Introduction to Economic Bases
An economic base industry is fundamental in providing employment opportunities vital for the sustenance and advancement of any given community within a specific geographic market area. Understanding these industries and their ripple effects is crucial for effective economic planning and sustainable community development.
What is an Economic Base?
An economic base refers to the set of primary industries that anchor the economic fabric of a particular area. These industries generate significant economic activity and employment, which, in turn, supports various ancillary service sectors. Economic base industries typically cater to markets outside the local area, bringing in income and opportunities.
How Economic Base Industries Benefit Communities
- Employment Opportunities: These industries provide essential jobs that form the backbone of the local economy. Each job in an economic base industry typically results in the creation of additional jobs in the local service sector.
- Population Growth: As new employment opportunities arise, individuals and families move to the area, boosting the local population and leading to cultural and infrastructural growth.
- Economic Stability: A robust economic base ensures sustained economic activities, providing a buffer against market volatilities and economic downturns.
Detailed Example: The Steel Industry in Pittsburgh
Imagine that the steel industry is the economic base for Pittsburgh. For each steelworker added to the economic base, another job is created in the service sector, such as positions for physicians, lawyers, switchboard operators, and barbers. This relationship reflects the employment multiplier effect typical of economic base industries.
Every new job in Pittsburgh’s steel industry brings in, on average, two additional people into the community. These could be spouses, children, or even non-working parents. Consequently, with each new job in this basic industry, the total population could increase by four individuals, facilitating broad-based community growth.
Frequently Asked Questions (FAQs)
1. What is meant by ‘basic industry’ through which an economic base is created? A basic industry is one that primarily caters to markets beyond the local economy. It brings in revenue from external sources, fostering broader economic stability and growth within the local area.
2. Can there be more than one economic base industry in a given geographic market area? Yes, multiple industries can serve as the economic base for an area, promoting diverse economic development and resilience against sector-specific downturns.
3. How does the economic base impact local service sectors? Service sectors expand as a response to the growth and opportunities created by economic base industries. They offer ancillary support and improve quality of life by providing essential services to residents.
Related Terms: Economic Development, Industry Symbiosis, Employment Multiplier, Geographic Market Area, Basic Industry, Service Sector.
