First, you will first look “over the shoulder” of an economic analyst as they estimate the export base and region-wide multiplier for St. Clair County, Illinois. (Credit for this exercise goes to David Swenson, Research Professor of Economics at Iowa State University.)
(In Part 2 of this exercise, you will perform your own export base estimation and then determine the region-wide multiplier, using a similar collection of data.)
Direct measures include surveying local companies or conducting a regional audit. These measures are costly, however. More commonly, economic researchers estimate the export base indirectly, by making certain assumptions about which industries are producing for export. For example, if you examine a public-data (BEA) list of the industries that comprise St. Clair County’s employers, it’s not difficult to spot those producing goods and services to be sold outside the region. (They are marked in red.)
Using this indirect method, we now have a list of St. Clair County’s basic industries. and can tabulate the total (estimated) basic jobs, for comparison with the total jobs (both basic-and non-basic) in the county.
The formula for calculating the multiplier ratio is Total Jobs / Basic Jobs.
Applying the ratio to the export base estimate yields a multiplier of 1.66. In other words, every basic industry job yields 1.66
A simple method for manually approximating a region-wide multiplier is to 1) estimate the export base using public data, and 2) determine the ratio of basic employment to total employment in the region.
Now that we’ve walked through a simple demonstration, let’s use some sample data and a provided export base estimate to determine a region-wide multiplier for the Orlando-Kissimmee-Sanford MSA in Florida. This region is the location of Walt Disney World, as well as a number of other theme parks and leisure destinations. It is also home to a number of financial and business service firms that serve customers nationwide.
In this example, the region’s basic industries have been highlighted for you. (You might have arrived at a slightly different list by applying your own judgment. (Remember, this approach is an inexact science, useful for estimating.)
Using the data above, locate or calculate answers to the following questions, to determine the region-wide multiplier for the Orlando-Kissimmee-Sanford MSA. In the next module, you’ll have a chance to enter your answers into the knowledge check.