1 Local Economic Analysis: A Case Study Local Economic Analysis: A Case Study Scuddy J. LeBlanc May 19, 2004

2 Why Conduct a Local Economic Analysis? Provides useful information for decision makers Provides useful information for decision makers Helps citizens understand their community’s local economy Helps citizens understand their community’s local economy Could help indicate the need for local education & research programs Could help indicate the need for local education & research programs

3 Analysis of the Tangipahoa Parish Economy Analysis of the Tangipahoa Parish Economy Using: Trends and comparisons Trends and comparisons Location quotient analysis Location quotient analysis Shift-share analysis Shift-share analysis Retail trade analysis Retail trade analysis

4 Acadia Allen Ascension Assumption Avoyelles Beauregard Bienville Bossier Caddo Calcasieu Caldwell Cameron Catahoula Claiborne Concordia DeSoto E. Baton Rouge Evangeline Franklin Grant Iberia Iberville Jackson Jefferson Davis Lafayette Lafourche La Salle Lincoln Livingston Madison Morehouse Natchitoches Orleans Ouachita Plaquemines Rapides Red River Richland Sabine St. Bernard St. Charles St. Helena St. James St. John St. Landry St. Martin St. Mary St. Tammany Tangipahoa Tensas Terrebonne Union Vermilion Vernon Washington Webster WBR West Carroll West Feliciana Winn Pointe Coupee East Carroll East Feliciana Tangipahoa Parish Louisiana

5 Comparisons of Tangipahoa Parish & Louisiana* Parish Population: 100,588 a) White 69.8% b) Black 28.4 % c) Hispanic 1.5% d) Asian 0.4% Housing units: 40,794 a) Owner-occupied 73.3% b) Rented 26.7% Unemployment 5.1% Louisiana 4,468, % 32.5% 2.4% 1.2% 1,656, % 32.1% 4.3% *Source: 2000 U.S. Census

6 Economic base, self- sufficient and importing sectors Location quotient analysis

7 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. Selling local products elsewhere. Government agencies that serve populations beyond the local level. Government agencies that serve populations beyond the local level. Income from private sources outside the community (dividends, etc.). Income from private sources outside the community (dividends, etc.).

8 Tangipahoa Parish Earnings by Economic Sector in 2000

Earnings by Economic Sector: Tangipahoa Parish – United States Farming: 2% - Ag services, forestry: 1% - Mining: 0% - Construction: 6% - Manufacturing: 9% - Transportation: 4% - Wholesale trade: 6% - Retail trade: 16% - Finance, insurance: 4% - Services: 19% - Government: 33% - 1% 6% 16% 7% 6% 9% 28% 16% Source: BEA

10 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)

11 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 Sector2000 LQ Farming 2.49 Retail trade 1.87 Government 2.17

12 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 Sector2000 LQ Ag services, forestry, etc Construction 0.93 Wholesale trade 1.09

13 Leaks in the Local Economy Any sector that has an LQ of less than.75 is considered a leak in the local economy. Economic Sector2000 LQ Mining 0.52 Manufacturing 0.60 Transportation & utilities 0.67 Finance, ins. & real estate 0.25 Services0.72

14 Retail Trade Analysis in the Local Economy Source: Retail data in NIACS: http//

15 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.

16 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.

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

18 Sources of Influence on the Local Economy Shift-share analysis

19 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

20 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, : Ag service, forestry & fisheries Ag service, forestry & fisheries Construction Construction Transportation & public utilities Transportation & public utilities Finance & insurance Finance & insurance Services Services

21 Influence of Local Factors on the Local Economy Factors within the firm Factors within the firm Factors within the private sector Factors within the private sector Factors within the public sector Factors within the public sector – State – Local

22 Factors within the Firm and Local Private Sector Within the firm Within the firm –Productivity –Management issues –Firm--cluster or isolated? Within the local private sector 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

23 Public Sector Factors Quality of life - public services & education Quality of life - public services & education Employment costs in relation to productivity Employment costs in relation to productivity –Education –Workers compensation insurance, –Unemployment insurance Taxes in relation to public services Taxes in relation to public services Simplicity and timeliness of paperwork Simplicity and timeliness of paperwork Local business regulations & overlapping jurisdictions Local business regulations & overlapping jurisdictions

24 Patterns in Shift-Share Analysis ( ) Base Economic Sectors National Factor Sector Factor Local Factor Farming+-- Government+-+ Retail+-+ Source: BEA

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

26 Patterns in Shift-Share Analysis ( ) Leaks in the local economy National Factor Sector Factor Local Factor Mining+-- Manufacturing+-+ Transportation+++ Finance++- Services++- Source: BEA

27 Outcomes for the Local Economy Trends More Comparisons

28 Trends in Tangipahoa Parish Earnings 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.

29 Trends in Tangipahoa Parish Income, Source: BEA

30 Trends in the Base of the Tangipahoa Parish Economy, Source: BEA

31 Trends in the Self-sufficient Sectors of the Local Economy, Source: BEA

32 Trends in the Leaks in the Tangipahoa Parish Economy, Source: BEA

33 What can be done to help the Local Economy? Increase the local economic base by: Selling local products elsewhere. Selling local products elsewhere. Government agencies that serve populations beyond the local level. Government agencies that serve populations beyond the local level. Income from private sources outside the community. Income from private sources outside the community. Start with the existing economic bases. Start with the existing economic bases.

34 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 self-sufficient to expand. Work with the local sectors that are part of growing national sectors. Work with the local sectors that are part of growing national sectors. Work with local sectors that are influenced by positive local factors. Work with local sectors that are influenced by positive local factors.

35 Recommendations for the LSU AgCenter to Help Local Farms Investigate how local products are marketed & help identify different strategies & products to generate more income 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 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 Help educate the farmers on improving their marketing techniques and on utilizing alternative marketing techniques & alternative agricultural enterprises

36 Suggestions for the Tangipahoa Parish Retail Economy Help educate local residence on the importance of shopping locally & buying local products 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 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 Help educate the local sales force on customer relations

37 Plugging “Leaks” Through Education & Research Business management training Business management training Job training to improve labor skills Job training to improve labor skills Finding a use for waste Finding a use for waste Conservation programs Conservation programs New technology that uses the resources more efficiently New technology that uses the resources more efficiently Job training for the unemployed Job training for the unemployed Finding a more valuable use for a local product Finding a more valuable use for a local product

38 Suggestions for Local Officials to Help Keep Government Jobs Form collaborations to cooperate in: Seeking new government employment & new local government enterprises Seeking new government employment & new local government enterprises Maintaining government employment & local government enterprises Maintaining government employment & local government enterprises

39 Local Economic Analysis Reference Material Community Economic Analysis: A “How To Manual”

40 Local Economic Analysis Course Work Missouri University - Ag Econ 301 Special Topics: Local Economic Analysis Winter Semester (1-credit or non-credit) Dr. Judith I. Stallman, Professor

41 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.”

42 Local Economic Analysis: A Case Study Special thanks to: Dr. Judith I. Stallman Dr. Judith I. Stallman for her suggestions & contributions to this presentation.

43 Local Economic Analysis: A Case Study The End Scuddy J. LeBlanc