Community Development Core Competencies for Extension Professionals in the North Central Region

1. Community Development Core Competencies for Extension Professionals in the North Central Region

2. Foundations of Practice • The Foundations of Practice: Community Development Core Competencies for Extension Professionals is composed of three major components: • Understanding Communities and their Dynamics • Developing Successful Community Initiatives • Areas of Specialization and Emphasis

3. Understanding Communities and their Dynamics • Basic Understanding of Community • Community Demographics • Community Economics • Community Power Structure • Natural Resources and Sustainability • Community Situational Analysis • Community Development Process

5. Community Economics • This presentation has been adapted from an original presentation developed by • Bill Pinkovitz • Professor • University of Wisconsin Extension • Center for Community Economic Development

6. Learning Objectives • Define local economy and learn how money and resources flow into and out of a community, and circulates within a community. • Learn the meaning, and importance of a community’s economic base and and how to identify and analyze basic industries.

7. Learning Objectives • Learn how to use traditional economic analysis tools to gain insights into local economies • Learn new innovative ways to use existing data sources to analyze local economies from a different perspective. • Learn how to access and use new powerful web based tool to analyze local economies

8. A Few Definitions • com.mu.ni.ty a group of people in a physical setting with geographic, political, social, and economic boundaries, and with discernable communication linkages. • Shaffer, et al • e.con.o.my A system of human activity directed toward meeting human needs and wants by the deliberate allocation of scare resources (land, labor, raw materials, and capital).

9. A Few Definitions • e.con.o.mic growth more jobs, more income, more sales, more customers. • e.con.o.mic de.vel.op.ment social, environmental, and economic change to enhance quality of life • Shaffer, et al

10. Some PerspectiveEmployment

11. Some PerspectiveIncome

12. The Local Economy Raw Materials Land Local Production Labor Local Consumption Capital

13. Dollars flow into and outof the local economy: $ $ Raw Materials Local Production Land Labor Local Consumption $ $ Capital

14. Dollars flow into the local economy in several ways: $ $ Local goods and services sold outside community Raw Materials Manufactured Goods Labor Insurance Transportation Financial Services Capital

15. Dollars flow into the local economy in several ways: $ $ Local goods and services sold outside community Tourists Regional Mall University Health Care Second Homes Visitors purchasing Local goods and services

16. Dollars flow into the local economy in several ways: $ $ Local goods and services sold outside community Social Security Gov. Purchases Federal Grants Government Offices Military Bases Dividends Interest Visitors purchasing Local goods and services Public dollars flowing into community AND other “non-earned income”

17. Dollars leak out of the local economy in several ways: Raw Materials Inventory Equipment Labor Capital Professional Services Financing Investments Local businesses purchasing goods and services outside the community $ $

18. Dollars leak out of the local economy in several ways: Local businesses purchasing goods and services outside the community Regional Malls Internet Sales Travel Transportation Financial Services Investments/Savings Local consumers purchasing goods and services outside the community $ $

19. Dollars leak out of the local economy in several ways: Local businesses purchasing goods and services outside the community Local businesses purchasing goods and services outside the community Federal/State Taxes Soc.Security Payments Taxes and Social Security Payments $ $

20. Dollars leak out of the local economy in several ways: Local businesses purchasing goods and services outside the community Local businesses purchasing goods and services outside the community Natural Resources Inefficiencies Opportunity Costs Taxes and Social Security Payments Waste/Inefficiencies $ $

21. How Does the Local Economy Grow? • Increase INFLOWS • Decrease OUTFLOWS • Increase the TRADE AREA

22. Strategies to Grow the Economy • Attract new basic employers • Improve the efficiency of existing firms • Improve ability to capture dollars • Encourage business formation • Increase aids from broader governments Glen Pulver

23. Basic Employersa.k.a Export Employers • A basic employer is a business that brings money into the community. Businesses that sell most of their goods/services to non-local markets. A business where the inflow of dollars into the community exceeds the outflow of dollars from the community. Typically, basic employers include: • Manufacturing Universities/Colleges • Farming Hospitals • Mining Insurance Companies • Tourism Transportation

24. Non-Export Businesses • Businesses that primarily serve the needs of the local consumers are called non-export businesses.

25. Why the FOCUS on Export Businesses? • Basic (Export) businesses provide the best opportunity to create additional jobs and income in a community. • Unless a community is growing rapidly, or its trade area is expanding significantly, increasing the number of non-export businesses simply means that the pie (market) will be cut into smaller slices, or existing businesses will disappear as new ones emerge.

26. Community Economic Analysis • Defining a Community’s Trade Areas • Identifying Export Businesses in a Community • Identifying the Competitive Sectors in a Community • Estimating the Total Impact of Economic Activities

27. Community Economic Analysis • Defining a Community’s Trade Areas • Identifying Export Businesses in a Community • Identifying the Competitive Sectors in a Community • Estimating the Total Impact of Economic Activities

28. Defining Trade Areas:Traditional Methods • Reilly’s Law: Method for determining a community’s retail trade area. • Based on the premises that • 1) People are attracted to larger communities to shop. • 2) Peoples willingness to travel to shop is influenced by time and distance.

29. Defining Trade Areas:Traditional Methods • Trade Area Capture: A method for estimating the number of customer equivalents who shopped in community for a specific product type (i.e. furniture). • Based on state per capita spending for the product adjusted by local per capita income. • Most often utilizes Census of Retail Trade data. • Most useful when comparing TAC over time.

30. Defining Trade Areas:Traditional Methods • Pull Factors: A method for estimating the number of customers a community attracts from outside the community for a specific product or service (i.e. furniture). • Simply estimated by dividing the Trade Area Capture by the municipal population. • Most often utilizes Census of Retail Trade data. • Most useful when comparing Pull Factors over time

31. Defining Trade Areas:Using GIS • Trade Area Analyst LT: An easy-to-use application utilizing Geographic Information Systems (GIS) software that enables users to easily map variety of markets by ZIP Code. • Customers • Employees • Patients • Visitors

32. Community Economic Analysis • Defining a Community’s Trade Areas • Identifying Export Businesses in a Community • Identifying the Competitive Sectors in a Community • Estimating the Total Impact of Economic Activities

33. Identifying Export BusinessesLocation Quotients • Location Quotient: A simple index that helps identify export and import industries by comparing the percentage of local employment in a specific industry to the percentage employed nationally in the same industry • % of local employment in industry A • % of national employment in industry A LQ =

34. Location QuotientEmployment by Sector Total Employees (2004) http://www.BLS.gov

35. SECTOR • U.S. • Indiana • Allen Co, In • Manufacturing • 13.1% • 23.3% • 18.4% • Construction • 6.4 • 6.0 • 6.2 • Retail • 13.9 • 13.6 • 12.6 18.4% 13.1% LQ = = 1.40 Employment by Sector Percentage of Total Employment (2004) Source: BLS.gov

36. Location Quotientby Sector Source: BLS.gov

37. Location Quotients Manufacturing Employment (2004) Source: BLS.gov

38. Interpreting LQs

39. Location Quotients A simple tool to help identify local: • Export and import industries • Existing and potential industry clusters • Economic strengths • Development prospects

40. Calculating LQsThe Good News U.S Department of Labor Bureau of Labor Statistics Quarterly Census of Employment and Wages http://www.bls.gov

41. http://www/bls.gov

42. Location Quotientshttp://www.seta.iastate.edu/takecharge/ Take Charge

43. Location Quotientshttp://www.seta.iastate.edu/takecharge/

44. Community Economic Analysis • Defining a Community’s Trade Areas • Identifying Export Businesses in a Community • Identifying the Competitive Sectors in a Community • Estimating the Total Impact of Economic Activities

45. Why employment changes Growth or decline in the national economy Growth or decline in the industry sector Relative strength of the local industry/economy

46. Shift Share Analysis • Shift Share Analysis provides an estimate of the impact of these three factors by separating the increase or decrease in local employment in specific industry sectors into three components: • 1. National Growth Share 2. Industrial Mix Share 3. Local Share

47. Shift Share Analysis National Growth Share: The increase or decrease in local employment that is attributable to the growth or decline in the national economy. Industrial Mix Share: The increase or decrease in local employment that is attributable to the growth or decline in a specific industry sector. Local Share: The increase or decrease in local employment that is attributable to the relative strength or weakness of the local industry/economy.

48. National Growth ShareEmployment Trends by Industrial SectorLaGrange County, IN (1994 to 2004) • local employment in industry A year 1 x average national total employment growth rate for the period = National Growth Share 302 jobs x

49. National Growth Share% Change in Employment by Industrial Sector LaGrange County, IN (1994 to 2004) • local employment in industry A year 1 x average national total employment growth rate for the period = National Growth Share 302 jobs x .149 = 45 jobs

50. Industry Mix Share % Change in Employment by Industrial Sector LaGrange County, IN (1994 to 2004) • local employment in industry A in year 1 x (national industry growth rate – national average growth rate) = Industry Mix Share 302 x (.378 - .149) = 302 x .229 = 69 jobs