the Local Leaks in the Local EconomyEconomyLeaks in the Local Leaks in the Local EconomyEconomy
Any sector that has an LQ of less Any sector that has an LQ of less than .75 is considered a leak in the than .75 is considered a leak in the local economy.local economy.
Economic SectorEconomic Sector 2000 LQ2000 LQ
Mining Mining 0.520.52
Manufacturing Manufacturing 0.600.60
Transportation & utilities Transportation & utilities 0.670.67
Finance, ins. & real estate Finance, ins. & real estate 0.250.25
ServicesServices 0.720.72
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Retail Trade Analysis Retail Trade Analysis in the Local Economyin the Local EconomyRetail Trade Analysis Retail Trade Analysis in the Local Economyin the Local Economy
Source: Retail data in NIACS: http//www.census.gov/prod/www/abs/ret-trd.html
15
Tangipahoa Parish Tangipahoa Parish Retail Sub-SectorsRetail Sub-SectorsTangipahoa Parish Tangipahoa Parish Retail Sub-SectorsRetail Sub-Sectors
The retail trade sector is a base The retail trade sector is a base for the local economy.for the local economy.
The “pull factor” is an indication of The “pull factor” is an indication of how well the retail trades are how well the retail trades are capturing their potential share of capturing their potential share of the market.the market.
16
Tangipahoa Parish Tangipahoa Parish Retail Sub-SectorsRetail Sub-SectorsTangipahoa Parish Tangipahoa Parish Retail Sub-SectorsRetail Sub-Sectors
A “pull factor” of 1 indicates that A “pull factor” of 1 indicates that the local sub-sector of the retail the local sub-sector of the retail economy is capturing 100% of its economy is capturing 100% of its potential. Pull factors above one potential. Pull factors above one indicate a capture of more than indicate a capture of more than a sub-sector’s potential share.a sub-sector’s potential share.
17
Tangipahoa Parish Retail Tangipahoa Parish Retail Sales Capture (Pull Sales Capture (Pull Factor)-1997Factor)-1997
Tangipahoa Parish Retail Tangipahoa Parish Retail Sales Capture (Pull Sales Capture (Pull Factor)-1997Factor)-1997
1.42
1.67
1.43
0.52
1.021.191.14
0.931.07
1.44
2.41
0
0.5
1
1.5
2
2.5
3Total Retail
Automobile
Furniture
Electronic Appliances
Building Materials
Food & Beverage
Health & Personal Care
Gasoline Stations
Clothing
Sporting Goods
General Merchandise
18
Sources of Influence on the Local Sources of Influence on the Local EconomyEconomy
Sources of Influence on the Local Sources of Influence on the Local EconomyEconomy
Shift-share analysis
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Forces that Influence Forces that Influence the Local Economythe Local EconomyForces that Influence Forces that Influence the Local Economythe Local Economy
Shift-share analysis shows how Shift-share analysis shows how communities are influenced by communities are influenced by outside and local forces.outside and local forces.
National factorsNational factors Sector factorsSector factors Local factorsLocal factorsShift-share analysis separates the Shift-share analysis separates the
influence of each of these factors influence of each of these factors on the local economyon the local economy
20
Influence of the Influence of the National Economy on National Economy on the local Economythe local Economy
Influence of the Influence of the National Economy on National Economy on the local Economythe local Economy
National economic growth and also National economic growth and also the growth (or decline) of particular the growth (or decline) of particular sectors will affect the local economy. sectors will affect the local economy.
National growth sectors, 1990-2000:National growth sectors, 1990-2000: Ag service, forestry & fisheriesAg service, forestry & fisheries ConstructionConstruction Transportation & public utilitiesTransportation & public utilities Finance & insuranceFinance & insurance ServicesServices
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Influence of Local Influence of Local Factors on the Local Factors on the Local EconomyEconomy
Influence of Local Influence of Local Factors on the Local Factors on the Local EconomyEconomy
Factors within the firmFactors within the firm Factors within the private Factors within the private sectorsector Factors within the public sectorFactors within the public sector– StateState– LocalLocal
22
Factors within the Firm Factors within the Firm and Local Private Sectorand Local Private SectorFactors within the Firm Factors within the Firm and Local Private Sectorand Local Private Sector Within the firmWithin the firm
– ProductivityProductivity– Management issuesManagement issues– Firm--cluster or isolated?Firm--cluster or isolated?
Within the local private sectorWithin the local private sector– Access to private infrastructureAccess to private infrastructure– State attractive marketsState attractive markets– Quality of life—private servicesQuality of life—private services– Regions with clusters grew rapidlyRegions with clusters grew rapidly– Local entrepreneurship cultureLocal entrepreneurship culture
23
Public Sector Public Sector FactorsFactorsPublic Sector Public Sector FactorsFactors Quality of life - public services & Quality of life - public services &
education education Employment costs in relation to Employment costs in relation to
productivityproductivity– EducationEducation– Workers compensation insurance,Workers compensation insurance,– Unemployment insuranceUnemployment insurance
Taxes in relation to public servicesTaxes in relation to public services Simplicity and timeliness of paperworkSimplicity and timeliness of paperwork Local business regulations & overlapping Local business regulations & overlapping
jurisdictionsjurisdictions
24
Patterns in Shift-Share Patterns in Shift-Share Analysis (1990-2000)Analysis (1990-2000)Patterns in Shift-Share Patterns in Shift-Share Analysis (1990-2000)Analysis (1990-2000)
Base Base Economic Economic SectorsSectors
National National FactorFactor
Sector Sector FactorFactor
Local Local FactorFactor
FarmingFarming ++ -- --
GovernmenGovernmentt
++ -- ++
RetailRetail ++ -- ++
Source: BEA
25
Patterns in Shift-Share Patterns in Shift-Share Analysis (1990-2000)Analysis (1990-2000)Patterns in Shift-Share Patterns in Shift-Share Analysis (1990-2000)Analysis (1990-2000)
Self-Self-sufficient sufficient Economic Economic SectorsSectors
NationaNational Factorl Factor
Sector Sector FactorFactor
Local Local FactorFactor
Ag. servicesAg. services ++ ++ ++
ConstructionConstruction ++ ++ ++
Wholesale Wholesale tradetrade
++ -- ++
Source: BEA
26
Patterns in Shift-Share Patterns in Shift-Share Analysis (1990-2000)Analysis (1990-2000)Patterns in Shift-Share Patterns in Shift-Share Analysis (1990-2000)Analysis (1990-2000)
Leaks in the Leaks in the local economylocal economy
National National FactorFactor
SectoSector r FactoFactorr
Local Local FactorFactor
MiningMining ++ -- --
ManufacturingManufacturing ++ -- ++
TransportationTransportation ++ ++ ++
FinanceFinance ++ ++ --
ServicesServices ++ ++ --
Source: BEA
27
Outcomes for the Outcomes for the Local EconomyLocal Economy
Outcomes for the Outcomes for the Local EconomyLocal Economy
Trends
More Comparisons
28
Trends in Tangipahoa Parish Earnings - 1969-2000
Trends in Tangipahoa Parish Earnings - 1969-2000
Increasing reliance on the Increasing reliance on the government enterprises & the government enterprises & the services sectorsservices sectors
Declining income from farming, Declining income from farming, manufacturing, and constructionmanufacturing, and construction
Finance, wholesale trade, & retail Finance, wholesale trade, & retail trade have historically been fairly trade have historically been fairly stable in Tangipahoa Parish.stable in Tangipahoa Parish.
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0%
5%
10%
15%
20%
25%
30%
35%
1969 1974 1979 1984 1989 1994 1999
% o
f lo
cal
eco
no
my
Residence adjustment Dividends, interest, rent
Transfer payments
Trends in Tangipahoa Parish Income, 1969-2000
Source: BEA
30
Trends in the Base of the Tangipahoa Parish Economy, 1969-2000
Trends in the Base of the Tangipahoa Parish Economy, 1969-2000
0%
5%
10%
15%
20%
1969 1974 1979 1984 1989 1994 1999
% o
f lo
cal e
con
om
y
Farm earnings Retail trade Gov't & gov't enterprises
Source: BEA
31
Trends in the Self-sufficient Sectors of the Local Economy, 1969-2000
Trends in the Self-sufficient Sectors of the Local Economy, 1969-2000
0%
1%
2%
3%
4%
5%
6%
7%
1969 1974 1979 1984 1989 1994 1999
% o
f lo
ca
l ec
on
om
y
Ag. services, forestry, fishing, other Construction Wholesale trade
Source: BEA
32
Trends in the Leaks in the Tangipahoa Parish Economy, 1969-2000
Trends in the Leaks in the Tangipahoa Parish Economy, 1969-2000
0%
2%
4%
6%
8%
10%
12%
1969 1974 1979 1984 1989 1994 1999
% o
f lo
ca
l ec
on
om
y
Mining ManufacturingTransportation, public utilities Finance, insurance, real estate Services
Source: BEA
33
What can be done to help What can be done to help the Local Economy?the Local Economy?What can be done to help What can be done to help the Local Economy?the Local Economy?
Increase the local economic base by:Increase the local economic base by: Selling local products elsewhere.Selling local products elsewhere. Government agencies that serve Government agencies that serve
populations beyond the local level.populations beyond the local level. Income from private sources Income from private sources
outside the community.outside the community. Start with the existing economic Start with the existing economic
bases.bases.
34
What Can Be Done to What Can Be Done to Help the Local Economy?Help the Local Economy?What Can Be Done to What Can Be Done to Help the Local Economy?Help the Local Economy?
Find ways to plug the leaks in the Find ways to plug the leaks in the local economy:local economy:
Work with the local sectors that are Work with the local sectors that are self-sufficient to expand. self-sufficient to expand.
Work with the local sectors that are Work with the local sectors that are part of growing national sectors.part of growing national sectors.
Work with local sectors that are Work with local sectors that are influenced by positive local factors.influenced by positive local factors.
35
Recommendations for Recommendations for the LSU AgCenter to the LSU AgCenter to Help Local FarmsHelp Local Farms
Recommendations for Recommendations for the LSU AgCenter to the LSU AgCenter to Help Local FarmsHelp Local Farms
Investigate how local products are Investigate how local products are marketed & help identify different marketed & help identify different strategies & products to generate more strategies & products to generate more incomeincome
Identify which farm enterprise hold the Identify which farm enterprise hold the most potential for greater profitsmost potential for greater profits
Help educate the farmers on improving Help educate the farmers on improving their marketing techniques and on their marketing techniques and on utilizing alternative marketing utilizing alternative marketing techniques & alternative agricultural techniques & alternative agricultural enterprisesenterprises
36
Suggestions for the Suggestions for the Tangipahoa Parish Retail Tangipahoa Parish Retail EconomyEconomy
Suggestions for the Suggestions for the Tangipahoa Parish Retail Tangipahoa Parish Retail EconomyEconomy
Help educate local residence on Help educate local residence on the importance of shopping locally the importance of shopping locally & buying local products& buying local products
Help determine if there are any Help determine if there are any gaps in product availability locally gaps in product availability locally & pursue retailers to fill those gaps& pursue retailers to fill those gaps
Help educate the local sales force Help educate the local sales force on customer relationson customer relations
37
Plugging “Leaks” Plugging “Leaks” Through Education & Through Education & Research Research
Plugging “Leaks” Plugging “Leaks” Through Education & Through Education & Research Research
Business management trainingBusiness management training Job training to improve labor skillsJob training to improve labor skills Finding a use for wasteFinding a use for waste Conservation programsConservation programs New technology that uses the New technology that uses the
resources more efficientlyresources more efficiently Job training for the unemployed Job training for the unemployed Finding a more valuable use for a Finding a more valuable use for a
local productlocal product
38
Suggestions for Local Suggestions for Local Officials to Help Keep Officials to Help Keep Government JobsGovernment Jobs
Suggestions for Local Suggestions for Local Officials to Help Keep Officials to Help Keep Government JobsGovernment Jobs
Form collaborations to cooperate Form collaborations to cooperate in: in:
Seeking new government Seeking new government employment & new local employment & new local government enterprisesgovernment enterprises
Maintaining government Maintaining government employment & local government employment & local government enterprisesenterprises
39
Local Economic Analysis Local Economic Analysis Reference MaterialReference Material
Local Economic Analysis Local Economic Analysis Reference MaterialReference Material
Community Economic Analysis: A “How To Manual” http://www.ag.iastate.edu/centers/rdev/pubs/contents/141.htm
40
Local Economic Analysis Local Economic Analysis Course WorkCourse Work
Local Economic Analysis Local Economic Analysis Course WorkCourse Work
Missouri University - Ag Econ 301 Special Topics: Local Economic Analysis http://mudirect.missouri.edu/
Winter Semester (1-credit or non-credit)
Dr. Judith I. Stallman, Professor
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Local Economic Analysis Local Economic Analysis Course WorkCourse Work
Local Economic Analysis Local Economic Analysis Course WorkCourse Work
“Local Economic Analysis” teaches how to determine: the economic base of the community, the general sources of economic growth and decline in the community, and the retail potential of the community in order to understand the strengths and weaknesses of the community economy.”
42
Local Economic Analysis:Local Economic Analysis:A Case StudyA Case Study
Local Economic Analysis:Local Economic Analysis:A Case StudyA Case Study
Special thanks to:Special thanks to: Dr. Judith I. StallmanDr. Judith I. Stallman
for her suggestions & contributions for her suggestions & contributions to this presentation.to this presentation.
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Local Economic Analysis:Local Economic Analysis:A Case StudyA Case Study
Local Economic Analysis:Local Economic Analysis:A Case StudyA Case Study
The EndThe End
Scuddy J. LeBlancScuddy J. LeBlanc
[email protected]@agcenter.lsu.edu