Assignment#1-EconomicBaseAnalysis

In Activity 3-2 you were provided with the opportunity to assess and analyze several differenttypes of economic development profiles.In fact, many economic development organizationsrefer to the profile by a different name (community profile, economic development profile, sitelocation profile).The goal of these profiles is to "showcase" the community or region topotentialandexistingresidentsandorbusinesses).Eachdataprofileshouldhaveapurpose.

The purpose of this is to provide insight into how economic development data canassist in economic development planning. In particular, data can be used to provide intelligenceinto an economic development strategy or plan.It is important that you have read Chapter 6 inthe Planning Local Economic Development textbook. In this assignment, you will visit severalgovernment websites to secure information which be utilized to complete the following analysis:LocationQuotients(LQ)andshift-shareanalysis(proportionalshiftsanddifferentialshifts).

Please note that the data in table 6.4 in the course textbook does not correspond with thediscussionaboutthetable.Thecalculationsinthetablearecorrectbutthediscussionisreferringtodifferentyearsthanwhatthetableisshowing.

Step1:Research-LocationQuotientsandShift-ShareAnalysis

Spend some time browsing the Internet forStatistics Canada and employment data.StatisticsCanada provides one of the most comprehensive data sites in the country.The labour forcesurvey provides a data table outlining employment by industry (or NAICS codes NationalAmerican Industry Classification System). For the purposes of this assignment, we will use thefollowing two sectors: i. Transportation and Warehousing and ii.Construction.Now spendsome time searching the Internet foremployment data in Alberta.This is the government ofAlberta's employment website.This website provides information on employment data for theprovince of Alberta.Sample data has been provided for you in this assignment in the "studentguide for economic development analysis", which is an Excel spreadsheet that you will berequired to complete and submit for this assignment. The spreadsheet can be found underAssignment#1 in D2L.

You should spend some time browsing these websites so you can appreciate the depth of dataprovided; however, for the purposes of this assignment,the data will be provided to youin thestudent guide for economic development analysis Excel spreadsheet (file provided in theAssignmentsarea).

The following videos will provide you with support to understand the concepts explored in thisassignment.

Video 1 provides additional explanation and example of shift- share analysisshiftshare analysis -Yahoo Video SearchResults

Video 2 breaks down the calculation for shift share and shares how to use Excel for this.Calculatinga shift-shareanalysis inExcel -YouTube

Reading1isapaperthatshowshowLQandShiftShareanalysisareusedinananalysisofaspecificregion.You willneedto loginintothe SAITlibrarytoreadthis article.

AnalysisoftheBehaviorofaRegionalEconomy-ProQuest

Step2:CalculationofLocationQuotient

Using the knowledge you have gained through the textbook, as well as the Excel spreadsheetprovided in Assignment 1 ("student guide for economic development analysis"), complete thetransportation and construction location quotients, for the first and second point in time. Yourresults should be put into the student guide for economic development analysis ExcelspreadsheetincellB10,B11,B13andB14.Theformulaforlocationquotientscanbefoundinchapter6 ofthe LEDtextbookand isalso provided below:

LQ=(

) ( )

Step3:CalculationandAnalysis-Shift-ShareAnalysis

The second method of analyzing an economy is referred to as shift-share analysis.Thisanalysisisdynamicbecauseitcompareschangesovertime,ratherthanlookingatonepointintime.The shift-share analysis is made up of the following components:shift (growth) in thenational economy, proportional shift and differential shift. These terms are economic names forverysimplecalculations which allow you to compare the growth of the national economy withgrowth in sectors of the economy at a national and local level. This was referred to in theresourcesindicated instep 1.

Theoverallshiftinthe economyis simplythepercentageofgrowthorpercentageof declinein the larger reference economy.For example, if the Canadian economy grew by 5%, wewould say there has been a 5% shift in the economy. In order to complete the proportional anddifferential shift you will need to calculate the percentage change in the transportation industryforbothAlberta(D3)andCanada(G3)aswellastheconstructionindustryforbothAlberta(cellD4)and Canada (cell G4).

Theproportional shiftis the relative change of a particular industry in the national economycompared to the relative change in the total of all industries in the national economy).Forexample, if the overall shift (overall growth) in the Canadian economy is 5%, and constructionindustry in Canada grew by 20%, the proportional shift in the construction industry would be15% (20% minus 5%). This means we would expect construction to contribute more growth toournationaleconomy.Calculatetheproportionalshiftfortransportationandconstructionusingthe data in the excel spreadsheet. Put your findings into the Excel spreadsheet in cells I3 andI4.

Thedifferentialshift.looksatthedifferenceintherateofgrowthordeclineinalocalindustry

relative to the rate of growth or decline in the same industry nationally. For example, say theconstructionindustryinCanadagrewby20%;however,theconstructionindustryinAlbertaonlygrewby8%,wewouldsaythedifferentialshiftinconstructionisnegative12%(8%minus20%).In other words, growth in the construction industry in Alberta is lagging behind growth in theconstruction industry in the national economy. Put your findings into the Excel spreadsheet incellsJ3 andJ4.

Step3:Submit

You have been asked to conduct a variety of economic development analysis on the studentguide to economic analysis Excel spreadsheet. Once you have completed the calculations, andansweredthequestionbelow,submityourcompletedspreadsheettotheD2LAssignmentarea.

Atthebottomofyourspreadsheet,answerthefollowingquestions:

1. BasedonyourcalculationofLQ,shouldAlbertabepursuingeitherofthesetwoindustriesaspartofitseconomicdevelopmentstrategy?Whyorwhynot?

1. Whatdoestheshiftshareanalysistellyouaboutthetwoindustries(remembershiftshareconsistsoftwoadditionalanalysis,proportionalshiftanddifferentialshift)?

1. Whatchallengescanyouseeforsmallercommunitiesandregionsinundertakingthistypeof economic development analysis?

Industry

Alberta

Canada

Shift-Share

1st Pt in Time

2nd Pt in Time

% Change

1st Pt in Time

2nd Pt in Time

% Change

Shift - Overall Growth**

Proportional Shift

Differential Shift

Transportation & Warehousing

115,800

128,000

858,500

905,500

0.0%

Construction

234,900

237,800

1,344,800

1,305,300

0.0%

Total Employment

2,203,500

2,274,700

17,744,600

17,830,100

0.0%

**The Shift - Overall Growth Column will have the same percentage since this is the overall shift for the economy of Canada (this percentage should be what you calculated for Column G5)

Location Quotient = local employment in an industry divided by total local employment ALL divided by national employment in an industry divided by total national employment

LQ Transportation 1st Pt in Time

Requires a calculation

LQ Construction 1st Pt in Time

Requires data

LQ Transportation 2nd Pt in Time

LQ Construction 2nd Pt in Time

Proportional Shift (change of an industry to the total of all industries) - calculated by subtracting the total of all industry rate of growth for the country from the industry by industry growth or decline

G-H

Differential Shift (dif in the rate of growth or rate of decline in a local industry compared to the same industry nationally)

D-G

- calculated by subtracting the rate of growth of ea industry at the national level from the rate of growth of the same industry at the local level

Proportional Shift

Relative change of an industry to the total of all industries

Does that industry have an advantage of disadvantage compared to overall economic growth

If Transportation and warehousing are growing faster than the overall economy they are proportionately more likely to contribute to economic growth

This calculation allows you to look at the industries that contribute to an economy's growth or decline

Differential Shift

Looks at the difference in the rate of growth or decline in a local industry relative to the rate of growth or decline in the same industry nationally

Where the proportional shift is flat (the industry as a whole is growing or declining at the same rate as the overall economy),

local growth or decline shows that the local industry is doing better or worse than would be expected if the local area were just like the larger region

Questions:

Answers:

1. Based on your calculation of LQ, should Alberta be pursuing either of these two industries as part of its economic development strategy? Why or why not?

2. What does the shift share analysis tell you about the two industries (remember shift share consists of two additional analysis, proportional shift and differential shift)?

3. What challenges can you see for smaller communities and regions in undertaking this type of economic development analysis?