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Lecture 2

Lecture 2. Central Cities and Regional Market Analysis. Cities, Counties, Metropolitan Areas. County. Metropolitan Area. $$. Central Business District. Central City. Smaller Cities. Atlanta Metropolitan Area. Metropolitan Statistical Area (MSA). Formed by the U.S. Bureau of the Census

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Lecture 2

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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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