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Proactive Industrial Development Strategies And Portfolio Analysis

Author

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  • Niles C. Schoening

    (University of Alabama)

  • Larry E. Sweeney

    (Ball State University)

Abstract

The analytical concepts of security portfolio theory can be applied to measure a targeted industry's compatibility with the community's existing industrial base. The model introduced in Part II of this paper allows for the measurement of the trade-off between employment growth and employment instability. The basic premises underlying this application are that employment and income instability in a region is analogous to risk in securities markets and that economic growth is similar to the return on a security portfolio. It is also assumed that the community leadership values economic growth and wishes to minimize future employment and income fluctuations. The use of portfolio analysis to find the optimal industrial mix is limited by both empirical and theoretical considerations. The succeeding sections of this paper explore the extent and severity of the limitations, especially when portfolio analysis is applied to the preparation of a targeted industries list for a small region.

Suggested Citation

  • Niles C. Schoening & Larry E. Sweeney, 1992. "Proactive Industrial Development Strategies And Portfolio Analysis," The Review of Regional Studies, Southern Regional Science Association, vol. 22(3), pages 227-238, Winter.
    • Handle: RePEc:rre:publsh:v22:y:1992:i:3:p:227-238
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    References listed on IDEAS

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    1. Michael J. Wasylenko & Rodney A. Erickson, 1978. ""On Measuring Economic Diversification": Comment," Land Economics, University of Wisconsin Press, vol. 54(1), pages 106-109.
    2. John Lintner, 1965. "Security Prices, Risk, And Maximal Gains From Diversification," Journal of Finance, American Finance Association, vol. 20(4), pages 587-615, December.
    3. Cho, Dong W. & Schuermann, Allen C., 1980. "A decision model for regional industrial recruitment and development," Regional Science and Urban Economics, Elsevier, vol. 10(2), pages 259-273, June.
    4. Ronald W. Spahr & Richard F. Deckro, 1988. "A Non-Linear Goal Programming Approach to Modeling Intraregional Economic Development," The Review of Regional Studies, Southern Regional Science Association, vol. 18(1), pages 10-18, Winter.
    5. Niles C. Schoening & Larry Sweeney, 1989. "Applying an Industrial Diversification Decision Model to Small Regions," The Review of Regional Studies, Southern Regional Science Association, vol. 19(3), pages 14-17, Fall.
    6. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
    7. Grossberg, Adam J., 1982. "Metropolitan Industrial Mix and Cyclical Employment Stability," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 12(2), pages 1-23.
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    Cited by:

    1. J. C. Dissart, 2003. "Regional Economic Diversity and Regional Economic Stability: Research Results and Agenda," International Regional Science Review, , vol. 26(4), pages 423-446, October.
    2. Roberto Ezcurra, 2011. "Unemployment Volatility and Regional Specialization in the European Union," Regional Studies, Taylor & Francis Journals, vol. 45(8), pages 1121-1137.
    3. Baldwin, John R. Brown, W. Mark, 2003. "Volatilité de l'emploi au niveau régional dans le secteur canadien de la fabrication : les effets de la spécialisation et du commerce," Série de documents de recherche sur l'analyse économique (AE) 2003005f, Statistics Canada, Direction des études analytiques.
    4. Hasan Engin Duran, 2015. "Regional Employment Volatility In Turkey: Causes And Consequences," Working Papers 2015/06, Turkish Economic Association.
    5. John Baldwin & W. Brown, 2004. "Regional manufacturing employment volatility in Canada: The effects of specialisation and trade," Economics of Governance, Springer, vol. 83(3), pages 519-541, July.
    6. repec:bla:jregsc:v:44:y:2004:i:3:p:517-542:1 is not listed on IDEAS
    7. Barth, James R. & Benefield, Justin D. & Hollans, Harris, 2015. "Industry Concentration and Regional Housing Market Performance," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 45(2).
    8. Jürgen Essletzbichler, 2005. "Diversity, stability and regional growth in the U.S. (1975-2002)," Papers in Evolutionary Economic Geography (PEEG) 0513, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2005.
    9. Fritz, Oliver, 1999. "Optimal Management of a Regional Income and Pollution Portfolio," ERSA conference papers ersa99pa187, European Regional Science Association.
    10. Deborah J. Harper & Larry V. St. Louis, 1999. "Regional Economic Diversification and Efficiency: Baumol' s Likely Lower Confidence Limit Measure of Risk," The Review of Regional Studies, Southern Regional Science Association, vol. 29(2), pages 197-211, Fall.
    11. Smith, Stephen M. & Miller, Kathleen, 2001. "Successful Adjustment to Economic Restructuring in the Nonmetro Northeast: 1950-1990," The Review of Regional Studies, Southern Regional Science Association, vol. 31(2), pages 121-147, Fall.
    12. Carlson, Virginia, 2000. "Studying Firm Locations: Survey Responses vs. Econometric Models," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 30(1), pages 1-22.

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