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Urban Economic Analysis and Market Trends

Explore the growth patterns and economic bases of central cities, counties, and metropolitan areas, focusing on cities like Atlanta. Learn about causes of city formation, city growth factors, and implications for future growth and the influence of the Internet. Delve into economic base analysis of regions, sources of income, and sectors contributing to local economies.

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Urban Economic Analysis and Market Trends

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  1. Lecture 2 Central Cities and Regional Market Analysis

  2. Cities, Counties, Metropolitan Areas County Metropolitan Area $$ Central Business District Central City Smaller Cities

  3. Atlanta Metropolitan Area

  4. Metropolitan Statistical Area (MSA) • Formed by the U.S. Bureau of the Census • Basis for creating a combination of contiguous counties based on two principles: • Functional Integrity Principle (economic links between counties) • Homogeneity Principle (similarities between counties)

  5. Metropolitan Statistical Area (MSA) Nassau County Duval County Baker County St. Johns County Clay County

  6. Core of a City • Dense collection of inhabitants of relatively large population • Where none of the citizens make their living directly from agricultural activity • Self-Supporting Workforce • Where social and economic relationships are relatively complex and hierarchical • Formal Government Structures

  7. Causes of City Formation • Economies of Scale • Produce more goods in fewer facilities • Economies of Agglomeration • Location Synergy • Positive Locational Externalities • Co-existence of different industries • Need for “Break-Bulk” Points and Distribution Centers in Goods Transportation

  8. City Growth: Atlanta • Key railroad junction • Close to Washington, D.C. by rail • Higher-level state and federal governmental and financial service functions in Atlanta (due in part by existing rail) • Delta Airlines established HUB in 1930’s • Cultural and Social Factors, breeding entrepreneurial talent and relatively successful race relations

  9. Evolution of Top 10 Ranking Cities

  10. Additional Movement Patterns • Overcrowding and High Costs of Living • Los Angeles to Phoenix • Weather and Climate • Movement to Arizona and Florida • Technological Development • New Industry to open • Boston, San Francisco, Raleigh-Durham • Cheaper Transportation / Entertainment • Las Vegas, Orlando

  11. Top 10 Cities of Growth (1950 – 1998)

  12. Lecture 2 The Internet and Growth Implications for the Future

  13. Industrialization Period • Strong correlation between specialized services in the manufacturing of goods and large employment inputs • Implies population growth • Laborers and skilled workers migrate to areas where work opportunities are better and/or available

  14. Information Age • Transportation and distribution costs often inconsequential • Producers may not require hierarchy of linkages to cities of smaller sizes for efficient production and distribution of goods and services. • “Shop” can be set up in small towns

  15. Future of Internet and Growth • Lower communication costs will allow second- and third-tier cities to grow faster than larger cities • Cities with good climate and overall quality of life will grow faster than those with few local amenities. • City location and growth will certainly be determined more by access to environmental and cultural amenities, and less by purely physical or geographical “centrality” • Population densities should decline as people lose the need to live close to work • Mixed-Use Communities away from CBD

  16. Lecture 2 Economic Base Analysis

  17. Economic Base Sources of a region’s total income (income of all households in the region) • Income from current employment • Salary, bonuses, commissions • Self-employment business income • Income from accumulated wealth or pensions • Portfolio returns from investments • Pension fund payments of annuities • Transfer payments from Government • Social Security • Welfare, housing, food, medical support

  18. Economic Base Analysis Export Sector: Employment bringing revenues into a region (i.e.: manufacturers of any product that serves more than the local population and brings revenues into the local region from outside) --Location Quotient (LQ) Service Sector: Employment geared toward serving the local population

  19. Circular Flow of Income Model “Real Flows:” Movement of Productive Services Consumer Goods and Services HOUSEHOLDS BUSINESSES Productive Resources (labor, land, capital, entrepreneurship)

  20. Circular Flow of Income Model “Money Flows:” Movement of Cash Consumption Expenditures HOUSEHOLDS BUSINESSES Resource Payments (wages, rents, dividends, interest, profit)

  21. Economic Base of the Local Economy Economic Base Theory: Identification Variables for Household Sector • Size of population, number of families, number of households • Age composition of the population • Income composition of population • Size of families and households • Occupational composition of population • Gender composition of population • Marital status of population • Educational attainment level of population

  22. Economic Base of the Local Economy Economic Base Theory: Identification Variables for Business Sector Standard Industrial Classification (SIC) System (U.S. Census Bureau): Identifies industrial activities according to numerical code Allows comparisons between economies (by MSA, city, or county)

  23. Economic Base of the Local Economy (SIC) • Agriculture • Mining • Construction • Manufacturing • Transportation, Communications, Utilities • Wholesale Trade • Retail Trade • Finance, Insurance, and Real Estate (FIRE) • Services (personal, business) • Services (professional, educational) • Public Administration (federal, state, local government agencies) • Nonclassifiable Establishments

  24. Export Base Analysis How Would Economic Growth Affect the Following Sectors of a Local Economy? • Residential Housing Market • Residential and Commercial Construction Industry • Purchasing Power of Consumers • Retail Real Estate and Industry • Employment

  25. Local Investment Providing Growth • Reinvestment from earnings or borrowed funds allows firms to grow faster, assuming wisely-utilized capital • Cities which are home to high-growth firms with high retained earnings and significant expansion plans will see growth

  26. Government Incentives for Growth • Local governmental acquisition of large sites for future development • Providing physical infrastructure • Tax abatement, credits, or breaks • Government financing • Creating Foreign Trade Zones with tax-exempt status on exports

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