Central Cities and Regional Market Analysis 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 Basis for creating a combination of contiguous counties based on two principles: Functional Integrity Principle (economic links between counties) Homogeneity Principle (similarities between counties)

Metropolitan Statistical Area (MSA) Nassau County Duval County Baker County St. Johns County Clay County

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

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

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

Evolution of Top 10 Ranking Cities 1850 Top 10 Cities 2000 Rank 2000 Top 10 Cities New York 1st Baltimore 16th Los Angeles Boston 20th Chicago Philadelphia 5th Washington-Baltimore New Orleans 31st San Francisco - Oakland - San Jose Cincinnati 24th St. Louis 50th Pittsburgh 49th Detroit Louisville 64th Dallas Buffalo 56th Houston

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

Top 10 Cities of Growth (1950 – 1998) City Percent Growth Average Growth Per Year Phoenix 1251% 26% Miami - Ft. Lauderdale 697% 15% Tampa - St. Pete 668% 14% Atlanta 638% 13% San Diego 542% 11% Dallas - Ft Worth 462% 10% Houston 461% Denver - Bolder 374% 8% Seattle - Tacoma 334% 7% Portland - Salem 319%

The Internet and Growth Implications for the Future Lecture 2 The Internet and Growth Implications for the Future

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

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

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

Economic Base Analysis Lecture 2 Economic Base Analysis

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

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

Circular Flow of Income Model “Real Flows:” Movement of Productive Services Consumer Goods and Services HOUSEHOLDS BUSINESSES Productive Resources (labor, land, capital, entrepreneurship)

Circular Flow of Income Model “Money Flows:” Movement of Cash Consumption Expenditures HOUSEHOLDS BUSINESSES Resource Payments (wages, rents, dividends, interest, profit)

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

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)

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

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

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

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