1 Local Economic Analysis: A Case Study Local Economic Analysis: A Case Study Scuddy J. LeBlanc...

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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.).

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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

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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.

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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.

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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

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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

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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

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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

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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

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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

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Self-Self-sufficient sufficient Economic Economic SectorsSectors

NationaNational Factorl Factor

Sector Sector FactorFactor


Ag. servicesAg. services ++ ++ ++

ConstructionConstruction ++ ++ ++

Wholesale Wholesale tradetrade

++ -- ++

Source: BEA

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Leaks in the Leaks in the local economylocal economy

National National FactorFactor

SectoSector r FactoFactorr


MiningMining ++ -- --

ManufacturingManufacturing ++ -- ++

TransportationTransportation ++ ++ ++

FinanceFinance ++ ++ --

ServicesServices ++ ++ --

Source: BEA

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Outcomes for the Outcomes for the Local EconomyLocal Economy

Outcomes for the Outcomes for the Local EconomyLocal Economy

Trends

More Comparisons

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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

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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

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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

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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

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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.

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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.

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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

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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

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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

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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

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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

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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

[email protected]

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“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.”

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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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The EndThe End

Scuddy J. LeBlancScuddy J. LeBlanc

[email protected]@agcenter.lsu.edu

1 Local Economic Analysis: A Case Study Local Economic Analysis: A Case Study Scuddy J. LeBlanc...

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