This is a preview of subscription content, log in via an institution to check access.
References
The sole purpose of this section is to give a rationale for the choice of problems. The oriented reader may safely proceed to the next section.
There is nothing at the regional or local level that corresponds to the overall long-range economic plans set up for the national economy. These have appraised the outlook for a coming period of five years. By means of a “national budget”, which forecasts changes in sector demand and supply for the coming fiscal year and is intended to provide a background for the economic policy chosen, these long-range economic plans have given various alternatives for predictions of gross national product, the trend of consumption, public and private investment, rates of expansion in different sectors, and so on. See the Government Official Investigations, “Svensk ekonomi 1960–1965,”SOU, no. 10, 1962.
In 1960 the public sector accounted for about 40% of total investment in Sweden. This proportion rises to more than 50% with the inclusion of housing, which is over-whelmingly financed by government lending. All in all, the public sector contributes a one-third share to the national product.
Not until he has answered this question can the planner tackle his next problem:location. He proceeds to draft a plan for the allocation of space which will enable the community to function with maximum efficiency. By and large, questions of location will be disregarded in the following sections of this report.
In most cases where the calculations are meant to pertain to buildings, it is probably appropriate to figure out the consumption of floor space first and then of the land area. There may sometimes be reason for taking land area first.
The dissaggregation, of coures, may be pursued even further to yield more sharply defined sectors. This report will not concern itself with traffic engineering, which has its own accounting techniques. However, estimates of traffic volume and engineering projects must obviously be based on the same forecast of community growth employed for the other sectors.
The independent variables are selected with reference to the findings of special investigations in each of the sectors. The explanatory variables must be more exactly defined for purposes of sector analysis.
These methods are exhaustively described in: Walter Isard,Methods of Regional Analysis, Cambridge, Mass., M. I. T. Press, 1960, Among the many other sources, see: Charles M. Tiebout,The Community Economic Base Study, New York, Committee for Economic Development, 1962; Charles L. Leven,Theory and Method of Income and Product Accounts, Pittsburgh, University of Pittsburgh, 1963; and Roland Artle,Studies in the Structure of the Stockholm Economy, Stockholm, Stockholm School of Economics, 1959.
Artle summarizes his critique of the economic base model thus: “Indeed it is a tremendous simplification to maintain that the export base isthe determinant of employment or income in a metropolitan area. A city may well continue to grow, even if its exports do not increase. Changes in productivity, changes in consumption patterns, private investment activity and government activity in the city, may all very well imply future growth. Also, by the establishment of industries for the production of goods and services which used to be imported, a city may conceivably get an impetus to further growth. Further one may conceive of various forms of capital movement which tend to stimulate the development of a city.” Artle,op. cit., p. 3.
Isard,op. cit.,, pp. 190–201 An example taken from Wichita, Kansas, gives the following values of an economic base multiplier for different years and periods (using employment figures): 1940=3.5; 1950=3.0; 1941–1950=2.6; 1939–1944=1.2; 1939–1948=3.0. Commenting on the last three numbers, Isard says (p. 201, fn. 42): “These different values for the multiplier reflect the highly fluctuating character of employment in aircraft and the relatively stable character of employment in service activities.” Ullman and Dacey have shown that larger towns have a higher proportion of their labor force employed in export industries than smaller towns. This suggests that the employment multiplier will decline as the region grows, See E. L. Ullman and M. F. Dacey, “The Minimum Requirements Approach to the Urban Economic Base”,Papers and Proceedings, The Regional Science Association, vol. VI, 1960, pp. 175–194.
Leven writes: “There is, however, still another factor which renders income accounting a better tool for the kind of metropolitan area analysis we are considering here, namely evaluating the prospects for growth and stability and assessing the contribution of each activity to the total economic process in the area. Income accunts are in normative terms. They are composed of variables which describe things which the economy presumably is trying to maximize, i. e. Gross National Product and National Income are desiderata. Input-output on the other hand is not so oriented;”op. cit. pp. 23–24. Further “the evidence uncovered in this study shows that even for an area of 60,000 people the extent of linked industry relationships is little more than norminal, particularly in comparison with the consumption multiplier effect stemming from the increased expenditures of the additional workers,” pp. 24–25.
We disregard here those cases where higher productivity boosts income per capita, perhaps as a result of increased capital intensity. Another possibility is increased productivity resulting in higher per-capita income and perhaps too higher aggregate income but paralleled by a decline in the size of the labor force.
The dependence of housebuilding on changes in the distribution of population by age and marital status is discussed below.
The data are derived from an investigation which is still in progress. All figures are preliminary.
A separate breakdown is made for the OJA steel mill. Other recorded sectors are construction and local government, with remaining activities merged into a single group, “other services” the latter consist chiefly of retail trade and transportation. The figures for construction workers include those who were housed in temporary dwellings. The total number of permanently resident employees in Oxelösund is also shown: i. e., exclusive of in-commuters (the number of out-commuters is negligible) and temporary construction workers housed in temporary dwellings.
This change is partly of a formal nature, since new duties were imposed on local government when Oxelösund was officially designated as a town in 1950.
This forecast is based on information and interviews on the ongoing buildup in the service sector.
The populations of Swedish communes have highly varying age structures owing to different rates of increase or decrease. Other things being equal, these variations give rise to considerable discrepancies in area income per capita and in local government expenditures.
After the lapse of another 50 years or so, however, capital outlays of this kind may again become significant to meet reinvestment needs.
It is assumed that, as is the practice in Sweden, the major portion of public investment is financed out of local government budgets. This particular practice does not alter the effect on real investment volume.
A relative increase of housing consumption and an increase in local government saving at Oxelösund may be directly traced to a larger volume of public-investment financing out of taxes.
A review of public investments for the 1957–1961 period shows that about 20% of these investments were unrelated to expansion.
The findings of such a calculation will naturally depend on which investments are classified as public.
Personal income is equated with income assessed for taxation. With allowance made for certain adjustments, the sum of personal income, the locally retained portion of corporate income, and the net transfers to the commune constitutes area income. Compare with Levenop. cit., pp. 67–70. Corporate profits impinge on the local economy in different ways: a smaller portion represents the locally retained portion of dividends (which form part of personal income in the following year), and a much larger portion the amount paid by companies in local income tax. For present purposes, the special problems induced by in-commuters and out-commuters are disregarded.
When communes are compared with reference to area income per capita, we find great dissimilarities. These may be due to differences of population structure, to varying levels of employment among inhabitants of able-bodied age, to differing economic patterns (i.e., relative magnitudes of industry groups), and to local variations in economic productivity. In Sweden, only a small part of regional variations in per-capita income would appear to be attributable to the last of these factors. Some of the factors, however, are highly correlated.
If the increase in employment level is due to a larger number of part-time jobs or in general to the employment of more people at low wages, this will obviously either lead to a reduction ofy as herein calculated or a rate of increase fory that is slower than the average increase in real wages for full-time employees. It will be noted in the present case study that income per, gainfully employed person went up by no more than 14% from 1956 to 1962, whereas the wage of an OJA employee rose by 28%.
Compare, however, with the above-cited satement by Isard on the slight cyclical fluctuations of the service sector in Wichita, Kansas.
Since as changes in gross local magnitudes, such as sales value and value added, have not yet been calculated, our analysis on this point is necessarily incomplete.
In this period there were no large-scale local purchases of building materials.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Holm, P. Physical planning and local economic development: Reflections on a case study. Papers of the Regional Science Association 12, 29–45 (1964). https://doi.org/10.1007/BF01941238
Issue Date:
DOI: https://doi.org/10.1007/BF01941238