A New Shortcut Method for Estimating Economic Base Multipliers

Local and regional development practitioners continue to widely use economic (export) base analysis to assess the strengths and weaknesses of sub-national economies. This paper proposes an alternative means for allocating the total employment of small regions into their basic (export-oriented) and nonbasic (locally-oriented) components, thereby allowing a shortcut calculation of the economic base multiplier. The new regression-based method, which makes use of the Arizona Community Data Set, is designed to supplement, and possibly replace, the well-known assignment, location quotient, and minimum requirements methods. Multipliers based on the four shortcut method are then compared over the time period 1980–2000. All estimates are based on a different data set comprised of nearly 200 communities located in the U.S. Southwest.