Chapter 10 Cities and Urban Economies • Relation between urban growth and capitalist development • Central place theory (NOT IN TEXT) • Economic base model •
Download ReportTranscript Chapter 10 Cities and Urban Economies • Relation between urban growth and capitalist development • Central place theory (NOT IN TEXT) • Economic base model •
Chapter 10 Cities and Urban Economies • Relation between urban growth and capitalist development • Central place theory (NOT IN TEXT) • Economic base model • Housing markets in urban areas • Gentrification processes • The development of global cities A simple model of trade Exports Internal Goods and Services Imports The Economic Base Model ET = Total Employment EX = Export Employment (Basic) EL = Local Employment (Non-Basic) ET = EX + EL (1) Define a = EL/ET Multiply by ET and substitute into (1): ET = EX + aET Solve for ET: ET = ( 1/1-a)EX Example, Economic Base Model If a = .67 Then:( 1/1-.67) =( 1/.33) = 3 If EX = 500, then ET = 3 x 500 or 1500. If EX rises to 750, ET becomes 3 x 750 or 2250 and if EX falls back to 400, ET declines to 1200 Alternative Formulation: Textbook p. 275 ΔT = m ΔB Where m= 1 + NB/B Or 1 +67/33 = 1 +2 or a multiplier of 3 If export = 500, then total impact is 1500 Measurement of the Economic Base Multiplier Direct Surveys “Short-cut” Approaches: Assumption or Assignment Minimum Requirements Location Quotients Industry Specific Models: Input-output Regional econometric models Example of Minimum Requirements Minimum Requirements Manufacturing 0.12 0.1 0.08 0.06 0.04 0.02 0 mfg85 mfg95 10 100 1000 Total Employment (Thousands) If total employment was 100,000, then minimum requirements is 6%, or 6,000. If actual employment were 10,000, 4,000 would be assigned to exports. Repeat for all industries, sum local shares to obtain “a” Example of Location Quotient Approach to Economic Base Industry Jobs Agriculture 500 Mining 300 Manufacturing1000 Retail 1500 Services 3000 Total 6300 LQ 0.8 5.0 2.0 1.0 1.2 Export 0 240 500 0 500 Local 500 60 500 1500 2500 1240 5060 a = 5060/6300 = .803, so (1/1-.803) = 5.08 Size of Region and Size of Multiplier 1.0 .67 Wn.State Mult. = 3 World - Mult = Individual Log Population Sells all labor a = 0, multiplier = 1.0 Regional Input-Output Models Final Demand Industry 1 Industry 2 Consumption Investment Govt. Exports Total Sales Industry 1 Industry 2 Labor Income Other Value Added Imports Total Purchases Total Sales = Total Purchases Total Sales = Intermediate Sales + Final Sales Total Purchases = Intermediate Purchases + Value Added + Imports Washington State Input-Output Model Handouts: Transactions Table Direct Requirements Matrix Direct & Indirect Requirements Matrix Direct, Indirect, & Induced Requirements Matrix Input-Output Notation = Direct, Indirect & Induced Requirements Matrix X Final Demand Output Impact Analysis Using I/O Models Employment Impacts calculated from Output Impacts Impact Analysis with I/O Models Key Inputs: Final Demand values for output, income, and jobs Key modeling requirements: I/o model relevant to the problem Results: usually reported for jobs, income, output, and taxes Impact Analysis Examples • ArtsFund – impacts of nonprofit arts and patron spending • Technology Alliance – impact of high tech • SAM – impact of the Gauguin exhibition • Boeing Field – impact of King County International Airport • UW – impacts of Husky athletics • Seattle Center – impacts of Key Arena and of the wide variety of activities on the campus Direct & Indirect Output Multipliers Direct & Indirect Labor Income Per Dollar of Final Demand Direct & Indirect Jobs Per $ Million Final Demand Output Multipliers Labor Income Multipliers – Total Labor Income /$ Direct Labor Income Employment Multipliers – Total Jobs Per Direct Job Regional Models, continued • Regional Econometric Models • Interregional Input-output models • Structural Change Regional Econometric Models The Washington Projection & Simulation Model Coefficient Change Imports Output (I/O Relations) Income Employment and Population Consumption Exports National Econometric Model State & Local Government Investment Productivity Rates Wage rates, tax rates, nonearnings income WPSM Simulation of Change in Aerospace Exports Aerospace Exports 160 140 Value-added 120 Consumption 100 80 State & Local Expenditures 60 Fixed Investment 40 Disposable Income 20 0 1975 Persons Employed (hundreds) 1980 1985 Population (hundreds) Multiregional Models Region B Region A Region D Region C Multiregional Input-Output Model (intermediate & final transactions including interregional value added payments) AA AB AC AD BA BB BC BD CA CB CC CD DA DB DC DD Feedback Loops Simulation of Columbia Basin (AK & HI Inset) States United Irrigation Project Development Project Region Other Washington Jobs Estimate of Employment Impacts from Multiregional Model 4000 3500 3000 2500 2000 1500 1000 500 0 Local Agriculture Local Food Products Other Local Jobs Project Construction Other Washington Jobs 0 10 Project Year 20 Structural Change in I/O Models • Washington State is unique in having 8 largely survey-based input-output models • They are benchmarked against 1963, 1967, 1972, 1982, 1987, 1997, 2002, and 2007 • Each of these is an economic census year • The models have been aggregated to a common sectoring scheme, and transaction values have been benchmarked against the year 1972, to be able to compare their structure in constant $. Output Change (1) Output Change (2) Gross Washington Output Level to Deliver 2007 Final Demand Employment Required to Deliver 2007 Washington Final Demand Share of Output Washington State Composition of Exports Share of Inputs Washington State