Dr. David Gallo Department of Economics Center for Economic Development California State University, Chico

 Personal income  Employment  Unemployment rate  Population growth

 Effect of net migration ( )

 Population growth in Mendocino County is strongly influenced by in migration  Willingness of people to move here depends on maintaining local amenities, natural and otherwise including medical and other services  Availability and cost of appropriate housing is also important

Agricultural, Timber, and Mining Exports Tourism Spending Retiree Income Retail Leakage Federal & State Jobs & Dollars Outside Contractors and Materials Purchases Goods and Services Exports

 Any industry that brings dollars from outside the area  An economic base industry can involve:  the production and outside sales of goods or services (agriculture or medical services, e.g.)  activities that draw in outside spending (local production of federal or state services)  outside spending drawn to the area by the quality of local amenities (tourism, or retirees)

 Where local goods and services are purchased with income earned outside the local area, local income is generated  The spending can be from tourists, resident retirees, or any individuals from outside the area shopping locally

 Unless sales are to non- residents, retail, services, and most residential construction are not economic base activities  The size of the economic base determines the amount of local retail, services, and construction  These activities cannot be expanded locally without an increase in economic base income

 Increase injections  Expansion of local economic base industries  Attract retirees or tourist spending  Reduce leakages  Establish or expand businesses that supply inputs to economic base industries  Locally produce more of the goods and services purchased by residents

 (1) Increase production and sales of products complementary with existing economic base industries: increases demand for the products of the cluster  (2) Increase local production of inputs for the economic base industry: reduces leakages from the spending stream  Example: Visitor or tourism industry  (1) Schedule local events to draw additional visitors  (2) Gift shop or craft sales: sales of more locally produced goods

 Agriculture:  Logging: $95.14 million  Fruit Farming”: $53.41 million  Manufacturing:  Sawmills: $ million  Wineries: $ million  Seafood Preparation and Packaging: $62.33 million  Government:  State and Local Non-education: $ million  State and Local Education: $84.34  Federal Non-Military: $12.64 million

 The IMPLAN model is an input-output model originally designed by the U.S. Forest Service.  The model estimates the indirect (purchases from local businesses) and induced (local spending of additional income) that result from an increase in economic base activity.  The total impact is the sum of the direct, indirect and induced impacts.

 Multipliers are calculated as the total impact divided by the direct impact  They can be calculated for output (gross value of production), income, or employment  Multipliers are larger when more of the indirect (input purchases) and induced (retail and services) activity is local or when less direct income is created per dollar of sales  Usually misinterpreted as implying that a larger multiplier means a larger local impact  Income multiplier for sawmills is 2.11  Income multiplier for wine production is 1.93

 For sawmills there is less direct local income per dollar of sales ($0.31), but significant local input purchases (indirect sales=$614,095 per million $’s in direct sales and 89% of the value of inputs are purchased locally)  Wine production generates less direct local income per dollar of sales ($0.25) and the industry generates purchases of fewer local inputs (indirect sales = $289,143 per million $’s in direct sales and currently 39% of the value of inputs are purchased locally)  Yet, given the impact on tourism (lodging, restaurant sales, etc), wineries may have a much larger impact on the local economy

 Economic growth is achieved through development of economic base industries  Focusing on industries where local production of inputs is feasible will generate the greatest impact on local income and employment  Additional focus should be on complementary industries: industries where products and services are used together