Community Economics Linking Theory and Practice

by Schaffer, Ron; Deller, Steven C.; Marcouiller, David W.

• ISBN13: 9780813816371
• ISBN10: 0813816378
• Edition: 2nd
• Format: Hardcover
• Copyright: 2004-04-19
• Publisher: Wiley-Blackwell

Summary

The first edition of provided readers with a comprehensive understanding of the many non-farm economic activities in rural America. In this complete revision of Dr. Shaffer's Community Economics: Economic Structure and Change in Smaller Communities authors Deller and Marcouiller join Shaffer to review the economics of smaller communities. To date, the main body of economic research and literature has neglected the economics of smaller communities. Community Economics: Linking Theory and Practice fills the information void. This text serves as a comprehensive guide on rural economies for economists, regional planners, rural sociologists and geographers. Additionally, it acts as an issue-oriented handbook of development strategies for government workers, planning and zoning officials, and others involved in the day-to-day commerce of community development.

Author Biography

Ron Shaffer is an Emeritus Professor, Department of Agricultural and Applied Economics, University of Wisconsin-Madison/Extension.

Steve Deller is a Professor, Department of Agricultural and Applied Economics, University of Wisconsin-Madison/Extension.

Dave Marcouiller is a Professor, Department of Urban and Regional Planning, University of Wisconsin-Madison/Extension.

Table of Contents

Foreword	xv
Preface	xvii
Section I Community Economic Development Theory	1	(78)
1 Defining Community Economic Development	2	(18)
Community	2	(1)
Development	3	(2)
Community Economic Development and Analysis	5	(1)
An Organizing Paradigm	6	(2)
Economics: Background Fundamentals	8	(9)
Market Efficiency and Pareto Optimality	8	(6)
Market Failure	14	(1)
Externalities	15	(2)
Summary	17	(1)
Study Questions	18	(1)
Notes	19	(1)
2 Growth Theory	20	(18)
Rostow-Kuznets Stages of Economic Growth	21	(3)
Income Distribution and the Stages of Development	21	(3)
Critique of the Stages of Development Theory	24	(1)
Structural Change Theories of Economic Growth	24	(2)
The Lewis Model of Structural Change	24	(1)
Patterns of Development	25	(1)
Critiques of Structural Change Theories	25	(1)
Neoclassical Solow-Swan Growth Theory	26	(6)
Spatial Interpretation of the Neoclassical Theory	28	(3)
Critiques of the Neoclassical Theory	31	(1)
Endogenous Growth Theory	32	(3)
Spatial Implications of Endogenous Growth Theory	34	(1)
Critiques of Endogenous Growth Theory	35	(1)
Policy Implications and Summary	35	(1)
Study Questions	36	(1)
Notes	36	(2)
3 Space and Community Economics	38	(21)
Significance of Location Theory in Community Economics	38	(1)
Profit Maximization	39	(9)
Least Cost or Cost Minimization	41	(3)
Demand Maximization	44	(4)
Summary and Critique of Classical Location Theory	48	(1)
Behavioral Approach	48	(2)
Objective Functions	48	(1)
Uncertainty	49	(1)
Information	49	(1)
Summary and Critique of the Behavioral Approach	50	(1)
Institutional Approach	50	(1)
Agglomeration in Location Theory	51	(4)
Regional Comparative Advantage	51	(1)
Industry Clusters	52	(1)
Alternative Agglomeration Semantics	53	(1)
Porter's Approach to Regional Competitive Advantage	54	(1)
Product Life Cycle	55	(1)
Limitations of Location Theory	56	(1)
Summary	56	(1)
Study Questions	57	(1)
Notes	58	(1)
4 Concepts of Community Markets	59	(20)
Circular Flow	59	(2)
External Markets: Export Base Theory	61	(5)
Limitations	63	(2)
Export Base Multipliers	65	(1)
Internal Markets: Central Place Theory	66	(7)
Range of a Good or Service	67	(1)
Demand Threshold	68	(1)
Central Place Hierarchy	69	(3)
Shifts in the Hierarchy of Central Places	72	(1)
Limitations of Central Place Theory	73	(1)
Concepts of Internal Market Analysis	73	(3)
How Trade Areas Differ	74	(1)
Identifying High Potential Internal Market Sectors	74	(1)
Information of Interest to Retail and Service Sector Prospects	75	(1)
Retail and Service Clustering	75	(1)
Developing a Clustering Strategy	76	(1)
Summary and Policy Implications	76	(1)
Study Questions	77	(1)
Notes	78	(1)
Section II Community Factor Markets	79	(105)
5 Land Markets	81	(21)
Use Capacity of Land and Its Ownership	82	(10)
Productive Land Use	82	(7)
The Economic Basis of Urban Sprawl	89	(2)
The Exurbanization Process	91	(1)
Land Use Planning: The Analytical Toolbox	92	(1)
Cost-Benefit Analysis	93	(1)
Fiscal Impact Assessment	93	(1)
Economic Impact Analysis	93	(1)
Land Use Planning: The Directice Toolbox	93	(6)
Public Ownership	94	(1)
Public Regulations	94	(1)
Publicly Provided Incentives	95	(2)
Quasi-public Market-oriented Land Use Tools	97	(2)
Summary	99	(1)
Study Questions	100	(1)
Notes	100	(2)
6 Labor Markets	102	(21)
Labor Markets	102	(7)
Demand for Labor	104	(2)
Supply of Labor	106	(2)
Institutions/Rules	108	(1)
Labor Market Theories	109	(4)
Supply-oriented or Human Capital Theory	109	(2)
Demand/Rules-oriented Theories	111	(2)
Informal Work and Leisure	113	(1)
Community Labor Market Issues	114	(4)
Unemployment	115	(1)
Job/Worker Matching	115	(1)
Information	116	(1)
Labor Mobility	117	(1)
Discrimination	117	(1)
Exploitation	117	(1)
Contingent Labor Force	118	(1)
Poverty/Welfare Reform and Strategies to Address Low-income Levels	118	(1)
Summary	119	(1)
Study Questions	120	(1)
Notes	121	(2)
7 Financial Capital Markets	123	(18)
Community Capital Assets and Markets	123	(1)
Capital Stock Assets versus Flows of Funds	123	(1)
The Importance of Financial Capital Markets to Community Economics	123	(1)
An Overview of Financial Capital Markets	124	(2)
Nonhomogeneity of Capital Markets	125	(1)
Debt versus Equity in Capital Markets	126	(1)
Debt: Community Capital Markets	126	(4)
Secondary Markets	127	(1)
Correspondent Banking	128	(1)
Accessing New Sources of Capital	128	(1)
The Role of Banks in Community Economic Development	128	(2)
Equity: The Traditional Venture Capital Industry	130	(3)
Impediments to the Venture Capital Investment Process	131	(1)
The Decision-making Process	132	(1)
Capital Market Failures	133	(5)
Mobility	133	(1)
Information	134	(1)
Risk and Uncertainty	135	(2)
Regulation	137	(1)
Discrimination	137	(1)
Specific Venture/Equity Capital Market Failures	137	(1)
Policy Responses to Capital Market Failures	138	(1)
Summary	138	(1)
Study Questions	139	(1)
Notes	139	(2)
8 Technology and Innovation	141	(12)
What Are Technology and Innovation?	143	(2)
Innovation or Technological Adoption	145	(2)
Models Explicitly Incorporating Technology	147	(3)
Product/Innovation Life Cycle Theory	147	(2)
Growth Center/Propulsive Industries Theory	149	(1)
Disequilibrium Theories	149	(1)
Policy	150	(1)
Summary	151	(1)
Study Questions	152	(1)
Notes	152	(1)
9 Nonmarket Goods and Services: Amenities	153	(14)
The Concept of Nonmarket Goods and Services	153	(4)
The Array of Economic Goods and Services	153	(2)
The Value of Nonmarket Goods and Services	155	(1)
Use Values	156	(1)
Non-use Values (Option, Existence, and Bequest)	157	(1)
The Role of Amenities in Community Economic Development	157	(5)
The Temporal Aspect of Amenities	158	(1)
Characteristics of Amenities	159	(1)
Approaches to Estimating the Value of an Amenity	160	(2)
Incorporating Amenities into the Realm of Community Economic Analysis	162	(3)
The Incomplete Nature of Traditional Regional Accounts	162	(1)
Relationship to Our Conceptual Basis	163	(2)
Summary and Policy Implications	165	(1)
Study Questions	165	(1)
Notes	165	(2)
10 Local Government and Public Goods	167	(17)
When Private Markets Fail	168	(9)
Tiebout's Solution	170	(1)
A Stylized Model of Local Public Markets	171	(4)
Efficiency, Effectiveness, and Evaluation	175	(2)
Taxation	177	(3)
Sources of Revenue for Government	177	(1)
Qualities of a Good Tax System	178	(2)
Taxes, Spending, and Economic Growth	180	(2)
Summary	182	(1)
Study Questions	182	(1)
Notes	182	(2)
Section III Institutions and the Art of Community Economics	184	(74)
11 Institutions and Society	185	(17)
The Role of Society and Culture in Community Economic Development	186	(1)
The Role of Institutions in Community Economic Development	187	(2)
Specific Institutions	188	(1)
Institutional Change	189	(1)
Government as an Institution	189	(10)
Incentives and Subsidies	192	(3)
Types of Subsidies	195	(1)
Critiques of Government Subsidies	196	(3)
Summary	199	(1)
Study Questions	200	(1)
Notes	200	(2)
12 Policy Modeling and Decision-Making	202	(22)
Our Capacity to Make Decisions (Social Capital)	202	(3)
Setting Collective Objectives	205	(2)
Utilitarianism	205	(1)
Libertarianism	206	(1)
Contractarianism	206	(1)
Arrow's Impossibility Theorem	207	(1)
Moving from Social Utility to Policy Action	207	(1)
An Objective Approach to Examining Policy	208	(2)
Addressing Community Needs: The Relevance of Public Policy	210	(1)
Identifying Community Strategies, Goals, and Objectives	210	(5)
Different Perspectives of Community Economic Development Policy Choices	213	(2)
Strategies for Community Economic Development	215	(3)
The Shaffer Approach	215	(3)
Community Entrepreneurship	218	(1)
A Zero Sum Approach	219	(1)
Complex Interrelationships and Persistence	220	(1)
Summary	221	(1)
Study Questions	222	(1)
Notes	222	(2)
13 The Practice of Community Economic Development	224	(34)
The Process of Community Economic Development	224	(7)
Readiness	224	(2)
Different Roles and Approaches	226	(3)
The Changing Logic of Community Economic Development	229	(1)
Community Decisions	230	(1)
Economic Data	231	(4)
Economic Accounts	231	(1)
Comparing Communities	231	(2)
Measuring a Community's Economy	233	(1)
Definitions of Industrial Sectors	234	(1)
Where to Find Data	235	(1)
Community Economic Analysis	236	(4)
The Community Economic Analysis Program	238	(1)
The Take Charge Program	239	(1)
Summary	240	(1)
Study Questions	241	(2)
Appendix A	243	(13)
Community Economic Preparedness Index	243	(13)
Appendix B	256	(1)
Twenty Questions about Your Community	256	(1)
Notes	257	(1)
Section IV Tools of Community Economics	258	(72)
14 Descriptive Tools of Community Economic Analysis	259	(23)
General Economic Trends	259	(3)
Growth Indices	259	(1)
Shift-share Analysis	260	(2)
Delineating the Relevant Economic Area	262	(6)
Defining Trade Areas by the Analysis of Customer Origins	262	(2)
Defining Trade Areas Based on Travel Time	264	(2)
Defining Trade Areas Based on Travel Distance: Gravity Models	266	(2)
Defining Labor Market Areas	268	(1)
Specialization: Bifurcating the Local Economy	268	(4)
Direct Methods	268	(1)
Indirect Methods	269	(3)
Local Market (Nonbasic) Analysis	272	(7)
Retail and Services Demand Analysis	272	(4)
Retail and Services Supply Analysis	276	(2)
Other Market Considerations and Gap Analysis	278	(1)
Summary	279	(1)
Study Questions	279	(1)
Notes	280	(2)
15 Inferential Tools of Community Economic Analysis: Fixed-Price Models	282	(20)
Input-Output Analysis	283	(13)
The Input-Output Descriptive Accounts	283	(1)
Crucial Assumptions of IO	284	(3)
An Example	287	(1)
The Predictive Input-Output Model	288	(2)
Input-Output Multipliers	290	(3)
Common Sense and Input-Output Multipliers	293	(1)
Input-Output Analysis in Practice	294	(1)
Extending the Traditional IO Framework	295	(1)
Social Accounting Matrix Analysis	296	(3)
The SAM Accounting Structure	296	(1)
Constructing a Regional SAM	297	(1)
Interpreting SAM Results	297	(1)
The Usefulness of SAM Analysis in Community Economics	298	(1)
Summary and Key Limitations of Fixed-price Models	299	(1)
Study Questions	300	(1)
Notes	300	(2)
16 Inferential Tools of Community Economic Analysis: Price Endogenous Models	302	(14)
Computable General Equilibrium Models	303	(5)
How a CGE Model Works	303	(1)
What a CGE Model Looks Like	304	(1)
A Simple Example	305	(2)
Operational CGE Models	307	(1)
Hybrid Conjoined Models	308	(3)
How a Conjoined Model Is Structured	310	(1)
Introduction to Spatial Statistics	311	(3)
Summary	314	(1)
Study Questions	314	(1)
Notes	315	(1)
17 Looking to the Future	316	(14)
Revisiting Our Definitions of Community Economic Development	317	(1)
Where We Have Been	318	(4)
A Comprehensive Approach to Community Economic Development	322	(3)
Strategies for Community Economic Development	325	(2)
What It's All About	327	(1)
A Comprehensive Theory	328	(1)
Notes	329	(1)
References	330	(23)
Index	353