Local Economic Analysis: A Case Study

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Local Economic AnalysisA Case Study

• Scuddy J. LeBlanc
• sleblanc_at_agcenter.lsu.edu
• May 19, 2004

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Why Conduct a Local Economic Analysis?

• Provides useful information for decision makers
• Helps citizens understand their communitys local
  economy
• Could help indicate the need for local education
  research programs

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Analysis of the Tangipahoa Parish Economy

• Using
• Trends and comparisons
• Location quotient analysis
• Shift-share analysis
• Retail trade analysis

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Louisiana
Claiborne
Morehouse
West Carroll
Union
East Carroll
Bossier
Lincoln
Webster
Caddo
Ouachita
Richland
Madison
Bienville
Jackson
Red River
DeSoto
Franklin
Caldwell
Tangipahoa Parish
Tensas
Winn
Natchitoches
Catahoula
La Salle
Sabine
Grant
Concordia
Rapides
Vernon
Avoyelles
West Feliciana
East Feliciana
St. Helena
Washington
Evangeline
Allen
Beauregard
Pointe
E. Baton Rouge
St. Landry
Tangipahoa
Coupee
St. Tammany
Livingston
WBR
Jefferson Davis
Acadia
Calcasieu
Lafayette
St. Martin
Iberville
Ascension
St. John
St. James
Orleans
Iberia
Cameron
St. Charles
Assumption
Jefferson
Vermilion
St. Martin
St. Bernard
Lafourche
St. Mary
Plaquemines
Terrebonne
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Comparisons ofTangipahoa Parish Louisiana

• Parish
• Population 100,588
• a) White 69.8
• b) Black 28.4
• c) Hispanic 1.5
• d) Asian 0.4
• Housing units 40,794
• a) Owner-occupied 73.3
• b) Rented 26.7
• Unemployment 5.1

• Louisiana
• 4,468,976
• 63.9
• 32.5
• 2.4
• 1.2
• 1,656,053
• 67.9
• 32.1
• 4.3

Source 2000 U.S. Census
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Economic base, self-sufficient and importing
sectors

• Location quotient analysis

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Base of the Local Economy

• The base of a local economy are the sectors that
  bring income into the community. In general,
  income jobs are brought into a local economy
  by
• Selling local products elsewhere.
• Government agencies that serve populations beyond
  the local level.
• Income from private sources outside the community
  (dividends, etc.).

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Tangipahoa Parish Earnings by Economic Sector in
2000
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2000 Earnings by Economic Sector Tangipahoa
Parish United States

• Farming 2 -
• Ag services, forestry 1 -
• Mining 0 -
• Construction 6 -
• Manufacturing 9 -
• Transportation 4 -
• Wholesale trade 6 -
• Retail trade 16 -
• Finance, insurance 4 -
• Services 19 -
• Government 33 -

• 1
• 1
• 1
• 6
• 16
• 7
• 6
• 9
• 9
• 28
• 16

Source BEA
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Location Quotients (LQs)

• Location Quotient is a single number for each
  local economic sector that determines if the
  local sector is an economic base by comparing it
  the same sector in the U. S. economy.
• Location Quotient (LQ)
• County earnings/US earnings (by sector)

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The Base of the Local Economy

• Any sector that has an LQ of 1.25 or greater is
  considered a base of the local economy. Also
  called an exporting sector.
• Economic Sector 2000 LQ
• Farming 2.49
• Retail trade 1.87
• Government 2.17

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Self-sufficiency in the Local Economy

• Any sector that has an LQ of .75 to 1.25 is
  considered self-sufficient in the local economy.
• Economic Sector 2000 LQ
• Ag services, forestry, etc. 0.93
• Construction 0.93
• Wholesale trade 1.09

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Leaks in the Local Economy

• Any sector that has an LQ of less than .75 is
  considered a leak in the local economy.
• Economic Sector 2000 LQ
• Mining 0.52
• Manufacturing 0.60
• Transportation utilities 0.67
• Finance, ins. real estate 0.25
• Services 0.72

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Retail Trade Analysis in the Local Economy
Source Retail data in NIACS http//www.census.gov
/prod/www/abs/ret-trd.html
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Tangipahoa Parish Retail Sub-Sectors

• The retail trade sector is a base for the local
  economy.
• The pull factor is an indication of how well
  the retail trades are capturing their potential
  share of the market.

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Tangipahoa Parish Retail Sub-Sectors

• A pull factor of 1 indicates that the local
  sub-sector of the retail economy is capturing
  100 of its potential. Pull factors above one
  indicate a capture of more than a sub-sectors
  potential share.

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Tangipahoa Parish Retail Sales Capture (Pull
Factor)-1997
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Sources of Influence on the Local Economy
Shift-share analysis
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Forces that Influence the Local Economy

• Shift-share analysis shows how communities are
  influenced by outside and local forces.
• National factors
• Sector factors
• Local factors
• Shift-share analysis separates the influence of
  each of these factors on the local economy

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Influence of the National Economy on the local
Economy

• National economic growth and also the growth (or
  decline) of particular sectors will affect the
  local economy.
• National growth sectors, 1990-2000
• Ag service, forestry fisheries
• Construction
• Transportation public utilities
• Finance insurance
• Services

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Influence of Local Factors on the Local Economy

• Factors within the firm
• Factors within the private sector
• Factors within the public sector
• State
• Local

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Factors within the Firm and Local Private Sector

• Within the firm
• Productivity
• Management issues
• Firm--cluster or isolated?
• Within the local private sector
• Access to private infrastructure
• State attractive markets
• Quality of lifeprivate services
• Regions with clusters grew rapidly
• Local entrepreneurship culture

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Public Sector Factors

• Quality of life - public services education
• Employment costs in relation to productivity
• Education
• Workers compensation insurance,
• Unemployment insurance
• Taxes in relation to public services
• Simplicity and timeliness of paperwork
• Local business regulations overlapping
  jurisdictions

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Patterns in Shift-Share Analysis (1990-2000)
Source BEA
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Patterns in Shift-Share Analysis (1990-2000)
Source BEA
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Patterns in Shift-Share Analysis (1990-2000)
Source BEA
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Outcomes for the Local Economy

• Trends
• More Comparisons

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Trends in Tangipahoa Parish Earnings - 1969-2000

• Increasing reliance on the government enterprises
  the services sectors
• Declining income from farming, manufacturing, and
  construction
• Finance, wholesale trade, retail trade have
  historically been fairly stable in Tangipahoa
  Parish.

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Trends in Tangipahoa Parish Income, 1969-2000
Source BEA
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Trends in the Base of the Tangipahoa Parish
Economy, 1969-2000
Source BEA
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Trends in the Self-sufficient Sectors of the
Local Economy, 1969-2000

Source BEA
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Trends in the Leaks in the Tangipahoa Parish
Economy, 1969-2000
Source BEA
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What can be done to help the Local Economy?

• Increase the local economic base by
• Selling local products elsewhere.
• Government agencies that serve populations beyond
  the local level.
• Income from private sources outside the
  community.
• Start with the existing economic bases.

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What Can Be Done to Help the Local Economy?

• Find ways to plug the leaks in the local economy
• Work with the local sectors that are
  self-sufficient to expand.
• Work with the local sectors that are part of
  growing national sectors.
• Work with local sectors that are influenced by
  positive local factors.

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Recommendations for the LSU AgCenter to Help
Local Farms

• Investigate how local products are marketed
  help identify different strategies products to
  generate more income
• Identify which farm enterprise hold the most
  potential for greater profits
• Help educate the farmers on improving their
  marketing techniques and on utilizing alternative
  marketing techniques alternative agricultural
  enterprises

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Suggestions for the Tangipahoa Parish Retail
Economy

• Help educate local residence on the importance of
  shopping locally buying local products
• Help determine if there are any gaps in product
  availability locally pursue retailers to fill
  those gaps
• Help educate the local sales force on customer
  relations

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Plugging Leaks Through Education Research

• Business management training
• Job training to improve labor skills
• Finding a use for waste
• Conservation programs
• New technology that uses the resources more
  efficiently
• Job training for the unemployed
• Finding a more valuable use for a local product

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Suggestions for Local Officials to Help Keep
Government Jobs

• Form collaborations to cooperate in
• Seeking new government employment new local
  government enterprises
• Maintaining government employment local
  government enterprises

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Local Economic Analysis Reference Material
Community Economic Analysis A How To Manual
http//www.ag.iastate.edu/centers/rdev/pubs/conten
ts/141.htm
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Local Economic Analysis Course Work
Missouri University - Ag Econ 301 Special Topics
Local Economic Analysis http//mudirect.missouri.e
du/ Winter Semester (1-credit or non-credit) Dr.
Judith I. Stallman, Professor Stallmannj_at_missouri.
edu
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Local Economic Analysis Course 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.
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Local Economic AnalysisA Case Study

• Special thanks to
• Dr. Judith I. Stallman
• for her suggestions contributions to this
  presentation.

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Local Economic AnalysisA Case Study

• The End
• Scuddy J. LeBlanc
• sleblanc_at_agcenter.lsu.edu