Introduction to Regional Input-Output Model

Economic base model
Total employment (T) = Basic (B) + non Basic (N)
• basic sector Industries whose markets are national or
global (export-base industry).
• non-basic sector Industries that sells almost of all their
output to local consumers.
The performance of non-basic sector is determined by
the performance of the local economy as a whole.
N = nT (n = the strength or sensitivity of the linkage between
the local economy, T and the locally oriented activities, N)
T = B + nT (T/B = 1/(1-n) : economic base multiplier)
Application: ΔT = [1/(1-n)]ΔB the increase in total
employment generated by an increase in export (basic
sector) employment.