Scuddy J. LeBlanc sleblanc@agcenter.lsu.edu
May 19, 2004
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Why Conduct a Local Economic
Analysis?
 Provides useful information for decision makers
 Helps citizens understand their community’s local economy
 Could help indicate the need for local education & research programs
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Analysis of the
Tangipahoa Parish Economy
Using:
Trends and comparisons
Location quotient analysis
Shift-share analysis
Retail trade analysis
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DeSoto
Sabine
Claiborne Union Morehouse
Red
River
Bienville
Lincoln
Jackson
Ouachita
Richland
Madison
Caldwell
Franklin
Tensas
Winn
La Salle
Grant
Rapides
Vernon
Avoyelles
Beauregard
Calcasieu
Cameron
Allen
Jefferson
Davis
Evangeline
St. Landry
West
Feliciana
East
Feliciana
St.
Helena
Pointe
Coupee
WBR
E. Baton
Rouge
Livingston
Acadia
St. Martin
St.
James
Iberia
Vermilion
St. Mary
Terrebonne
Louisiana
Tangipahoa
Parish
Washington
St. Bernard
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Comparisons of
Tangipahoa Parish & Louisiana*
Population: a) White b) Black c) Hispanic d) Asian
Parish
100,588
69.8%
28.4 %
1.5%
0.4%
Housing units: 40,794 a) Owner-occupied 73.3% b) Rented
Unemployment
26.7%
5.1%
*Source: 2000 U.S. Census
Louisiana
4,468,976
63.9%
32.5%
2.4%
1.2%
1,656,053
67.9%
32.1%
4.3%
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Location quotient analysis
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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.
 Government agencies that serve populations beyond the local level.
 Income from private sources outside the community (dividends, etc.).
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Tangipahoa Parish Earnings by
Economic Sector in 2000
6%
0%
1%
2%
9%
4%
6%
33%
16%
19%
4%
Farming
Ag. Services, Forest., Fish.
Mining
Construction
Manufacturing
Transportation
Wholesale
Retail
Finance, etc.
Services
Government
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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%
1%
1%
6%
16%
7%
6%
9%
9%
28%
16%
Source: BEA
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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)
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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 Sector
Farming
Retail trade
Government
2000 LQ
2.49
1.87
2.17
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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 Sector 2000 LQ
Ag services, forestry, etc. 0.93
Construction 0.93
Wholesale trade 1.09
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Any sector that has an LQ of less than
.75 is considered a leak in the local economy.
Economic Sector
Mining
Manufacturing
Transportation & utilities
2000 LQ
0.52
0.60
0.67
Finance, ins. & real estate 0.25
Services 0.72
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Source: Retail data in NIACS: http//www.census.gov/prod/www/abs/ret-trd.html
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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.
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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.
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Tangipahoa Parish Retail Sales
Capture (Pull Factor)-1997
3
2.5
2
1.5
1
0.5
0
2.41
1.42
1.67
1.43
0.52
1.02
1.191.14
0.93
1.07
1.44
Total Retail
Automobile
Furniture
Electronic Appliances
Building Materials
Food & Beverage
Health & Personal Care
Gasoline Stations
Clothing
Sporting Goods
General Merchandise
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Sources of Influence on the
Local Economy
Shift-share analysis
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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
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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, 1990-2000:
 Ag service, forestry & fisheries
 Construction
 Transportation & public utilities
 Finance & insurance
 Services
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Influence of Local Factors on the Local Economy
Factors within the firm
Factors within the private sector
Factors within the public sector
– State
– Local
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Factors within the Firm and
Local Private Sector


Within the firm
– Productivity
– Management issues
– Firm--cluster or isolated?
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
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




Quality of life - public services & education
Employment costs in relation to productivity
– Education
– Workers compensation insurance,
– Unemployment insurance
Taxes in relation to public services
Simplicity and timeliness of paperwork
Local business regulations & overlapping jurisdictions
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Patterns in Shift-Share Analysis
(1990-2000)
Base
Economic
Sectors
Farming
Government
Retail
National
Factor
Sector
Factor
+
+
+
-
-
-
Local
Factor
-
+
+
Source: BEA
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Patterns in Shift-Share Analysis
(1990-2000)
Self-sufficient
Economic
Sectors
Ag. services
Construction
Wholesale trade
National
Factor
Sector
Factor
+
+
+
+
+
-
Local
Factor
+
+
+
Source: BEA
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Patterns in Shift-Share Analysis
(1990-2000)
Leaks in the local economy
Mining
Manufacturing
Transportation
National
Factor
+
+
+
Finance
Services
+
+
Sector
Factor
-
Local
Factor
-
-
+
+
+
+
+ -
-
Source: BEA
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Trends
More Comparisons
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Trends in Tangipahoa Parish
Earnings - 1969-2000
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.
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Trends in Tangipahoa Parish Income,
1969-2000
35%
30%
25%
20%
15%
10%
5%
0%
1969
Residence adjustment
Transfer payments
1974 1979 1984
Dividends, interest, rent
1989 1994
Source: BEA
1999
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20%
Trends in the Base of the Tangipahoa
Parish Economy, 1969-2000
Farm earnings Retail trade Gov't & gov't enterprises
15%
10%
5%
0%
1969 1974 1979 1984 1989 1994 1999
Source: BEA
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Trends in the Self-sufficient Sectors of the Local Economy, 1969-2000
Construction Wholesale trade
7%
6%
5%
4%
3%
2%
1%
0%
1969
Ag. services, forestry, fishing, other
1974 1979 1984 1989 1994
Source: BEA
1999
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12%
Trends in the Leaks in the Tangipahoa
Parish Economy ,
1969-2000
Mining
Transportation, public utilities
Services
Manufacturing
Finance, insurance, real estate
10%
8%
6%
4%
2%
0%
1969 1974 1979 1984 1989 1994
Source: BEA
1999
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What can be done to help the
Local Economy?
Increase the local economic base by:
 Selling local products elsewhere.
 Government agencies that serve populations beyond the local level.
 Income from private sources outside the community.
 Start with the existing economic bases.
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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 part of growing national sectors.
 Work with local sectors that are influenced by positive local factors.
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Recommendations for the LSU
AgCenter to Help Local Farms
 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
 Help educate the farmers on improving their marketing techniques and on utilizing alternative marketing techniques
& alternative agricultural enterprises
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Suggestions for the Tangipahoa
Parish Retail Economy
 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 educate the local sales force on customer relations
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Plugging “Leaks” Through
Education & Research







Business management training
Job training to improve labor skills
Finding a use for waste
Conservation programs
New technology that uses the resources more efficiently
Job training for the unemployed
Finding a more valuable use for a local product
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Suggestions for Local Officials to
Help Keep Government Jobs
Form collaborations to cooperate in:


Seeking new government employment & new local government enterprises
Maintaining government employment
& local government enterprises
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Local Economic Analysis
Reference Material
Community Economic Analysis: A “How To Manual” http://www.ag.iastate.edu/centers/rdev/pubs/contents/141.htm
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Local Economic Analysis
Course Work
Missouri University - Ag Econ 301 Special Topics: Local
Economic Analysis http://mudirect.missouri.edu/
Winter Semester (1-credit or non-credit)
Dr. Judith I. Stallman, Professor
Stallmannj@missouri.edu
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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.”
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Local Economic Analysis:
A Case Study
Special thanks to:
Dr. Judith I. Stallman for her suggestions & contributions to this presentation.
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Local Economic Analysis:
A Case Study
The End
Scuddy J. LeBlanc sleblanc@agcenter.lsu.edu
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