Glossary
Here are definitions for some of the terms used in ths study. Please use the back button to return to the page you were viewing.
Business Dynamics (Variable)
This variable did not load within any of the eight factors identified as statistically meaningful by the factor analysis. However, business dynamics is part of the theoretical framework of regional growth, and a similar variable was a critical variable in the description of business dynamic in the original study.This variable measures business dynamics in a metro area and is calculated as the ratio between business openings and business closings of single-site companies.
Employment
Employment measures job opportunities available to people in the regional labor force, but it does not differentiate between low-skill, low-paying jobs and high-skill, high-paying jobs.
Factor analysis
A mathematical tool used to reduce the initial number of variables to a smaller set of factors and detect structure in the relationships among variables. More specifically, factor analysis seeks to discover if the process underlying variation in the observed variables can be explained largely or entirely by a much smaller number of variables called factors.
Gross Metropolitan Product
Gross metropolitan product (GMP) measures value-added output produced in the region and is the regional counterpart to the national gross domestic product.
Individual Entrepreneurship
This is the second new factor developed in this study (column 9 in Table 1), and it describes the small business sector of regional economies. The Individual Entrepreneurship indicator includes two variables: percentage of self employed and the share of business establishments with less than 20 employees. This factor confirms researchers' projections for the increased role of small and personal businesses in the economy. The small business sector is expected to expand because the growing digital infrastructure reduces the barriers to entry by lowering the costs of starting a new business as well as opening new markets and new industries.
Legacy of Place
Legacy of Place reflects the demographic, social, and economic history of metropolitan areas. It includes variables that may suggest older physical infrastructure including industrial and residential buildings (approximated by the percentage of houses built before 1940), industrial heritage (share of manufacturing employment), and racial and poverty concentrations in central cities (dissimilarity index and the core city's share of poverty relative to the core city's share of the metropolitan population). This factor is different from other eight in that it is a policy variable, which could be changed to improve future growth prospects. Rather, it is a reminder that many regional economies must overcome historical circumstances in order to return to a path of growth. It also offers a convenient way to select a group of metro areas that share similar legacies with one of the four NEO metro areas.
Locational Amenities
Locational amenities reflect the quality of life in a region and influence people's decisions about the places they want to live, work, and play. Even though the quality of life measures are highly subjective and people prioritize them differently, in our analysis we included variables that reflect some universal priorities. These variables describe transportation infrastructure, arts and recreational amenities, and healthcare services.
Per capita income
Per capita income (approximates the regional standard of living and is used by many economists as a critical gauge in assessing a region's economic performance. It is total income divided by total population.
Productivity
Productivity measures gross metropolitan product (GMP) per employee and provides a proxy for a critical measure of regional competitiveness.
Racial Inclusion and Income Equality
Poverty and segregation come hand in hand with high rates of crime and social welfare. Variables included in the Racial Isolation and Inequality factor have a distinctly different pattern of variation across metropolitan U.S. from the variables that measure assimilation of different ethnicities and immigrants in society's social and economic life. Areas with a large black population have a different set of economic and social problems and, therefore, a different path of development.
Skilled Workforce and Research & Development (R&D)
As an indicator of the regional economy, this factor primarily describes the labor force quality affiliated with advanced research. Defined by the variables approximating high educational attainments and occupational levels (graduate and bachelor's degrees and professional occupations), this factor describes the ability of a region to be engaged in technology-driven economic development based on industrial and university R&D and technology-related small business entrepreneurship. The definition of this factor confirms that scientific and technological research are intense in metropolitan areas with large concentrations of highly educated populations, a characteristic that does not change quickly over time and requires years of development and persistent investment.
Technology Commercialization
Many regions and communities are adopting strategies to foster innovation. Successful production of innovation requires investments in research and development that can lead to the introduction of new products and more efficient processes of production. Traditionally, innovation was dominated by large companies and their substantial R&D budgets. However, in more recent years smaller firms, some which started as spin-offs from university-based research, are commercializing new technologies.
Urban Assimilation
Assimilating minority populations into the economic and social life of regions through advanced community development and equity greatly enhances regional growth, according to the latest study by Manuel Pastor and his co-authors. A third strong group of variables distinguished by the factor analysis describes the assimilation of different ethnic groups and acknowledges a common variation of the high presence of this population in places with a strong share of minority-owned businesses and advanced information sector. Four of the five variables included in this factor describe ethnic diversity by the share of Hispanic population, percentage employed in minority-owned businesses, percentage foreign born population, and the percentage of Asian population. The variation of the Urban Assimilation indicator is clearly driven by the presence of the Hispanic population variable.
Urban/Metro Structure
Economic development literature suggests that metropolitan areas with healthy central cities have stronger economic growth over time. Two variables in our analysis have their highest loadings in this factor, central city population as a percentage of metro population and the rate of property crime. This factor is more difficult to interpret since the larger share of population in a central city is considered as a positive characteristic of a metropolitan area, but at the same time, this variable is highly correlated with high property crime rate, which is a negative attribute of regional life.
Factor | Per Capita Income | Employment | GMP | Productivity |
|---|---|---|---|---|
Skilled Workforce and R&D |
0.00333 |
|
|
0.00134 |
Technology Commercialization |
0.00374 |
|
0.00211 |
0.00232 |
Racial Inclusion & Income Equality |
0.00104 |
0.00208 |
0.00357 |
0.00138 |
Urban Assimilation |
|
0.00143 |
0.00276 |
0.00126 |
Legacy of Place |
|
-0.00748 |
-0.00917 |
-0.00136 |
Business Dynamics |
|
0.00237 |
0.00281 |
|
Individual Entrepreneurship |
|
0.00200 |
0.00180 |
|
Locational Amenities |
0.00222 |
|
|
|
Urban/Metro Structure |
|
0.00129 |
0.00218 |
|
