The process of regional economic growth: A case study of washington state

Abstract

Nearly 60 years ago, North and Tiebout engaged in a vigorous debate on the nature of regional economic growth that is still relevant today. The discourse led to the formulation of the economic base model, a simple but powerful means of explaining, analyzing, and forecasting the process of regional economic growth. The objective of this study is to explain how the Washington state economy has grown and evolved over the past 50 years in light of the theory advanced by North and Tiebout. Drawing upon Washingtons long history of regional economic modeling and analysis, the study addresses several questions, among them: Are exports the key to regional economic growth? To what extent do people follow jobs? Are the regional unemployment rate, wage rates, and consumer prices determined in the regional or national market? What are the causes of regional economic cycles? This case study shows that the historical behavior of the Washington economy is largely consistent with the economic base theory of regional growth. The study presents a classical picture of an open regional economy operating in a much larger arena: a trade-dependent economy with little, if any, control over its unemployment rate, wages, and prices because of mobile factors of production.