Tradable Economy

Regional economic theory states that the economy of any local area (for example, a state) is driven by economic activities that import https://www.arizonaindicators.org/files/economy/money into the local area through the sales of goods and services to customers who do not live—or in the case of businesses, do not have a physical presence—in the local area. The portion of the economy that sells to customers outside the local area is called the “tradable” economy, or alternatively “basic” or “export” economic activity. Customers of the tradable economy may be located elsewhere in the United States or in another country. Such export activities differ from population-driven (not tradable, nonbasic, nonexport) activities, which sell to and support the local population.

The geographic concentration of economic activities within the United States is used to identify activities that appear to be traded within the United States. For example, significant mining operations in the United States are limited to relatively few locations. This high geographic concentration indicates that a very high proportion of mining is tradable. In contrast, health care exists across the nation in relatively equal shares of the total economy or local population, indicating that hardly any of this activity is tradable.

Economic activity can be measured using a multitude of indicators. The most common is employment, but this is an imperfect measure of economic activity because of variations in the number of hours worked and in the hourly wage. That is, jobs are unequal in their dollar impact on the economy. Thus, when dollar measures of economic activity are available, such as earnings or gross domestic product (GDP), they are preferable to employment for most economic analyses, including tradability. Tradable shares are displayed on Arizona Indicators for each of these three measures. Consistent industrial data go back to 1990 for employment and earnings, but only back to 1997 for GDP.