Geoscience Reference
In-Depth Information
capital mobility, employment multipliers, economies of scale, import substitution,
technological development, transportation costs, and infrastructure. More impor-
tantly, the discourse led to the formulation of the economic base model, a simple
but powerful means of explaining, analyzing, and forecasting the process of
regional economic growth.
1
The objective of this study is to explain how the Washington state economy has
grown and evolved over the past 50 years in light of the theory advanced by North
and Tiebout. In simple terms, do the facts fit the theory? The analysis draws upon
various types of regional economic models—for example, an economic base model
(Conway
2006
), an input-output model (Bourque and Conway
1977
), an interin-
dustry econometric model (Conway
1990
), and a structural time-series forecasting
model (Conway
2001
)—and the historical data bases that underpin them.
Among the questions addressed are the following: Are exports (domestic and
foreign) the key to regional economic growth? To what extent has the economic
base become service oriented? With regard to interregional migration, do people
follow jobs? Are the regional unemployment rate, wage rates, and consumer prices
determined in the regional or national market? What are the causes of regional
economic cycles? What are the implications of the study's findings to our under-
standing of the regional growth process (the validity of the economic base theory),
regional modeling (the applicability of demand-oriented models), and regional
development policy (the efficacy of industrial recruitment programs in reducing
local unemployment)?
At the outset, it should be emphasized that there are two caveats to this study.
First, it describes the economic behavior of a region within the United States, where
there are no national boundaries restricting the movement of labor or capital. Thus,
the findings of the study may not pertain to other parts of the world. Second, even
with respect to the United States, this is a case study. There has been no attempt to
compare the Washington experience with that of other states. Indeed, it is doubtful
that a study like this can be wholly replicated in other states. Few states, if any, have
Washington's 60-year history of intense regional analysis—theory, modeling, and
applications—that began with North and Tiebout. At the same time, there is no
reason to believe that, with regard to the role of exports and the mobility of labor
and capital, other regional economies behave much differently than Washington.
8.2
Economic Base Theory of Regional Growth
North, who dismissed the prevailing stages of growth theory as an inadequate
explanation of the Pacific Northwest experience, initiated the exchange. He
contended that exports were the key to economic growth. What a region exported
was determined by its comparative advantage (i.e.,
its ability to produce
1
The economic base concept originated in earlier studies of urban economies. See Andrews (
1953
)
and Hoyt (
1954
).
