Abstract
Regional economists fill roles that are increasingly recognized as vitally important. More and more government agencies are sponsoring regional development programs and initiatives. They work in government, academia, and the private sector to provide relevant information for decision makers and to analyze the factors that contribute to economic growth and decline. They work as employees and consultants for government agencies responsible for decisions on public capital expenditures, for the private sector in banks or businesses making location and related decisions, in academia conducting research on regional economic issues and generating state and regional economic forecasts, and they work for utilities that rely heavily on regional economic forecasts for their operating and investment decisions. They develop policies that can help regions attract new businesses, create jobs, and improve the quality of life for residents. Regional economists with interests in equity also study the distributional impacts of economic development because impacts on different groups of people are rarely identical. They are interested in how economic development affects the distribution of income, quality of life, and the environment.
Regional economists use economic theory, statistics, and a variety of analytical tools and techniques to study regional economies and to analyze regional economic data, such as employment, income, housing, demographics, and population growth to identify patterns and trends and to construct models of economic behaviors that allow them to estimate quantitative impacts of various economic shocks and to forecast economic conditions. They study factors such as education, infrastructure, and transportation to understand regional economies and to develop policies to promote economic growth and development. Most also use more than one kind of economic model to support their work, so they need a strong foundation in economic theory, mathematics, and statistics, and an understanding of economic systems structure and behavior. Finally, they need to be able to communicate their findings effectively to policy makers, businesses, and to the public.
Given the exceedingly wide-ranging set of topics and techniques, regional economists need the command of a proportionally wide-ranging set of tools to bring to the analysis of their own regional economies. How, then, does an aspiring student of economics prepare for a career as a regional economist? I can think of no better roadmap to follow than found in Richard S. Conway Jr.'s Empirical Regional Economics: Economic Base Theory, Models and Applications (ERE). Unlike so many regional economics texts that either focus on theory divorced from empirical application or present sequentially a set of established regional economic analysis tools, Conway has distilled a half- century of experience as a regional economic consultant to define the landscape faced by regional economics practitioners. The result is a text that rests solidly on the fundamentals of economic base theory, which distinguishes between export-oriented, growth-stimulating basic industries and nonbasic industries that support basic industry and local population, and which has proven itself to be effective empirically in dozens of Conway's own regional economic analyses and applications to a range of regional economies and regional economic issues. Resting on the fundamentals of economic base theory, however, in no way implies that the simple economic base model dominates the book's content. Rather, after presenting the economic base theory of regional growth, we see numerous cases where empirical evidence supports the relevance of economic base principles to regional economies. Indeed, the voluminous body of research from his half century of practical experience provides a plethora of examples not simply of how the introduced analytical tools could be applied, but instead, how they were applied, the contexts for those applications, and why the tools chosen are appropriate for the tasks at hand. He skillfully balances the presentations of each model and tool with real-world practical contexts that bring their applications to life.
Insightful readers will also glean from his numerous practical examples not only the outlines of essential considerations to be taken for engaging with a wide range of applications, but also the extremely important role played by a deep familiarity and understanding of the target region's unique economic characteristics. As obvious examples, Boeing and Microsoft play critically important roles in the Seattle regional and Washington state economies. A regional economist who lacks familiarity and understanding of the relationship between Microsoft stock options and area personal income, for example, would inevitably fail to accurately quantify regional economic impacts or forecasts. Although not explicitly stated, it becomes clear that while economic base theoretic principles apply across most, if not all, U.S. subnational regional economies, an intimate knowledge of a region's unique characteristics is likely the difference between a successful and an unsuccessful career as a regional economist. While some readers might initially question the focus on a single region for application examples, it quickly becomes clear that developing a deep understanding of the region of study is essential to the formulation of consistent regional economic models.
The text is presented in three main parts. The first part's two chapters present the principles and empirical evidence for the economic base theory of growth. A set of thought-provoking questions and exercises will be welcomed by instructors and are recommended for any student of regional economics. The four chapters in Part II introduce four essential regional economic models, namely the Economic Base, Input-Output, Interindustry Econometric, and Structured Time-Series models. Each chapter presents the salient mathematical formulations along with insights drawn from real-world empirical applications. Each chapter also underscores the regional economist's need for a well-stocked analytical tool kit—a job for every tool and a tool for every job. Part III, roughly a third of the book, is a compendium of 48 case studies that demonstrate and elaborate on a wide array of topics commonly addressed by regional economists. Topics in each chapter fall under the categories of U.S. and World Economy, Regional Economic Behavior and Welfare, Urban and Rural Economies, Economic Cycles, Economic Policy, Regional Housing Market, and Regional Forecasting. Examples of the case studies include Changing Demographics, Federal Fiscal Policy, International Trade, Employment and Migration, Boeing and Microsoft, Regional Cycles, Economic Resilience, Entrepreneurs, Import Substitution, Sports and the Economy, Minimum Wage, Housing Market, Economic Bubbles, Trend and Cycle, Long-Range Forecasting, and Leading Index. This part of the text reifies the need for a deep understanding of regional economics writ large, and of the practicing regional economist's need for intimate familiarity with how universal economic principles play out on the ground in their own regions. Some may initially view Part III as an optional supplement, but its contribution to understanding the role of a regional economist and to preparing aspiring regional economists for successful careers should not be underestimated. Instead, the case studies, drawn from decades of commentary and analysis in the quarterly Puget Sound Economic Forecaster, published for 25 years by Conway and Doug Pederson, can be seen not only as a compendium of topics on which a regional economist should be schooled, but in many cases, also as templates to follow for others addressing these and similar issues in their own regions.
ERE provides emerging scholars with a road map to follow in preparing for successful careers as regional economists. The focus is on four analytical tools, models that are essential for the kinds of impacts assessments and short- and long-term forecasts needed by private and public actors in regional economies. An aspiring regional economist would do well to use this book as a guidepost for setting up a suite of models to support a successful consultancy, business bureau, or other economic development agency. Each of the models is developed, presented, and demonstrated in a way that could easily support the development of each of the four types of models for a region of choice. ERE also provides established regional economists with a treasure trove of examples to follow in ensuring a comprehensive treatment of problems in specific topical areas.
Since this is primarily a textbook, there is a companion website designed to provide additional material for classroom use. It includes regional economic newsletters, additional case studies, and reports related to the book. The articles are selected to stimulate thought and discussion among the students. The URL of the website is www.empiricalregionaleconomics.com.
Finally, ERE is in many ways a true labor of love and a gift to regional economic practitioners. I’m aware of no other regional economist who, as his career draws to a close, has taken the necessary time and effort to share with the research community not only the foundations and demonstrations of necessary analytical tools but also the wealth of lessons learned from a successful half century of regional economic practice. We often hear that those who can, do, and those who can’t, teach. In contrast, Conway is one who can both do and teach, as this text confirms. ERE demonstrates an attachment to the profession in which Conway invested and a deep appreciation of the intricacies of regional economic behaviors and interrelationships that characterize the region he holds dear and cares about deeply. His commitment to the region and command of regional economics—both vital for the success of a regional economist—shine brightly from first page to last. ERE is an incredible how-to, a rich legacy from one who knows, and in its own unassuming way, a tribute to an incredible and successful career in regional economics.
