MARASIGAN,Nessa Mae P.
provide information that can aid in Economic development interventions requires
AC12FA1- ECONOMIC DEVELOPMENT
INTRODUCTION TO ANALYTICAL METHODS FOR
LOCAL ECONOMIC DEVELOPMENT PLANNING
Successful economic development planning is
based on a solid analytical framework that
accurately describe the local Economic context such
as identification of groups that have special needs,
local resources available to sustain needs, place of
community in the larger regional, state, national
and global context.
Developmentoccurs when the community’s
standard of living can be preserved and increased
through a process of human development that is
based on equity and sustainability.
Information and Analytical Requirements for Local
Economic Development Planning
Economic development and implementation
requires analyses across a wide range of categories
that make up the local economy. These an analyses
can be descriptive, predictive, or evaluative.
 Descriptive Analyses, the community’s
determine how its economy is fairing
relative to its position in the past or its
current position as measured against
development goals that may have been
set or
 measured against other referent
economies (e.g., the nation or
similar-sized country for which it
competes for resources).
Also often used in marketing purposes- to
attracting firms, major development
projects, employers, employees, and
residents.
 Predictive Analyses in economic
development often take the form of
impact or causal analysis. This analysis can
assess the growth or development will be
on local economy but can be extended to
a wider set of community concerns.
Example: …
 Fiscal Impact Analysis- estimates the
impact of a particular development
project on cost and revenues of the local
government units that will provide
services to the development
 Socioeconomic Impact Analysis- assess
how development changes community
demographics, demands for housing,
retail and other services, levels of
employment and income, as well as
aesthetic quality of the community.
 Impact Analysis- focuses on building and
land development associated with new
economic development activities.
 Evaluative Analysis seeks to determine
how well specific goals of economic
development planning efforts are being
met in addition to gauging shifts in
economic development conditions.
Example: …
Understanding Economy’s Strengths and
Weaknesses
a detailed analytical understanding of the
strengths and weaknesses of the local
economy as well as the forces that are
constraining or driving it. Local matters must
also be placed in the context of external
economic forces from around the globe such as
new technology, changing availability of
natural resources, and trade & monetary
policy.
First step is creating a descriptive profile
Economic development analyst must
determine the appropriate unit of analysis
answering questions like:
• What are the geographic boundaries of
the local economy?
• Is it a legally defined city or country or a
subarea such as neighbourhood planning
unit?
McLean & Voytek (1992)
“The range od impact of evonomic acitivity alost
never coincides with the jusridicial boundaries of
political units. Spillovers occur in both directions:
the policy decisions of one jurisdiction may affect
economuc activity adjacent areas, even as economic
activity flows easily across jurisdictional lines.”
Period of Analysis- understanding and determining
whether the local economy is better or worse of
currently than at some earlier point in time, as well
as determining exactly how it changed over a period
of time, is affected by two cyclical phenomena.
 Long term/Long wave- phenomenon
where significant and permanent shifts in
 the economic activity occur. This can be
sectoral-such as the shifts from
manufacturing to services industries.
 Structural shifts- can perceived as
geographical (ex. Regional or
localeconomy in which economic activity
was largely associated with one particular
sector may decline if new sector
originates in another
The Economic Profile
How much more information should be included
will depend on the part of the specific needs of the
community as well as on the availability of
information for the size of the community under
Consideration.
The smaller the community or the less its
geographic boundaries coincide with administrative
or political boundaries, the more difficult it
becomes to obtain detailed economic information
from secondary sources.
The Economic Profile
Demographics
- tell whether it is large or small, growing
or declining and homogeneous or diverse.
Age profile (usually analyzed in 5-year segments,
three broad segment of less than working age; 16-
64 years old or working age & 65 or retirement age).
Educational Attainment, workforce can provide an
indication of how advanced the economic
development strategy can be.
Population Estimates, include the number of people
in the area between census periods. Births, deaths,
and migration factors are added or subtracted from
census data to give an estimate of current
population in an area
Changing ethic mix, can bring new opportunities
and challenges to the economic development
professional
Quality of Life
Important consideration because they influence the
ability to retain and attract firms and employees.
Firms in more advance sectors and workers in
advanced occupations gave higher quality-of-life-
expectations
Income and Wages
Subcategory key to understand what standard of
living is in the local economy. One of the objective
of three objective of local economic development
planning is improving the standard of living.
Labor Force Characteristic
A key activity in local economic development
planning is job creation. Earnings from employment
is the primary source of income.
Business Establishment by Industry Sectors and
Employment Size
Focuses on the characteristic of the business
establishments found in the local economy.
Business establishment provides clues as to its role
in the overall economy
International Linkage
Due to economic globalization, local economic
development planner should be familiar with and
may want to encourage international linkages and
support foe export-oriented business within the
local economies.
Transportation, Utilities, Taxes, Land/Building,
Availability & Environmental Regulations
Traditional requirement and cost of doing business
in a local Economy
Transportation- indicate how connected the local
economy to another economic centres
Taxes- range of taxes to which businesses and
employees can be subject
Availability of land and buildings- expanding
business in a critical factor in a local economic
development
Environmental regulations- environmental permits
that businesses may have to secure depending on
their production processes.
Building on Comparisons
Data for economic development analysis build on
comparisons that look at a community in relation to
someplace else that is a valid referent. Typically,
planners compare the strengths and weaknesses of
their zone of action (local, country or multicountry)
with a much larger area (a state, multistate, region
or nation), depending on the size of the units.
Example: …
As a result of comparison, planners may find that
the local area gas a higher portion of electronic
companies or that its hospital and medical firms,
while seemingly highly represented, in fact are
actually below the number expected in ration to
area like the state region.

Gathering Available Descriptive Data
Data for local communities come from individual,
government and private sources, and each source
has its strength and weaknesses. Availability of
information is rapidly increasing through Internet
sources
Local Agencies and Individuals
Already available in many communities is a vast
array of existing data held by local planning or
service agencies. People who live, work, and play in
the community can be involved in contributing their
knowledge and ideas to the local economic
development planning process through community
fact-finding techniques such as the following
Personal interviews
Public hearings
Neighborhood meetings
Church, fraternal, & trade oragnizations
Press, radio, and television outlets
Existing reports, case studies, and feasibility studies
Industrial Classifications
We use NAICS help ud understand the multiplicity of
partd in the economy. Replacement for the SIC
system that served for more than 60years as the
structure for the collection, aggregation,
presentation and analysis of the U.S economy.
Occupational Data
Revisions to the occupational classification system.
It requires the use of the crosswalks to do tiine
series analyses. However, unlike NAICS, the SOC
system is intended only for analyzibg U.S data
Census of Population
Most well-known source of economic data has been
the US census, which collects data every 10years.
Census obtained from every household a small
amount of data, such as age, race or ethnicity,
gender, family, and a few housing items.
Employer Reports
Provides accurate, inclusive, abd recurring reportd
as they get licenses and pay fees and taxes as part
of their overall activities. These reported turn into
data, which are collected by government agencies.
Economic development pkannerd are interested in
two reports which are: quarterly payments for
unemployment insurance to their state and social
security deductions to the federal government.
Private Data
Significant increase in private data sets that
economic development analysts find useful. In
some case, these data sets are from public sources
but are repacked by private firms in a manner that
makes them more useful for analysis.
Rationale for a Dynamic Analysis
Analyst will want to know what is changing in the
economy for several reasons. First they will be able
to invest public resources wisely and to allocate
public infrastructure for appropriate industrial
needs. In addition, knowing which industries are
likely to grow most rapidly, will allow economic
developers to understand which jobs and skills are
likely to increase.
Shift-Share Analysis
Shift-Share analysis is a powerful technique for
analyzing changes in the structure of the local
economy in reference to the state or nation. Unlike
the LQ, shift-share deals with the changing
economy, not just the way it is at one period of
time.
The purpose of shift-share analysis is to
disaggregate the growth of a local economy’s
industry structure. It can be calculated with
employment or other economic data, but
employment is usually used.
Input-Output Analysis
Input-output analysis ("I-O") is a form of
macroeconomic analysis based on the
interdependencies between economic sectors or
industries.
This method is commonly used for estimating the
impacts of positive or negative economic shock and
analyzing the ripple effects throughout an
economy.
Local EconomicDevelopment Strategy
Projects from Strategies
Action plans are documents describing the
components of a proposed project that match the
economic development strategy.
In simple words, it is a document that lists what
steps must be taken in order to achieve a specific
goal.

SPECIFYING PRODUCTS/ SERVICES
Describing Project Outcomes
Employment Impacts
Explains that job creation generally is important, but
it is more important to create the right jobs for
those in need in the community.
Linkages and Spin-offs
Projects that strengthen socioeconomic linkages are
usually also projects with a competitive advantage.
Community Improvement
Aspects of a project that enhances the total
livability of an area.
Materials
All existing physical resources, both natural and
human-made.
Labor Force
Population used to create a product or service for
sale
Markets
Place where there is demand for certain products or
services.
Management
Is a special type of human capital. They serves as
the catalyst of effective good management
Money
Is the financing directly involved in establishing and
operating a proposed project.
Funding
Obtaining all of the fiscal resources to develop and
manage a project or program
Financing
Identifying sources of capital (often private) to
provide the initial financial resources.
Business improvement districts (BIDs)
- An organized effort to use public and private
monies to maintain and restore a commercial
neighbourhood
Empowerment Zones (Ezs)
- Businesses in these designated areas of need that
are eligible for special incentives to open or expand
operations.
Tax Increment Financing (TIF)
- A typically district-based designation that allows
projected future tax gains to be used to finance
today’s infrastructure improvements.
ECONOMIC DEVELOPMENT PLANS WITHIN THE
CONTEXT OF COMPREHENSIVE PLANS
Comprehensive Land-use Plan Development-
widely utilized local planning practice primarily
intended to reserve underdeveloped land for a
future "highest and best use".
THE COMMUNITY-BASED EMPLOYMENT
DEVELOPMENT STRATEGY OPTION (THE
NEIGHBORHOOD DIMENSION)
This option is designed to promote economic
development at the neighborhood or small
community level and create employment
opportunities for persons who are long-term
unemployed, new entrants to the labor force, or
groups seeking to play unconventional roles in the
economic system.
Finally, community-based organizations are the
major provider of low-cost and affordable housing
for the nation's workforce. Basic activities include
the following:
1. Community-based development organizations-
nonprofit organizations that own and/or operate
entrepreneurial activities and also provide a wide
range of community services.
2. Cooperatives- worker-owned and worker-
managed business in which the group shares the
responsibility and liability for generating wealth
and/or employment using jointly held resources.
3. Community capital institutions- a new set of
community-based capital institutions that are
emerging across the nation.
4. Affordable housing corporations- provide
housing for workers, low- and moderate-income
groups, and special-needs populations, at the same
time creating new employment and business
opportunities.
5. Land trust and similar community ownership
instruments- create vehicles for local control and
ownership of economic activity in the community.
COMMON TRAPS IN STRATEGY FORMULATION
 1. Leading with grants without a strategic
program and clear goals.
 2. Letting the tool(s) determine the
strategy.
 3. Starting at the wrong end of the
problem.
  4. Following the fad.
 5. Overlooking development capacity.
ASSEMBLING THE ELEMENTS
OF A STRATEGY
Factors that form the base for assembling strategy:
1. Target Characteristics- it include such items as
the strategy's scope
2. Methods Development- a good strategy uses
appropriate methods to accomplish intended
objectives.
3. Forms of Local Organizations- organizational
form needs to be well thought out before economic
development strategy is selected.
4. Time Frame- a local economic development
strategy must include both short-term, visible
objectives and long-term, process objectives.
Prerequisites for successful strategy formulation
1. Socioeconomic Base Analysis
2. DEVELOPMENT CAPACITY ANALYSIS
- are essential starting points for designing
appropriate development strategies.
BASIC EMPLOYMENT
entail business activities that provide services
primarily outside the local area via the sale of goods
and services but whose revenue is directed to the
local are in the form of wages, payments to local
suppliers, and capital expenditures.
Non BASIC EMPLOYMENT
associated with services and business activity that
primarily serve the local area.
As a result, an analysis of the economic base should
consider the following:
1. Determining which sectors play a
dominant role in the local economy
2. Identifying important linkages between
the local economy and the external
economy
3. Assessing the local potential for economic
growth, stability, and decline and
identifying contingencies for economic
development
4. Exploring contingencies important to the
local population or political leadership
SELECTING STRATEGIC OPTIONS
Four strategic approaches:
1. Locality or Physical Development Strategy
2. Business Development
3. Human Resources Development
4. Community-based Development
The locality development strategy option
(the built environment dimension)
Tools for accomplishing locality development goals
are numerous and include the following:
• Planning and development controls
• Economic and enterprise zones
• Transportation and major infrastructure
• Landscaping and streetscaping
• Household services and housing
The business development strategy option
(the demand side)
Several mechanisms can be employed, including the
following:
• Small business and innovation assistance
centers
• Technology and business parks
• Venture financing companies
• One-stop business information centers
• Micro-enterprise programs
• Business retention and expansion
programs
The human resource development option
(supply side)
The methods include the following:
• Customized training
• Innovation development
• Targeted placement
• Welfare to work
• School-tow-work programs
• Local employment programs
LOCAL ECONOMIC DEVELOPMENT
Local Economic Development (LED) is an approach
towards economic development which allows and
encourages local people to work together to
achieve sustainable economic growth and
development thereby bringing economic benefits
and improved quality of life for all residents in
a localmunicipal area
STRATEGIC PLANNING
Strategic planning is an organization's process of
defining its strategy, or direction, and making
decisions on allocating its resources to pursue this
strategy. It may also extend to control mechanisms
for guiding the implementation of the strategy.
Economic Development Practitioners …
.. Understand the value of strategic approaches to
rekindle distressed communities, both rural and
urban.
NO URBAN AREA HAS BEEN EXEMPT FROM
INCREASING SUBURNIZATION.
SUBURNIZATION
Suburbanization is a population shift from central
urban areas into suburbs, resulting in the formation
of urban sprawl. Sub-urbanization is inversely
related to urbanization, which denotes a population
shift from rural areas into urban centres.
A suburb is a residential district located on the
outskirts of a city. If you live in thesuburbs, you
probably travel to the city for work. Suburb comes
from Latin: sub means "below or near" and urbis
means "city." You will also recognize this root in
urban.
URBAN SPRAWL
Urban sprawl is basically another word for
urbanization. It refers to the migration of a
population from populated towns and cities to low
density residential development over more and
more rural land. The end result is the spreading of a
city and its suburbs over more and more rural land
SMART GROWTH MEASURES
Designed to increase urban densities, improve
urban livability in all aspects (schools, mass transit
and etc.) and boost inner city retailing.
STRATEGIES
Strategies are planned actions for specific
development goals of a community derived from
available opportunities – economic as well as social.
Its constitute an overarching set of principles that
form concepts to guide general to specifi actions.
Therefore, it is important to examine alternative
strategies along with a set of specific projects or
proposals as the basic building blocks of an
economic development (Kemp, 1992).
THE GOALS OF LOCAL ECONOMIC DEVELOPMENTA
key goal for any economic development is to
provide quality jobs for the current population.
It is important, then, to rethink job generation by
starting with the supply side of the question ..
1. Who is in our population base?
2. What skills do they bring?
3. What kind of jobs might best fit for
them?
GOAL NUMBER 1
Achieve Local Economic Stability
GOAL NUMBER 2
Build a Diverse Economic and Employment Base
GOAL NUMBER 3
Promote Local Sustainability
CHAPTER 5: Population Growth and Economic
Development: Causes, Consequences,
and Controversies
• World population growth through history
LAND PLUS LABOR PLUS CAPITAL = ED
• Structure of the world’s population
– Geographic region
– Fertility and Mortality Trends
– Rate of population increase
– Birth rates, death rates , Total
fertility rates
– Age Structure and dependency
burdens
• The Hidden Momentum of Population
Growth
– High birth rates cannot be
altered overnight
– Age structure of developing
country populations
The Demographic Transition
• Stage I: High birthrates and death rates
• Stage II: Continued high birthrates,
declining death rates
• Stage III: Falling birthrates and death
rates, eventually stabilizing
 • Some empirical evidence • Overpopulation is a Deliberately Contrived
False Issue
• Implications. Fertility lower if
• Population Growth is a Desirable
The Causes of High Fertility in Developing – Raise women’s education, role, Phenomenon
Countries: The Malthusian and Household Models and status
• Population Growth Is a Real Problem”
• The Malthusian Population Trap – More female nonagricultural
wage employment – Extremist arguments
– The idea that rising population
and diminishing returns to fixed – Rise in family income levels – Theoretical arguments
factors result in a low levels of
living (population trap) – Reduction in infant mortality – Empirical arguments

• Criticisms of the Malthusian Model – Development of old-age and • Lower economic

social security growth
– Impact of technological progress
– Expanded schooling • Poverty
– Currently no positive correlation opportunities
between population growth and • Adverse impact on
levels of per capita income in The Consequences of High Fertility: Some education
the data Conflicting Perspectives
• Adverse impact on
– Microeconomics of family size; • Population growth: “It’s Not a Real health
individual and not aggregate Problem”:
• Food issues
variables – The real problem is not
population growth but the • Impact on the
• The Microeconomic Household Theory of environment
Fertility following,

• Underdevelopment • Frictions over

• The Demand for Children in Developing international
Countries • World resource migration
– First two or three as “consumer depletion and
environmental Goals and Objectives:
goods” Toward a Consensus
destruction
– Additional children as • Despite the conflicting opinions, there is
“investment goods”: • Population
Distribution some common ground on the following:
– Work on family farm, – Population is not the primary
microenterprise • Subordination of
women cause of lower living levels, but
– Old age security motivation may be one factor
 – Population growth is more a
consequence than a cause of
underdevelopment
– It’s not numbers but quality of
life
– Market failures: potential
negative social externalities
– Voluntary decreases in fertility is
generally desirable for most
developing countries with still-
expanding populations
• Some Policy Approaches
– Attend to underlying
socioeconomic conditions that
impact development
– Family planning programs
should provide education and
technological means to regulate
fertility
– Developed countries have
responsibilities too
• What Developing Countries Can Do
– Persuasion through education
– Raise the socioeconomic status
of women
– Increase employment
opportunities for women
(increases opportunity cost of
having more children, as in
microeconomic household
theory)
• What the Developed Countries Can Do
Generally
– Address resources use
inequities
– More open migration policies
• How Developed Countries Can Help
Developing Countries with Their
Population Programs
– Research into technology of
fertility control
– Financial assistance for family
planning programs, public
education, and national
population policy research
activities in the developing
countries.
mid-twentieth century, but it has since
been elaborated and expanded upon by
many others.
Four stages to the classical demographic transition
model
 Stage 1: Pre-transition
 Stage 2: Early transition
 Stage 3: Late transition
 Stage 4: Post-transition
Thomas Malthus (1766 -1834)
 He was a political economist and
Enlightenment thinker who observed the
growing population with increasing
concern.
 In good Enlightenment fashion he was
trying to find “natural laws”, similar to the
laws of gravity that could explain the
perpetuation of poverty in the world.

– Family planning programs Demographic Transition

– Address incentives and  The demographic transition theory is a

disincentives for having children generalized description of the changing
through the principal variables pattern of mortality, fertility and growth
influencing the demand for rates as societies move from one
children demographic regime to another

– Coercion is not a good option  The term was first coined by the American
demographer Frank W. Notestein in the