Measuring Regional Economic Development Thomas G. Johnson October 6, 2006

Goal for this project To develop an information system with which USDA Rural Development can assess its programs nation-wide To develop an information system with which USDA Rural Development can assess its programs nation-wide

The new system must be: 1. Economically valid 2. Precise and accurate 3. Understandable 4. Broadly applicable 5. Not a burden on the agency’s clients 6. Inexpensive to develop and use 7. Integrated into current web-based systems 8. Expandable to allow application to other programs

We reviewed assessment systems used by The Small Business Administration The Small Business Administration Economic Development Administration Economic Development Administration Other countries and international agencies Other countries and international agencies We also reviewed the economics research literature

Previous Standards for Program Benefit Assessment Most agencies (including Rural Development) traditionally measure jobs created or saved. Most agencies (including Rural Development) traditionally measure jobs created or saved. No indication of indirect jobs createdNo indication of indirect jobs created No indication of existing jobs displaced by the new jobsNo indication of existing jobs displaced by the new jobs No indication of quality of jobsNo indication of quality of jobs No indication of benefitsNo indication of benefits

The Socio-Economic Benefit System (SEBAS) A nation-wide, information system that estimates a variety of measures of economic change A nation-wide, information system that estimates a variety of measures of economic change A large regional economic database A large regional economic database A process for collecting and entering client level data A process for collecting and entering client level data SEBAS is integrated into USDA’s web-based accounting system SEBAS is integrated into USDA’s web-based accounting system

SEBAS Features Measures impacts of each loan or grant at the local, non-metro economy and state levels Measures impacts of each loan or grant at the local, non-metro economy and state levels Considers the current economic base in the region and state Considers the current economic base in the region and state Estimates the displacement effects at each level of geography Estimates the displacement effects at each level of geography Calculates a number of new measures of economic development Calculates a number of new measures of economic development Allows the monitoring of impacts over time Allows the monitoring of impacts over time

SEBAS Indicators Direct Jobs Direct Jobs Net new full-time equivalent employment Net new full-time equivalent employment Net Contribution to Gross Domestic Product Net Contribution to Gross Domestic Product Contribution to local and state tax revenues Contribution to local and state tax revenues Job quality: New GDP per FTE Job quality: New GDP per FTE

Why GDP and FTE The goal of rural policy should be to increase the economic opportunities for rural residents The goal of rural policy should be to increase the economic opportunities for rural residents Full-time, well-paid jobs that complement the current economy bring more benefits to rural economies than part-time, seasonal, low paid jobs that compete with current employers Full-time, well-paid jobs that complement the current economy bring more benefits to rural economies than part-time, seasonal, low paid jobs that compete with current employers SEBAS measures the quality of economic development SEBAS measures the quality of economic development

Following, are views of the actual web-based SEBAS system

Thank you