Economic Development Recovery and Resiliency Playbook - Flipbook - Page 43
Understanding Your Economic
Base Through Cluster Analysis,
Business Size, and Supply Chain
Ch.4
In any discussion of economic resiliency and recovery, the composition of
an economic base is key to efective recovery and resiliency planning. To
strengthen its resiliency, a community needs to know the types of businesses
and employers that generate jobs and economic activity, both at the local
level and regionally. Communities also need to know how the mix of busi
nesses has evolved and changed over time, and how this all connects to
external and internal factors. This is all important in creating a diversified
and resilient local economy.
Data is an essential foundation that informs economic development
strategies, policies, implementation actions, and other responses. The
economic base provides objective measures for defining a local or regional
economy, its strengths and weaknesses, and how change might potentially
impact its future. Economic base information can be used for identifying
business attraction and retention priorities, and in the context of economic
resiliency and recovery, economic base information can demonstrate how
changes occurring in one sector can have broader efects that cut across
multiple sectors.
This chapter presents a summary of the economic base indicators that can
help inform the plans and strategic actions needed to strengthen economic
resiliency and address disaster recovery. In addition, this chapter provides
some of the information and data sources that communities can consult to
gain a better understanding of their economic base.
Reviewing Local Economic Drivers and
Composition of the Business Community
What drives the economy, and how do you define it? Analyzing the economic
base helps to answer this question. The economic base consists of private
sector establishments, public sector agencies, nonprofit organizations,
institutions, and numerous other entities that serve diferent functions
within a geographic area. Generally, a local economy comprises two main
functions: basic and nonbasic. The economic base is built from export-driven
(or revenue-driven) basic activities, while local-serving needs are met by
nonbasic activities.
At its most fundamental level, an economic base consists of the businesses,
jobs, and wages that exist within a community and/or region. Other measures
can include firm size, business characteristics, patents, and taxable sales,23
but to help the user understand what it all means, the analysis of the economic
23
International Economic Development Council; Professional Development: Economic
Development Strategic Planning; Washington D.C.; 2016.
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