Measuring Regional Economic Development

Measuring Regional Measuring Regional Economic DevelopmentEconomic Development

Thomas G. JohnsonThomas G. JohnsonOctober 6, 2006October 6, 2006

Goal for this projectGoal for this project To develop an information system To develop an information system

with which USDA Rural Development with which USDA Rural Development can assess its programs nation-widecan assess its programs nation-wide

The new system must be:The new system must be:1.1. Economically validEconomically valid2.2. Precise and accuratePrecise and accurate3.3. UnderstandableUnderstandable4.4. Broadly applicableBroadly applicable5.5. Not a burden on the agency’s clientsNot a burden on the agency’s clients6.6. Inexpensive to develop and useInexpensive to develop and use7.7. Integrated into current web-based Integrated into current web-based

systemssystems8.8. Expandable to allow application to other Expandable to allow application to other

programsprograms

We reviewed assessment systems We reviewed assessment systems used byused by

The Small Business AdministrationThe Small Business Administration Economic Development Economic Development

AdministrationAdministration Other countries and international Other countries and international

agenciesagencies

We also reviewed the economics We also reviewed the economics research literatureresearch literature

Previous Standards for Program Previous Standards for Program Benefit AssessmentBenefit Assessment

Most agencies (including Rural Most agencies (including Rural Development) traditionally measure Development) traditionally measure jobs created or saved.jobs created or saved.• No indication of indirect jobs createdNo indication of indirect jobs created• No indication of existing jobs displaced No indication of existing jobs displaced

by the new jobsby the new jobs• No indication of quality of jobsNo indication of quality of jobs• No indication of benefitsNo indication of benefits

The Socio-Economic Benefit The Socio-Economic Benefit System (SEBAS)System (SEBAS)

A nation-wide, information system A nation-wide, information system that estimates a variety of measures that estimates a variety of measures of economic changeof economic change

A large regional economic databaseA large regional economic database A process for collecting and entering A process for collecting and entering

client level dataclient level data SEBAS is integrated into USDA’s web-SEBAS is integrated into USDA’s web-

based accounting systembased accounting system

SEBAS FeaturesSEBAS Features Measures impacts of each loan or grant at Measures impacts of each loan or grant at

the local, non-metro economy and state the local, non-metro economy and state levelslevels

Considers the current economic base in Considers the current economic base in the region and statethe region and state

Estimates the displacement effects at each Estimates the displacement effects at each level of geographylevel of geography

Calculates a number of new measures of Calculates a number of new measures of economic developmenteconomic development

Allows the monitoring of impacts over timeAllows the monitoring of impacts over time

SEBAS IndicatorsSEBAS Indicators Direct JobsDirect Jobs Net new full-time equivalent Net new full-time equivalent

employmentemployment Net Contribution to Gross Domestic Net Contribution to Gross Domestic

ProductProduct Contribution to local and state tax Contribution to local and state tax

revenuesrevenues Job quality: New GDP per FTEJob quality: New GDP per FTE

Why GDP and FTEWhy GDP and FTE The goal of rural policy should be to The goal of rural policy should be to

increase the economic opportunities for increase the economic opportunities for rural residentsrural residents

Full-time, well-paid jobs that complement Full-time, well-paid jobs that complement the current economy the current economy bring more benefits bring more benefits to rural economiesto rural economies than part-time, than part-time, seasonal, low paid jobs that compete with seasonal, low paid jobs that compete with current employerscurrent employers

SEBAS measures the quality of economic SEBAS measures the quality of economic developmentdevelopment

Following, are views of the actual Following, are views of the actual web-based SEBAS systemweb-based SEBAS system

Thank youThank you