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					Local Economic Analysis:
      A Case Study
      Scuddy J. LeBlanc
 sleblanc@agcenter.lsu.edu
        May 19, 2004



                             1
 Why Conduct a Local Economic
 Analysis?

 Provides useful information for decision
  makers
 Helps citizens understand their
  community’s local economy
 Could help indicate the need for local
  education & research programs



                                             2
 Analysis of the
 Tangipahoa Parish Economy

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




                                3
                          Claiborne


                                         Lincoln
                                                       Union              Morehouse
                                                                                                                                   Louisiana
                                                            Ouachita
                                                                           Richland
                          Bienville                                                            Madison
                                              Jackson


DeSoto            Red                                                           Franklin
                  River                                        Caldwell
                                                                                              Tensas



                                                                                                                                   Tangipahoa
                                          Winn


                                                            La Salle



                                                                                                                                     Parish
         Sabine
                                               Grant




                                               Rapides
                      Vernon
                                                                   Avoyelles



                                                                                           West         East          St.      Washington
                                                                                           Feliciana    Feliciana     Helena
                                      Allen        Evangeline
             Beauregard                                                              Pointe
                                                                   St. Landry                          E. Baton
                                                                                     Coupee            Rouge
                                                                                              WBR                 Livingston

                                 Jefferson
                                                   Acadia
            Calcasieu            Davis
                                                                           St. Martin

                                                                                                                    St.
                                                                                                                    James
                                                                            Iberia
                   Cameron                             Vermilion
                                                                                                                                            St. Bernard

                                                                                           St. Mary



                                                                                                             Terrebonne




                                                                                                                                                          4
Comparisons of
Tangipahoa Parish & Louisiana*
                        Parish    Louisiana
Population:             100,588   4,468,976
a) White                 69.8%    63.9%
b) Black                 28.4 %   32.5%
c) Hispanic               1.5%    2.4%
d) Asian                  0.4%    1.2%

Housing units:    40,794          1,656,053
a) Owner-occupied 73.3%           67.9%
b) Rented         26.7%           32.1%
Unemployment       5.1%           4.3%
*Source: 2000 U.S. Census                     5
Economic base, self-
sufficient and importing
sectors

 Location quotient analysis



                              6
  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.).
                                            7
     Tangipahoa Parish Earnings by
     Economic Sector in 2000
                             Farming
 6%                          Ag. Services, Forest., Fish.
       9%   4%   6%
0%                           Mining

1%                           Construction
                       16%
                             Manufacturing
2%
                             Transportation

                        4%   Wholesale
                             Retail
                             Finance, etc.
 33%                         Services
                      19%
                             Government


                                                       8
2000 Earnings by Economic Sector:
Tangipahoa Parish – United States
             Farming: 2% - 1%
Ag services, forestry: 1% - 1%
              Mining: 0% - 1%
       Construction: 6% - 6%
     Manufacturing: 9% - 16%
     Transportation: 4% - 7%
   Wholesale trade:    6% - 6%
        Retail trade: 16% - 9%
 Finance, insurance: 4% - 9%
            Services: 19% - 28%
       Government: 33% - 16%
                              Source: BEA
                                            9
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)
                                      10
 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
                                         11
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
                                         12
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      13
    Retail Trade Analysis in the
          Local Economy

         Source: Retail data in NIACS:
http//www.census.gov/prod/www/abs/ret-trd.html



                                                 14
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.



                                            15
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-sector’s
potential share.



                                          16
      Tangipahoa Parish Retail Sales
      Capture (Pull Factor)-1997

                                                 Total Retail
 3
                                                 Automobile
2.5                            2.41              Furniture
                                                 Electronic Appliances
 2                                               Building Materials
         1.67
      1.42   1.43                         1.44   Food & Beverage
1.5
                        1.191.14                 Health & Personal Care
                    1.02               1.07
 1
                                   0.93          Gasoline Stations
                0.52                             Clothing
0.5                                              Sporting Goods
                                                 General Merchandise
 0
                                                                      17
Sources of Influence on the
     Local Economy


 Shift-share analysis



                              18
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
                                          19
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                               20
Influence of Local Factors on the
Local Economy

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




                                     21
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 life—private services
  – Regions with clusters grew rapidly
  – Local entrepreneurship culture
                                         22
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
                                                  23
Patterns in Shift-Share Analysis
(1990-2000)

Base         National   Sector     Local
Economic     Factor     Factor     Factor
Sectors
Farming         +          -            -
Government      +          -            +
Retail          +          -            +



                               Source: BEA
                                             24
Patterns in Shift-Share Analysis
(1990-2000)
Self-sufficient   National   Sector    Local
Economic          Factor     Factor    Factor
Sectors
Ag. services         +         +            +
Construction         +         +            +
Wholesale            +          -           +
trade


                                    Source: BEA
                                                  25
Patterns in Shift-Share Analysis
(1990-2000)
Leaks in the local   National   Sector Local
economy              Factor     Factor Factor
Mining                   +        -           -
Manufacturing            +        -           +

Transportation           +        +           +

Finance                  +        +           -

Services                 +        +           -

                                      Source: BEA
                                                    26
Outcomes for the Local
     Economy

 Trends
 More Comparisons

                         27
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.


                                       28
                           Trends in Tangipahoa Parish Income,
                           1969-2000
                              Residence adjustment          Dividends, interest, rent
                              Transfer payments
                     35%

                     30%
% of local economy




                     25%

                     20%

                     15%

                     10%

                     5%

                     0%
                       1969     1974     1979        1984      1989       1994          1999
                                                                        Source: BEA            29
                           Trends in the Base of the Tangipahoa
                           Parish Economy, 1969-2000
                              Farm earnings          Retail trade   Gov't & gov't enterprises
                     20%



                     15%
% of local economy




                     10%



                     5%



                     0%
                       1969       1974        1979          1984    1989        1994            1999
                                                                                Source: BEA            30
                          Trends in the Self-sufficient Sectors
                          of the Local Economy, 1969-2000
                              Ag. services, forestry, fishing, other   Construction      Wholesale trade
                     7%

                     6%
% of local economy




                     5%

                     4%

                     3%

                     2%

                     1%

                     0%
                       1969          1974        1979         1984      1989      1994         1999

                                                                                  Source: BEA         31
                           Trends in the Leaks in the Tangipahoa
                           Parish Economy, 1969-2000
                              Mining                                    Manufacturing
                              Transportation, public utilities          Finance, insurance, real estate
                              Services
                     12%


                     10%
% of local economy




                     8%


                     6%


                     4%


                     2%


                     0%
                       1969       1974           1979            1984     1989           1994             1999
                                                                                     Source: BEA             32
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.


                                       33
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.
                                           34
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   35
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

                                             36
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
                                        37
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



                                   38
      Local Economic Analysis
              Reference Material


Community Economic Analysis: A “How To Manual”
http://www.ag.iastate.edu/centers/rdev/pubs/contents/141.htm




                                                           39
    Local Economic Analysis
          Course 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
              Stallmannj@missouri.edu
                                                          40
     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.”

                                                          41
  Local Economic Analysis:
        A Case Study

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

                                         42
Local Economic Analysis:
      A Case Study
         The End

     Scuddy J. LeBlanc
sleblanc@agcenter.lsu.edu

                            43

				
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