Economic base analysis is a theory that posits that activities in an area divide into two categories: basic and nonbasic.
The theory was developed by Robert Murray Haig in his work on the Regional Plan of New York in 1928.
Extending by manipulation of data and comparisons, conjectures may be made about population and income.
Total reference area employment It is assumed that the base year is identical in all of the above variables.
Economic base ideas can be easy to understand, as are measures made of employment.
If its economic base is concentrated in sectors that are growing, then it is in good shape.
Methodologically, economic base analysis views the region as if it were a small nation and uses notions of relative and comparative advantage from international trade theory (Charles Tiebout 1963).
In a sense, the activity is macroeconomics "written small", and it has not been of much interest to urban economists in recent years because it does not get at within-city relationships.
As H. Craig Davis points out, there are a number of assumptions on which economic base analysis is conducted.
[1] Quintero, James Paul (2007), Regional Economic Development: An Economic Base Study and Shift and Shares Analysis of Hays County, Texas (Applied Research Project, Masters Program), Texas State University San Marcos, Paper 259, archived from the original on 26 May 2008