Regional economic analysis

University of Dortmund Tel. +49-231-755-6467 Faculty of Spatial Planning Fax +49-231-755-4398 SPRING Centre 44221 Dortmund-Germany http://www.rp.uni-dortmund.de/geo/spring/ Regional Economic Analysis Overview 1. Basic parameters (indicators) of regional economic development 2. Overview of methods for inter- and intraregional economic analysis 3. Review of selected methods Basic parameters of regional economic development Sources of data International Development reports (UN, WB, OECD, UNESCO) National Statistics Reports and surveys Sector reports and studies Project reports … Kinds of measurements Levels of attainment (absolute, relative /proportion, per capita, index) Distribution of attainment (by region, urban and rural, gender, age groups, income groups, ethnic groups) Changes/trends Rankings Basic parameters of regional economic development Labour Labour force: The working age population of a defined age bracket (depending on country standards, for example age 15 - 64) who contributes to the production of goods and services in a country (employed) or those who have not worked but exerted pressure in the labour market, by actively looking for work. Working age population: The entirety of persons with a defined age bracket, including students, retirees, disabled, housewives etc. Labour force participation rate: The proportion of the working age population, who are in the labour force Basic parameters (indicators) of regional economic development Labour Year Working age population (in 1,000) Labour force participation rate (%) 1994 42,670 64.4 1995 42,770 65.6 1996 45,034 65.8 1997 46,214 65.5 1998 47,415 66 1999 48,637 65.8 2000 48,076 64.3 2001 49,502 67.5 2002 50,502 66.2 Example: Working age population (in thousands) and labour force, years 1994 – 2002, The Philippines Basic parameters of regional economic development Employment Employment rate: The proportion of the total number of persons employed to the total number of persons in the labour force Unemployment rate: Proportion of persons in the labour force who have no jobs or business but are reported actively looking for work Underemployment rate: The proportion of employed persons who expressed the desire to have (a) additional hours of work; or (b) additional job in their present job; or (c) a new job with longer working hours. Basic parameters of regional economic development Example: Unemployment rate compared over time and among places Number of unemployed people 1990 Province Nation 6,000 850,000 2000 5,444 760,000 Unemployment rates Rates 1990 7.8 4.5 2000 6.8 3.8 Percentage change 1990-2000 -12.8 -15.6 Indices 1990 173 100 2000 179 100 How to calculate the indices: Compute the ratios of the figures for the provincial and national unemployment rates (Example: 7.8/4.5) By convention, the ratio is multiplied by 100, producing a whole number index for the provinces that uses the national unemployment rate as the base for comparison. Basic parameters of regional economic development Employment by sector: Number and proportion of employed persons in different economic sectors Sector classification (following standard industry classification): Primary: Agriculture, livestock, fisheries, forestry Secondary: Industry (mining, quarrying, manufacturing, construction, electricity, gas, water) Tertiary: Services (transportation, storage and communication, retail and wholesale, finance, real estate, government services) Example: Year/Sector Primary Secondary Tertiary 1950 24.8 42.6 32.6 1960 13.4 48 38.6 1970 9 48.4 42.6 1980 5.3 45.3 49.4 1990 3.4 40.0 57 Germany (West), taken from the Statiscal Yearbook; for comparison: Philippines 37.1, 16.2, 46.7) Basic parameters of regional economic development Wage rates Nominal minimum wage rates vs. Real minimum wage rates: Example: Sector Non-Agriculture Agriculture Nominal 280 (4.6 US$) 243 (4 US$) Real 161 (2.68 US$) 140 (2.33 US$) Example (NCR Philippines, March 2003), in PhP, Source NSCB 2003 Basic parameters of regional economic development Economic accounts Quantify the magnitude of transactions taking place in the economy especially those relating to the production and consumption of goods and services Provide a description of economic performance Indication of personal and community economic welfare and, compared over time, of economic growth Gross National (Regional/Provincial) Domestic Product (GDP) The total output (value) of goods and services for final use produced by an economy, by both residents and non-residents, regardless of the allocation to domestic and foreign claims. Basic parameters of regional economic development Gross National (Regional/Provincial) Product (GNP): Comprises the GDP plus net factor income from abroad, which is the income residents receive from abroad for factor services (labour and capital), less similar payments made to non-residents who contribute to the domestic economy The GNP involves personal consumption expenditures, private investment, local and central government expenditures, all sales of the nation/region’s products and services to buyers from outside (exports) Gross Value Added (GVA): The value of final output net of intermediate input Intermediate Input: Value of goods and services used up in the production process during the accounting period such as raw material and supplies, containers and packing materials, fuel, electricity… Basic parameters of regional economic development Net factor income from abroad Gross Value Added Gross Domestic Product Intermediate Inputs Gross National Product Basic parameters of regional economic development Per Capita GNP/GDP The physical volume of goods and services produced for a period per person At current prices: Actual value, changes do not eliminate price changes (inflation) At constant current prices: At constant base year prices, after eliminating effects of price changes (inflation), makes economic account data comparable Inflation: General measures of the average monthly and annual rate of change in the retail prices of commodities purchased by households computed from a base year and weighted by the consumption pattern or basket of households Purchasing Power Parity (PPP): A rate of exchange that accounts for price differences across countries Basic parameters of regional economic development Productivity related indicators Education Basic literacy rate: The percentage of people aged 15 years and above who can, with understanding, both read and write a short, simple statement in their everyday life. Functional literacy rate: Covers aspects of basic literacy rate, plus people’s ability to understand the message in simple paragraphs and perform simple calculations of useful nature Educational attainment: Measured as enrolment of children in primary, secondary and tertiary education Basic parameters of regional economic development Technology achievement index: Dimension 1. Creation of technology Indicator Patents ranted per capita Receipts of royalty and license fees from abroad per capita 2. Diffusion of recent innovations Internet hosts per capita High- and medium-technology exports as a share of all exports 3. Diffusion of old innovations Logarithm of electricity consumption per capita Logarithm of telephones per capita 4. Human skills Mean years of schooling Gross enrolment ratio at tertiary level in science, mathematics and engineering Source World Intellectual Property Organization (2001) World Bank, World Development Indicators 2001 International Telecommunication Union 2001 UN Statistical Division World Bank, World Development Indicators 2001 International Telecommunication Union 2001 Barro and Lee (2000) UN Educational, Scientific and Cultural Organization (based on UNESCO 1998 – 2001) Basic parameters of regional economic development HDR 2001, p. 45 Basic parameters of regional economic development Development indices How to calculate an index Basic parameters (indicators) of regional economic development Human Development Index (HDI) UNDP, www.undp.org Measures human development in three basic dimensions: long and healthy life : life expectancy at birth (life expectancy index) Knowledge: Adult literacy rate, expressed as combined primary, secondary and tertiary enrolment ratio (education index) Decent standard of living: GDP per capita (PPP US$) Basic parameters of regional economic development N Batanes 100 Apayao Ilocos Norte 0 100 200 Kilometers Example: HDI Philippines National average HDI: 0. 749 Cagayan Abra Kalinga Mountain Ilocos SurProvince Ifugao CAR REGION II Isabela REGION I La Union BenguetNueva Vizcaya Quirino Pangasinan Tarlac Aurora Nueva Ecija Luzon Island Group Human Development Index 0.321 - 0.448 0.449 - 0.543 0.544 - 0.624 0.625 - 0.8 >0.8 REGION III Zambales Pampanga Bulacan MMla Cavite Rizal Highest provincial HDI: 0.885 Lowest provincial HDI: 0.321 Bataan REGION IV Quezon REGION V Catanduanes Camarines Sur National Capital Region Laguna Camarines Norte Batangas Oriental Mindoro Occidental Mindoro Marinduque Albay Sorsogon REGION IV Romblon Masbate REGION VIII Northern Samar Eastern Samar Samar Biliran Aklan Capiz Leyte Antique Iloilo Negros Occidental Cebu Visayas Island Group Guimaras REGION VI Bohol Palawan Negros Oriental Southern Leyte Surigao Del Norte Camiguin REGION VII Siquijor CARAGA REGION X Misamis Del Norte Oriental Agusan Surigao Del Sur REGION IX Zamboanga Del Norte Misamis Occidental Bukidnon Lanao Del Norte Lanao Del Sur Agusan Del Sur Zamboanga Del Sur Davao ARMM Basilan Sulu Cotabato Maguindanao Davao Oriental Davao Del Sur Mindanao Island Group Sultan Kudarat South Cotabato Sarangani REGION XI Tawi-tawi ARMM Basic parameters of regional economic development Methodological problems of development indicators/indices International comparison difficult (definitions, price levels) No or distorted prices Underreporting/informal economy Subsistence / barter economies not captured No disaggregation of indices to provincial / district level Problem of analysis based on economic product: status of wellbeing (housing, health, recreation, nutrition, job satisfaction, physical and natural environment not indicated by current levels of individual or regional income Current levels of income (and product) say little about the underlying health of the economy and prospects for the future