Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group i

Handbook for Assessing 

Economic Opportunities from 

Appalachian Development Highways

prepared for the 

Appalachian Regional Commission

Washington, DC

prepared by:

Economic Development Research Group, Inc.

Glen Weisbrod, Project Director

Jinevra Howard

Margaret Collins

Cambridge Systematics, Inc.

Donald Vary

March 14, 2001
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group i

CONTENTS

ACKNOWLEDGEMENTS ....................................................................................................... iii

1. INTRODUCTION

1.1 Motivation ....................................................................................................... 1-1

1.2 Organization of the Handbook.......................................................................... 1-1

1.3 Data and Data Resources.................................................................................. 1-3

1.4 Overview of Analysis Steps ............................................................................. 1-5

1.5 Economic Development Motivations and Limitations....................................... 1-5

2. FIRST STEPS

2.1 Overview ......................................................................................................... 2-1

2.2 Identify the Target Area ................................................................................... 2-1

2.3 Identify New Linkages..................................................................................... 2-2

2.4 Identify Stakeholders........................................................................................ 2-3

2.5 Summary.......................................................................................................... 2-5

3. LOCAL ECONOMIC PERFORMANCE ANALYSIS

3.1 Overview ......................................................................................................... 3-1

3.2 Employment Data ............................................................................................ 3-1

2.3 Business Mix Analysis..................................................................................... 3-3

3.4 Business Trend Analysis .................................................................................. 3-6

3.5 Interpretation of Economic Base Analysis........................................................ 3-8

3.6 Summary.......................................................................................................... 3-9

4. MARKET ACCESSIBILITY

4.1 Overview ......................................................................................................... 4-1

4.2 Types of Market Accessibility Effects.............................................................. 4-1

4.3 Measurement of Accessibility Changes............................................................ 4-2

4.4 Interpretation and Analysis of Changes in Economic Opportunities ................. 4-7

4.5 Summary........................................................................................................ 4-10

5. ECONOMIC DEVELOPMENT RESOURCE ANALYSIS

5.1 Overview ......................................................................................................... 5-1

5.2 Determining Your Economic Development Focus............................................ 5-1

5.3 Economic Development Programs.................................................................... 5-2

5.4 Facility Resource Assessment .......................................................................... 5-2

5.5 Labor Force Assessment................................................................................... 5-6

5.6 Commercial Business District Assessment ....................................................... 5-8

5.7 Tourism Assessment ........................................................................................ 5-8

5.8 Interpretation and Use of These Results.......................................................... 5-11
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

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6. CALCULATION OF OPPORTUNITIES

6.1 Overview ......................................................................................................... 6-1

6.2 Business Costs ................................................................................................. 6-1

6.3 Development Constraints and Incentives.......................................................... 6-3

6.4 Complementary Industries................................................................................ 6-4

6.5 Calculation and Interpretation of Changes in Economic Opportunities ............. 6-5

6.6 Summary.......................................................................................................... 6-6

7. PROCESS FOR DEVELOPING A STRATEGIC PLAN

7.1 Overview ......................................................................................................... 7-1

7.2 SWOT Review: Where are we now? ................................................................ 7-1

7.3 Vision and Goal Formulation: Where are we going?......................................... 7-2

7.4 Strategy Development: How do we get there? .................................................. 7-4

7.5 Monitoring and Evaluation............................................................................... 7-6

APPENDIX A BLANK WORKSHEETS ...................................................................... A-1

APPENDIX B CASE STUDY - CORRIDOR T............................................................ B-1

APPENDIX C CASE STUDY – CORRIDOR V .......................................................... C-1
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ACKNOWLEGEMENTS

This report was prepared by a team composed of Glen Weisbrod, Jinevra Howard and 

Margaret Collins of Economic Development Research Group, and Donald Vary of Cambridge 

Systematics. It was prepared under the direction of Greg Bischack of the Appalachian 

Regional Commission (ARC). 

The consultant team also acknowledges the invaluable assistance provided by Bob 

Sokolowski and other staff members of the ARC, as well as the active participation and 

assistance of local development districts and other local and regional agencies for completion 

of the two case studies. For the Mississippi case study, the project team benefited from the 

assistance provided by Randy Kelley and Wayne Averett of the Three Rivers Planning and 

Development District; Bill Wardlaw at the Pontotoc County Chamber of Commerce; David 

Rumbarger and Greg Giakelli at the Community Development Foundation in Tupelo; and 

Kim Thurman and Wayne Parrish of the Mississippi Department of Transportation. For the 

New York – Pennsylvania case study, the project team benefited from the assistance provided 

by Don Rychnowski, Brian Schrantz, Richard Zink and Matt Galanka of the Southern Tier 

West Regional Planning & Development Board; Bill Steiner and Bob Skarada of the 

Northwest Pennsylvania Regional Planning & Development District; Dave Skellie and Jake 

Welsh at the City of Erie Planning Department; and Karl Ishman of the Pennsylvania 

Department of Transportation. 
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CHAPTER ONE

INTRODUCTION

1.1 Motivation

This handbook is designed to help economic development practitioners in Appalachian 

Region communities to identify and pursue economic opportunities, specifically including 

those made possible by newly-completed segments of the Appalachian Development 

Highway System (ADHS). 

The 1964 President's Appalachian Regional Commission (PARC) reported to Congress that 

economic growth in Appalachia would not be possible until the Region's isolation had been 

overcome. Much of the region was bypassed when the Interstate highway system was built 

because it was costly to build roads through the mountains. The ADHS now has top priority 

as a key to economic development in the region, because it can link previously-isolated areas 

to broader labor, supplier and customer markets. By providing direct links and reducing 

travel times, new segments of the ADHS effectively can improve accessibility to and from 

those areas and make them more attractive for economic development. 

However, a transportation project, such as the completion of a new highway segment, does 

not automatically result in economic growth and development. It merely overcomes one 

barrier to economic growth, and thus increases potential opportunities for additional economic 

growth. For that reason, it is important for development practitioners to have the tools to 

identify and take advantage of local opportunities for economic development that arise from a 

transportation project. Accordingly, this handbook is designed for the use of local planners 

who do not necessarily have much prior experience in economic development analysis, and is 

designed to help them identify targets and strategies for business attraction and growth.

This introductory chapter has three parts. The first gives an overview of how the handbook is 

organized. The second discusses data requirements and the role of the electronic spreadsheets 

and paper worksheets that are included with the handbook. The third summarizes basic 

economic development motivations and goals. It is important to understand why you are 

pursuing economic development as this will affect how you interpret the analysis that this 

handbook outlines. 

1.2 Organization of the Handbook

This handbook is organized into six chapters, accompanied by a series of paper worksheets 

and an electronic spreadsheet analysis tool. You can use the handbook with the spreadsheet 

tool, to help you identify economic opportunities and potential business growth. The 

organization of the handbook is shown in the figure on the next page.
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The basic premise of this handbook is that the amount and type of economic opportunities that 

can result from a transportation project (such as the completion of a highway link) will 

depend on a number of factors which you can identify and analyze. Most simply, the 

economic opportunities that you can identify depend on what your area of analysis is (e.g., a 

town, city or county), and what areas you are now linked to by the new highway segment. 

These basic factors are considered further in Chapter 2. Another important factor is the local 

economic performance of the area and its relative strengths and weaknesses, which are 

evaluated in Chapter 3. The extent to which the transportation project improves travel times 

and expands market areas also has a large influence on the potential growth in different 

sectors; this is discussed in Chapter 4. The availability of local resources to support economic 

opportunities is also important; you will assess local economic development resources and 

constraints in Chapters 5 and 6. 

 Figure 1-1. Flowchart: Logic of Guidebook Order

Introduction

 (Ch. 1)

Local Economic 

Analysis (Ch. 3)

Transportation & 

Accessibility 

Analysis

(Ch. 4)

Economic Development 

Resource Analysis

(Ch. 5)

Strategic Planning 

(Ch. 7)

First Steps

(Ch. 2)

Analysis of Potential Opportunities

(Ch. 6)
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The spreadsheet analysis tool that accompanies this handbook is used for data input and 

analysis of the issues covered in Chapters 2, 3, 4 and 6. Paper worksheets are used in 

Chapter 5; illustrations of their use are provided where they are referenced within this report 

and blank copies are provided in the Appendix. Throughout the text, sample tables are used 

to describe the spreadsheet inputs and outputs. These will help you find your place in the 

spreadsheet tool and will also allow you to browse through the handbook without needing to 

have the spreadsheet open.

Although the focus of the handbook is on identifying economic opportunities from 

transportation projects, the last chapter goes further by providing you with the basic steps in 

building an economic development strategy to take advantage of potential new opportunities 

of any kind. 

Each chapter will begin with a brief review of what has been covered in previous chapters and 

how the current chapter fits in with the overall process of assessing new economic 

opportunities and determining which ones you will pursue. 

1.3 Overview of Analysis Steps

Define Study Area and Relevant Agencies. A first step is to define the area of analysis - the 

area that you want to identify economic opportunities for - and the areas to which you are now 

better linked because of the transportation project. You will collect data about these areas, 

which will be used in a spreadsheet tool to identify potential growth in your economy. You 

must also initiate contact with other economic development practitioners and stakeholders in 

your area. They may have useful data and resources, and they will be involved later on in the 

process of pursuing economic opportunities. The process of identifying your study area and 

the linkage areas, and contacting stakeholders, is discussed in Chapter 2.

Economic Base Analysis. The next step is to identify existing economic opportunities by 

analyzing your local economy and its strengths and weaknesses, particularly as compared to 

other communities. In Chapter 3 you will perform a local economic analysis in which you 

compare the local mix and growth of industries with other areas. The purpose of the local 

economic analysis is to identify industries that: (1) are underrepresented relative to the newly 

linked areas, (2) are growing slower than same industries elsewhere.

Transportation Access Changes. The new highway segment itself may help generate 

opportunities for economic growth by reaching and serving new or expanded markets.1 In 

general there are four types of markets that can be served or expanded due to a new highway 

link: labor markets, sales markets, business-to-business markets, and pass-by traffic. Labor 

markets can be made more available for businesses (which also means that people have more 

job opportunities) when a new highway link makes it possible for a larger number of people 

to reach a business or business district in a reasonable amount of time. The market for 

business sales can increase when the population that can reach a business or business district 

 

1

 It also may create threats of local loss if it shifts local workers and shoppers to businesses outside the area.
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within a reasonable amount of time is increased. The market for business-to-business sales 

can increase when a highway link reduces the amount of time it takes suppliers to deliver to 

producers. Finally, pass-by traffic may increase in some areas and decrease in others, leading 

to some new and some lost business opportunities.

Any reduction in travel times between people and places can be thought of as an increase in 

the accessibility of various markets. Chapter 4 of this handbook will show you how to 

measure the accessibility improvements that result from a transportation project. The 

spreadsheet tool will identify the local industries that have growth opportunities due to the 

new link.

Relative Costs and Supporting Resources. The remaining step in identifying potential new 

economic opportunities is to assess how competitive your area is in terms of costs of doing 

business, available infrastructure, and opportunities to build upon growth industries in 

surrounding areas.

Chapter 5 provides worksheets to assess the extent of local resources to support economic 

development in various sectors of the economy. For example, if you are thinking of pursuing 

an industrial development strategy, you will need to know what resources, such as industrial 

parks and buildings, are available to pursue this kind of development strategy. If you are 

thinking of pursuing tourism, recreation or natural resource extraction, you will want to know 

what resources already exist in those areas. You will also want to know what sort of 

economic growth can be supported by the local workforce size and skills, as you may find that 

your preferred strategy requires more attention to workforce training and development. 

You can then apply this information to derive ratings of your area’s relative infrastructure and 

land constraints in Chapter 6. Additional worksheet forms provide a basis for rating relative 

costs of doing business, as well as opportunities to expand suppliers to other emerging 

industries. These are the remaining factors needed to complete a SWOT (Strengths, 

Weaknesses, Opportunities and Threats) analysis of your area, and thus to identify the nature 

of business expansion and attraction opportunities for your area. The spreadsheet tool 

automatically provides estimates of the magnitude of potential highway-related opportunities 

for various industries in your area.

Strategy Plan. Once you have identified your target industries and assessed your available 

resources, it is time to make a strategic plan for economic development to take advantage of 

new opportunities. Chapter 7 will take you and other stakeholders through additional steps to 

develop a mission statement based on this analysis and the community's goals, and to form a 

strategic plan for how to achieve the goals set forth in the mission statement. The nature of 

this process may depend significantly on the nature of the economic opportunities that were 

identified, and on the differing action needs associated with focusing on different business 

segments for economic expansion or attraction. 
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1.4 Data Requirements and Resources

The data you will need to use the methods set forth in this guidebook include data about your 

local economy, data about the economies of the areas you are now linked to, regional and 

national economic data (for purposes of comparison to the local area), transportation / 

accessibility data, and local area data pertaining to labor force, facilities and resources. The 

guidebook will explain how to obtain the data that you need for each section, when you reach 

that section. 

These data will be used in two ways. The first way it will be used is by you and other 

stakeholders. As you go through the handbook you will develop a picture of your economy 

and the opportunities that are opened up by the new transportation link. You can use this 

picture to make informed decisions about what opportunities to pursue and what sectors of the 

economy to target with your economic development efforts. The data will also be used by the 

spreadsheet tool that accompanies this handbook. The spreadsheet will calculate the growth 

opportunities for each sector of your economy, and can suggest areas that you should target 

with your economic development efforts.

1.5 Economic Development Motivations and Limitations

This section provides an overview of the motivations for applying this handbook and some of 

the constraints associated with it or any other analytic process for identifying economic 

opportunities. 

Motivations for Using the Handbook. In general, the goal of economic development is to 

improve the quality of life for an area’s residents. Quality of life has many dimensions; in 

terms of economic opportunities it means real increases in income, a broader range of 

employment opportunities, and greater choices for shopping and recreation. These aspects of 

quality of life are generally associated with economic growth, which is in turn related to 

transportation and access to and within an area.

A transportation project can open up opportunities for economic growth leading to improved 

quality of life, by improving local access for customer markets, labor markets, and businessto-business delivery markets. The local community's motivations and goals for pursuing 

economic development will influence which types of economic opportunities you focus on 

and pursue in your strategic plan.

Local and regional efforts to stimulate economic development are typically driven by one of 

three motives:

(1) Motivation: to eliminate an existing economic constraint. Existing economic 

problems include a wide range of conditions, some of which primarily affect people, 

and some of which primarily affect businesses. 
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• High unemployment and low wages are the economic problems that most directly 

affect an area’s residents. High unemployment and low wage rates may be a result 

of low skill levels, a mature or declining economic base, a narrow economic base 

which is highly dependent on one or a few sectors, poor access to jobs, or 

competition from other regions. Economic development efforts in a region with 

high unemployment might focus on employment and training programs to increase 

the skills of the labor force. 

• Seasonal fluctuations in employment also affect an area’s population. Seasonal 

fluctuations generally result when an area’s economy is reliant on seasonal tourism 

and recreation (e.g., skiing, boating, etc.), or resource-based (e.g., agriculture) 

industries that experience high demand for products or services during one or two 

seasons, and then experience a significant drop in demand in the “off-season”. 

During the “off-season”, unemployment increases substantially, income levels 

decline, and ripple effects, such as declining retail sales, are felt throughout the 

local economy. An economic development program in a region with seasonal 

fluctuations in employment due to a season-based tourist market might focus on 

efforts to expand the tourist season or to diversify the local economy.

• A third problem that may exist in areas with a small population base or poor access 

is a lack of local services and retail opportunities. Limited options for shopping 

and services may force residents to travel to other areas to purchase goods and 

services, thus resulting in an outflow of income from a region.

• Two problems that affect the ability of businesses to operate successfully in a 

region include isolation from labor, inputs and markets, and out-migration of 

population (which may result when employment opportunities and access to goods 

and services decline). Isolation from labor, production inputs and markets will 

prevent a region from successfully competing to retain businesses, grow 

businesses, and attract new businesses. Out-migration of population reduces the 

local labor pool and thereby impedes access to labor. Problems related to isolation 

and access to suppliers, labor and market might be addressed through a program 

aimed at improving transportation access to the region.

(2) Motivation: to reduce risk of economic decline. Regions that appear to be 

economically strong still might be at risk of economic decline. 

• This is particularly true of regions that are characterized by over-dependence on a 

particular industry or a few large employers to sustain their economic vitality. 

In these cases, an industry downturn caused by external factors (such as changes in 

the cost of production inputs, changes in technology, changes in consumer tastes 

or increased foreign competition) or by internal factors (such as poor management, 

or company restructuring) can have devastating impacts on a community. In 

regions that rely on a single industry, an economic development strategy focused 

on attracting more employment in a broader range of industries (i.e. 

diversification) may be appropriate. 
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• Another risk factor, which regions are often unprepared to address, is competition 

from other areas. Frequently, the risk of competition is not identified until after a 

region begins to lose businesses to a competing area. An economic development 

strategy aimed at sustaining a competitive business climate can offset this threat. 

Maintaining and improving reliable, cost-competitive transportation access to the 

region may be part of such a strategy.

(3) Motivation: to capitalize on opportunities for improvement. Not all regions 

pursue economic development to solve existing problems or reduce risk. Even regions 

with a strong economy may wish to pursue economic development activities as a 

means to sustain growth of the local economy and retain industries. Economic growth 

can also lead to expanded employment opportunities, choices in housing, services and 

shopping, and other improvements in the quality of life in the region. 

Limitations. The premise of this handbook is that in order to expand and attract business to 

your area, it is necessary to address the constraints that now hold back such economic growth 

from occurring. The constraints may relate to many factors, including (but not limited to):

(1) available workforce size and skills;

(2) costs of obtaining materials;

(3) costs and reliability of providing goods to markets;

(4) taxes and utility costs;

(5) range and cost of housing available;

(6) availability of supporting infrastructure;

(7) availability and cost of industrial parks and business sites; and

(8) business climate.

New highway links and improved highway segments can help address some but not all of 

these factors. They cannot by themselves overcome a lack of skilled workers, or housing, or 

industrial parks with sufficient supporting infrastructure, or reasonable utility costs. In some 

communities, a highway will help bring economic development only when remaining 

constraints are also addressed. 

The screening methods provided in this handbook are designed to help identify those 

additional constraints to economic development, as well as to identify the potential 

opportunities associated highway improvements, for Appalachian communities. The 

discussion of strategy at the end of this handbook is also designed to help communities and 

regions develop plans to address their remaining needs.
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CHAPTER TWO

FIRST STEPS

2.1 Overview

This chapter is dedicated to gathering the basic information you will need to analyze the types 

of economic opportunities made possible by completion of a new highway link to your area. 

You will identify your study area and the location of new and improved linkage areas, and 

you will make initial contact with key stakeholders. This requires three steps. First, it is 

important to clearly define your area of analysis both to focus your analysis on the area you 

care about and in order to collect the appropriate data. Second, you will need to identify the 

other areas to which you will have improved access upon completion of the highway project. 

Third, you will want to contact other local and regional individuals and organizations who 

have an impact on your area's economic development, as they may be able to help with data 

and resources. In addition, they will be involved later on in the strategic planning process 

(discussed in Chapter 6).

Preview. In this chapter, you will: 

ß Identify the target area for your analysis (generally a county or group of counties)

ß Identify the areas to which your target area is linked by the new highway segment

ß Identify and contact the key stakeholders involved in economic development and

ascertain their role in economic development

ß Identify data and resources available from stakeholders

2.2 Identify the Target Area (Spreadsheet “Input 1”)

The first step is to identify the target area for your analysis. There are three aspects to 

consider in choosing your target area: a) choosing the area that your economic development 

efforts are focused on, b) choosing an area for which it is possible to obtain data, and c) 

considering the scope of influence of the new highway segment. 

(a) Choose your economic development area. First of all, you want to choose the area 

that your economic development efforts are focused on. If you are a town planner, 

this may be a town or the town plus the rest of the surrounding county. If you are a 

regional planner, then the area may be an aggregation of counties. The larger the area 

you choose for your analysis the more other economic development stakeholders that 

will likely be included within the area. This may mean that they will be more willing 

to support your analysis with data and/or resources. 

(b) Consider availability of data. Another aspect of choosing your target area is the issue 

of data availability. There is a trade-off between accuracy and effort in choosing a 

geographic area for organizing your data. It is much easier to collect population data 
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by county than by census tract, just as it is much easier to estimate travel times 

between two counties than it is between the hundreds of census tracts that make up the 

two counties. However, using one time to represent travel between two counties fails 

to capture much of the variation in travel between within the two areas. In general, the 

larger the area, the less data you will need to collect, and the less work you will do to 

estimate travel times. 

(c) Determine the impact area. The new highway segment’s area of influence may be a 

factor to consider in choosing your target area of analysis. You are going to analyze 

the economic opportunities that arise from the new highway link, so you might 

consider using for your target area the broader area that is influenced by the highway.

The spreadsheet assumes that you will use a one or two-county target area, which is also 

referred to as the study area. The name of the study corridor and the counties comprising the 

Study Area should be listed in entered into the spreadsheet as shown in Table 2-1. 

2.3 Identify New Linkages. (Spreadsheet “Input 1”)

The new highway segment can open up economic opportunities by linking your area to areas 

it was previously unconnected to, or by reducing the time it takes to get between your area 

and other areas. There may be several distinct areas being linked by the new highway 

segment, representing different directions from your area. On the Spreadsheet page “Input 1” 

(illustrated in Table 2-1), you may list one to four most significant places outside your local 

area that the new highway segment makes more accessible to/from the local area. These can 

be counties or groups of counties. 

Table 2-1 Sample Input Table for Impact and Linkage Areas 

(Spreadsheet “Input 1”)

ARC Handbook Spreadsheet - Input Form 1

ARC-OPPS Economic Development Opportunities Model

 a. Header for Pages

Scenario Title Corridor V

Today's Date 3/15/2001

 b. Define Study Area

State MS County Pontotoc

County

 c. Hwy Linkages to Other Areas

1 Lee County

2 Lafayette County

3 Panola County

4 
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2.4 Identify Stakeholders. (Paper Worksheet 2-1)

Stakeholders are people and organizations in your community that have an interest in 

economic development. They can include public sector representatives, such as state, 

regional, and local economic development agencies; elected officials; chambers of commerce; 

utilities; major employers; colleges and training institutions; tourism promotion groups; and 

realtors and developers. 

It is important at the outset to identify and contact existing local and regional organizations 

and institutions that play a role in economic development, because they may have data and 

resources that you can use throughout the analysis process in this handbook, and because they 

will be involved in the strategic planning process at the conclusion of your analysis. 

To begin the process of stakeholder identification, fill in Column 1 of Worksheet 2-1 (Table 

2-2 on the next page) with the names of all stakeholder organizations and people that you 

know of who have a role in economic development in your area. These stakeholders will be 

engaged to help complete the remaining worksheets. Then contact them as necessary to fill in 

the remaining information about the activities of their organizations. This process should 

include the following steps:

ß Identify yourself and briefly describe the purpose of your call and the analysis you are 

doing.

ß In Column 2, enter information about the nature of any current role of the organization 

in marketing, promoting, or advertising the area. 

ß In Column 3, list and describe any business development and financing programs with 

which the organization is involved.

ß In Column 4, record any other relevant economic development information/services 

that the organization provides.

ß Ask what data they have on your target area and newly linked areas (listed in 

Worksheet 2-1) such as employment by 2-digit SIC or business costs. If they have 

relevant data you will call them when you get to Chapters 3 and 4.

ß Ask what data they have on the target area's economic development resources (industrial 

parks and buildings, labor force, etc.). If they have relevant data you will contact them in 

Chapter 5.

ß Ask who else in your area is involved in local economic development and add them to 

Column 1 of the worksheet. These additional stakeholders should then be contacted and 

asked the same set of questions. 
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Table 2-2 Sample Input Table for Key Stakeholders (Paper Worksheet 2-1)

Stakeholder

Group

Organization Name, 

Address, Contact 

Person, Tel

(1)

Marketing Role

(describe)

(2)

Business Development & 

Financing Programs

(describe)

(3)

Other Roles in Economic 

Development

(describe)

(4)

What data on 

target area / 

linked areas?

(5)

What data on ED 

resources?

(6)

State ED 

Agency

State Econ Development 

Office , John Doe, 

<<contact, address, tel>>

press releases, newsletters, 

statewide marketing for 

business attraction

job creation tax credits, 

enterprise zones, training 

assistance, business loans 

site inquiry referrals, planning 

information and public 

infrastructure investment

database of local 

and regional 

economic trends

statewide database of 

economic development 

programs

County/

Regional ED 

Agency

XX County Industrial 

Development Agency, 

James Jones , <<contact, 

address, tel>>

--

SBA revolving loan fund, 

Micro Loan program

technical support referral program

-- --

Local ED 

Organization -- -- -- -- -- --

Local 

Government

XX County Planning 

Dept., Joanne Jones,

<<contact, address, tel>> 

--

property tax credits for reuse of 

distressed properties -- -- community taxes, 

major employers, land 

use data

Electric 

Utility

XYZ Power Company, 

Roberta Jones,

<<contact, address, tel>>

regional promotion via 

web site; inquiry referrals

negotiable electric rates

-- --

industrial park 

inventory

Chamber of 

Commerce

XX County Chamber, 

Doris Doe, 

<<contact, address, tel>>

promotional folder and 

brochure about the area

leadership training program business appreciation dinners, 

networking guide and events --

business directory and 

product/service 

purchasing guide

State Trans 

Agency

State DOT, Ron Doesen,

<<contact, address, tel>> --

grants and loans for local access 

roads

highway access policies and 

programs --

traffic counts and 

speeds., for major 

roads

Non-Profit Southern Tech College, 

Small Business Devel. 

Center, Joan Johnson, 

<<contact, address, tel>>

--

leadership training, business 

financing support, small 

business incubator

technical assistance [program.

-- --
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2.5 Summary 

In this chapter you determined your area of analysis (which you will use to collect appropriate 

data for use in your analysis of economic opportunities) and you identified contacts among 

economic development stakeholders who may be sources of data and resources for the 

following chapters. In Chapter 3 you will use some of this information to analyze the 

performance of your local area economy relative to the linkage areas and other surrounding 

areas, and you will identify the types of business that represent strengths, weaknesses and 

sources of potential growth in your area’s economy. Chapter 4 will then help you identify the 

types of business opportunities which are opened up by completion of the highway project, 

and in Chapter 5 you will be able to use your economic development contacts to help assess 

the economic development resources that are available in your area. 
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CHAPTER THREE

LOCAL ECONOMIC PERFORMANCE ANALYSIS

3.1 Overview

The data collection and spreadsheet analysis in this chapter focus on identifying industries that 

are underrepresented locally relative to surrounding areas, or lagging in growth compared to the 

same industry elsewhere. These industries can represent potential sources of economic growth 

for your area, though they will also need to be evaluated in terms of which ones will be most 

significantly helped by the new highway link (an issue addressed in Ch. 4), the extent of 

available infrastructure and business resources (an issue addressed in Ch. 5) and relative 

business costs (an issue addressed in Ch. 6). 

Preview. In this chapter you will:

ß Analyze and compare the local mix of industries with that of newly linked areas

ß Analyze and compare the trends of local industries with those occurring nationally

ß Compare the local cost of doing business with newly linked areas.

3.2 Employment Data

Analysis Tables. To compare industry mix and trends in the study area with other areas, you 

will need to collect data on the number of employees in each sector of each economy you are 

comparing. Online sources for this data are described later in this section. For the mix analysis, 

you will need data on current employment (for the most recently available year), broken down 

by industry, for the local area and for the linkage areas. For the trend analysis, you will need 

employment for the most recently-available year and for five years before then, also broken 

down by industry, for both the local area and for the nation. You may specify these years in 

spreadsheet page “Input 1” (illustrated in Table 3-1 below), and the employment data in 

spreadsheet page “Input 2” (illustrated in Table 3-2 on the next page).

Table 3-1. Sample Input Table for Employment Years (Spreadsheet "Input 1")

ARC Handbook Spreadsheet - Input Form 1

 d. Years for Economic Data

Most Recent 1997

Earlier Time 1993
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Table 3-2. Sample Input Table for Employment Data (Spreadsheet "Input 2")

Study Area Linkage Areas United States

Current Employment in Thousands 1993 1998 1998 1993 1998 

SIC LABEL Pontotoc Lee County Lafayette 

County

Panola 

County

United States

7 Agricultural services 80 24 0 60 0 555,686 685,704

8 Forestry 10 0 0 0 0 17,716 26,530

9 Fishing 0 0 10 0 48 12,704 12,589

10 Metal mining 0 0 0 0 0 49,491 49,357

12 Coal mining 0 0 10 0 0 113,948 93,182

13 Oil and gas extraction 0 0 0 0 48 257,694 268,645

14 Nonmetallic minerals, exc. fuels 0 0 304 43 0 95,952 98,792

15 General contractors 56 60 175 101 77 1,096,289 1,274,707

16 Heavy construction 10 27 919 423 12 679,578 768,283

17 Special trade contractors 49 60 620 60 132 2,731,774 3,447,485

20 Food and kindred products 10 10 0 0 60 1,498,078 1,539,682

21 Tobacco products 0 0 369 0 0 37,189 34,166

22 Textile mill products 10 60 1,870 0 1,750 615,683 553,198

23 Apparel and other textile products 260 10 103 375 375 972,060 835,219

24 Lumber and wood products 320 500 4,309 10 109 675,081 745,254

25 Furniture and fixtures 3,291 4,231 670 0 60 476,488 514,504

26 Paper and allied products 10 60 276 86 0 627,746 621,072

27 Printing and publishing 10 60 22 0 35 1,500,580 1,501,714

28 Chemicals and allied products 0 0 10 0 0 851,720 832,546

29 Petroleum and coal products 0 0 3,237 60 10 112,984 107,829

30 Rubber and misc. plastics products 271 222 0 0 726 915,166 1,015,177

31 Leather and leather products 0 0 709 34 0 104,747 83,387

32 Stone, Clay, and glass products 10 10 175 0 44 471,639 500,828

33 Primary metal industries 175 175 1,155 60 0 655,556 686,161

80 Health services 252 277 244 168 639 10,403,118 11,348,141

81 Legal services 11 13 60 113 66 962,374 971,998

82 Educational services 10 10 674 123 175 1,967,024 2,183,438

83 Social services 123 143 0 0 53 2,028,694 2,246,164

84

Museums, botanical, zoological 

gardens 0 0 531 225 0 73,874 90,117

86 Membership organizations 77 74 536 88 71 2,062,501 2,207,886

87 Engineering & management services 69 32 10 10 49 2,589,839 3,181,353

89 Services, other 0 0 60 0 0 84,960 99,865

99 Unclassified establishments 10 0 39,995 8979 9,453 64,441 34,324

SUBTOTAL 7,774 7,240 79,866 17,898 18,894 91,596,939 101,971,746
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Data Sources. You can obtain the necessary employment data for non-agricultural industries 

using “County Business Patterns,” which is an annual government data series that provides 

county-level economic data by industry1. Data on employment by 2-digit SIC are available 

online for the U.S., states, and counties; you can view the data on your web browser (and copy it 

into a spreadsheet) at http://www.census.gov/epcd/cbp/view/cbpview.html , or directly download 

it from http://www.census.gov/pub/epcd/cbp/download/cbpdownload.html . If you download the 

data, it should be saved as a “comma-delimited” text file, which can then be opened in Excel.

Data for 1997 and earlier are based on SIC (Standard Industrial Classification) categories, while 

data for 1998 onward (including the most recent year for which data is currently available) is 

based on the new, NAICS (North American Industry Classification System) categories. It may 

be easier to use 1997 as your most recent year and compare 1997 data to data from 1992. 

Sometimes data are withheld for certain industries due to confidentiality reasons (when there are 

a small number of firms in a given group). In the download version, such cases will have a letter 

from A to M to indicate the range of employment in that industrial sector. (You can replace the 

letter with the midpoint of the range, as follows: A = 10; B = 60; C = 175; E = 375; F = 750; G = 

1,750; H = 3,750; I= 7,500; J = 17,500; K = 37,500; L = 75,000; M = 100,000.) If you view the 

data with your web browser, then the data observations will show an employment range where 

data is withheld. Again, you can assume the midpoint of the range.

3.3 Business Mix Analysis

A comparison of the “mix” of industries in your economy with that of other areas provides a way 

to identify the types of businesses that are particularly weak in your area and strong elsewhere. 

If the other areas are defined as those to which your area is being linked by the new highway 

segment, then we have a means of identifying possible strengths in the other areas which might 

become local growth opportunities in your area, as a result of the new highway links between 

them. 

The spreadsheet automatically calculates the ratio of the concentration of each industry in your 

economy to the concentration of the same industry in the average of the linkage areas' 

economies. For example, if 10% of employment in your local area is food products, and 30% of 

employment in the linkage area is food products, then the ratio of local to linkage area 

concentrations would be 10/30 or 0.33. This means that your area has one-third the 

concentration of jobs in food products that exist in the linkage area. This ratio is sometimes 

referred to as the Location Quotient (LQ). We refer to it here as the “mix ratio” (to distinguish it 

from the “trend ratio” discussed later). 

 

1 The series excludes data on self-employed individuals, employees of private households, railroad employees, 

agricultural production employees, and most government employees. 
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For each specific industry sector, the mix ratio is interpreted as follows:

• If the mix ratio is > 1, then your local area has a higher concentration of employment in 

that industry than the average of the areas to which you are now better linked. 

• If the mix ratio is < 1, then your local area has a lower concentration of employment in that 

industry than the average of the areas to which you are now better linked. 

• If the mix ratio is = 1, then your local area and the average of the areas to which you are 

now better linked have equal concentration of employment in that industry.

The spreadsheet model automatically generates the business mix analysis in the spreadsheet 

“Output 1,” which is illustrated in Table 3-3 on the next page. The spreadsheet also assigns each 

sector into a category (1, 2, or 3 for Low, Medium, or High concentration):

• Industrial sectors with mix ratios of 1.5 or higher are assigned a rating of “3” (high 

concentration rating) to show that the local economy is at least 50% above the 

concentration of those sectors in the linkage areas. 

• Industry sectors with a mix ratio of 0.67 or lower are assigned a rating of “1” (low 

concentration rating) to show that the local economy is at least 50% below the 

concentration of those sectors in the linkage areas. 

• The rest (with mix ratios in between 0.67 and 1.5) are in between those extremes and are 

assigned a rating of “2” (Medium concentration rating). 

Sectors with a rating of 3 (high ratio) are already thriving in your local area, while those with a 

rating of 1 (low ratio) may be candidates for additional growth as a result of the new or 

improved highway linkage between the areas. 

The spreadsheet model also calculates the “expected number” of jobs that would occur in your 

area if it had an industry mix identical to that of the linked areas (i.e., a mix ratio of 1, 

representing the same percent of your employees in each industry). In that case, the number of 

local jobs in each sector will be equal to the "Expected Jobs" column of the table. If the mix 

ratio is less than one, then there will be fewer jobs occurring locally than would be expected, and 

the shortfall will be calculated in the last column of the table. This difference between actual 

and expected numbers of jobs provides a sense of the magnitude of difference in industry 

concentration between your area and the areas to which you are now being linked by the 

highway. 
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Table 3-3. Sample Spreadsheet Output: Business Mix Analysis (Spreadsheet "Output 1" Part A)

Percent of Total 

Employment

Mix/LQ Ratio:

Study Area to Mix Ratio 

Expected 

Jobs

Actual 

Jobs

SIC LABEL Study 

Area

Linkage 

Area Linkage Area Classification (Study Area)

(Study 

Area)

 Local 

Shortfall

7 Agricultural services 0.3% 0.1% 5.5 3 4 24 0

8 Forestry 0.0% 0.0% 0.0 0 0 0 0

9 Fishing 0.0% 0.0% 0.0 0 4 0 4

10 Metal mining 0.0% 0.0% 0.0 0 0 0 0

12 Coal mining 0.0% 0.0% 0.0 0 1 0 1

13 Oil and gas extraction 0.0% 0.0% 0.0 0 3 0 3

14 Nonmetallic minerals 0.0% 0.3% 0.0 0 25 0 25

15 General contractors 0.7% 0.3% 2.4 3 25 60 0

16 Heavy construction 0.3% 1.2% 0.3 1 97 27 70

17 Special trade contractors 0.7% 0.7% 1.0 2 58 60 0

20 Food and kindred products 0.1% 0.1% 2.3 3 4 10 0

21 Tobacco products 0.0% 0.3% 0.0 0 27 0 27

22 Textile mill products 0.7% 3.1% 0.2 1 260 60 200

23 Apparel and other textile 0.1% 0.7% 0.2 0 61 10 51

24 Lumber and wood products 6.0% 3.8% 1.6 3 319 500 0

25 Furniture and fixtures 50.4% 0.6% 80.5 3 53 4,231 0

26 Paper and allied products 0.7% 0.3% 2.3 3 26 60 0

27 Printing and publishing 0.7% 0.0% 14.6 3 4 60 0

28

Chemicals and allied 

products 0.0% 0.0% 0.0 0 1 0 1

29 Petroleum and coal products 0.0% 2.8% 0.0 0 238 0 238

30 Rubber and misc. plastics 2.6% 0.6% 4.2 3 52 222 0

31 Leather and leather products 0.0% 0.6% 0.0 0 53 0 53

32 Stone, Clay, and glass 0.1% 0.2% 0.6 1 16 10 6

33 Primary metal industries 2.1% 1.0% 2.0 3 87 175 0

Sectors 34 - 79 left out of this chart to save space - all sectors included in spreadsheet

80 Health services 3.3% 0.9% 3.7 3 76 277 0

81 Legal services 0.2% 0.2% 0.8 1 17 13 4

82 Educational services 0.1% 0.8% 0.1 0 70 10 60

83 Social services 1.7% 0.0% 37.4 3 4 143 0

84 Museums, botanical 0.0% 0.6% 0.0 0 54 0 54

86 Membership organizations 0.9% 0.6% 1.5 3 50 74 0

87 Engineering & management 0.4% 0.1% 6.4 3 5 32 0

89 Services, other 0.0% 0.1% 0.0 0 4 0 4

99 Unclassified establishments 0.0% 50.1% 0.0 0 4,204 0 4,204
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3.4 Business Trend Comparison

A comparison of the “trend” of industries in your economy compared with their national 

performance provides a way to identify the types of businesses that are particularly thriving or

faltering in your area (compared to their performance elsewhere). Those industries are locally 

lagging in growth may be seen as local weaknesses and as potential future growth opportunities. 

To do this comparison, the spreadsheet model automatically calculates the percent change in the 

number of employees in each sector for your local area and for the U.S. over the past five years. 

It then computes the ratio of these percentages, which tells you whether the local industry is 

growing or declining faster or slower than the national industry, or if it is moving in an opposite 

direction from the national industry (e.g., declining while the national industry is growing or vice 

versa). This is sometimes referred to as the "Shift Share Ratio," though we refer to it here as the 

“trend ratio” (to distinguish it from the “mix ratio,” previously discussed).

 

The spreadsheet model automatically generates the business trend analysis in the second page of 

spreadsheet “Output 1,” which is illustrated in Table 3-4 on the next page. The spreadsheet also 

assigns each sector into a trend category (from 1 to 6) depending on the relative growth rate of 

the local area to that of the industry nationwide. The categories are as follows:

Industry Growth Classification

1. industry growing faster locally than nationally

2. industry declining locally while growing nationally

3. industry growing locally while declining nationally 

4. industry declining locally slower than nationally 

5. industry growing locally slower than nationally 

6. industry declining locally faster than nationally

The spreadsheet model also calculates the “expected change” (growth or decline) in local jobs 

that would occur in your area if it had the same trends as that of the national average for each 

industry (i.e., a trend ratio of 1, representing the identical percent change in employment for each 

industry in both places). In that case, the local change in number of local jobs in each sector will 

be equal to the "Expected Change" column of the table. This difference between actual and 

expected trends provides a sense of the magnitude of difference in industry growth between your 

area and industry averages. 
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Table 3-4. 

Sample Spreadsheet Output: Business Trend Analysis (Spreadsheet Tab “Output 1” Part B)

Percent Growth

Growth 

Ratio Growth Ratio

Expected 

Change in 

Jobs

Actual 

Change in 

SIC LABEL Jobs

Study Area U.S. (Shift-Share) Classification (Study Area) (Study Area)

Local 

Shortfall

7 Agricultural services -70.0% 23.4% -3.0 2 19 -56 75

8 Forestry -100.0% 49.8% -2.0 2 5 -10 15

9 Fishing 0.0% -0.9% 0.0 4 0 0 0

10 Metal mining 0.0% -0.3% 0.0 4 0 0 0

12 Coal mining 0.0% -18.2% 0.0 4 0 0 0

13 Oil and gas extraction 0.0% 4.2% 0.0 5 0 0 0

14 Nonmetallic minerals 0.0% 3.0% 0.0 5 0 0 0

15 General contractors 7.1% 16.3% 0.4 5 9 4 5

16 Heavy construction 170.0% 13.1% 13.0 1 1 17 0

17 Special trade contractors 22.4% 26.2% 0.9 5 13 11 2

20 Food and kindred products 0.0% 2.8% 0.0 5 0 0 0

21 Tobacco products 0.0% -8.1% 0.0 4 0 0 0

22 Textile mill products 500.0% -10.1% -49.3 3 -1 50 0

23 Apparel and other textile -96.2% -14.1% 6.8 6 -37 -250 0

24 Lumber and wood products 56.2% 10.4% 5.4 1 33 180 0

25 Furniture and fixtures 28.6% 8.0% 3.6 1 263 940 0

26 Paper and allied products 500.0% -1.1% -470.3 3 0 50 0

27 Printing and publishing 500.0% 0.1% 6,616.3 1 0 50 0

28 Chemicals products 0.0% -2.3% 0.0 4 0 0 0

29 Petroleum and coal 0.0% -4.6% 0.0 4 0 0 0

30 Rubber and misc. plastics -18.1% 10.9% -1.7 2 30 -49 79

31 Leather products 0.0% -20.4% 0.0 4 0 0 0

32 Stone, Clay, and glass 0.0% 6.2% 0.0 5 1 0 1

33 Primary metal industries 0.0% 4.7% 0.0 5 8 0 8

Sectors 34 - 79 left out of this chart to save space – all sectors included in spreadsheet

80 Health services 9.9% 9.1% 1.1 5 23 25 0

81 Legal services 18.2% 1.0% 18.2 1 0 2 0

82 Educational services 0.0% 11.0% 0.0 5 1 0 1

83 Social services 16.3% 10.7% 1.5 1 13 20 0

84 Museums, botanical 0.0% 22.0% 0.0 5 0 0 0

86 Membership organizations -3.9% 7.0% -0.6 2 5 -3 8

87 Engineering & management -53.6% 22.8% -2.3 2 16 -37 53

89 Services, other 0.0% 17.5% 0.0 5 0 0 0

99 Unclassified establishments -100.0% -46.7% 2.1 6 -5 -10 0
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3.5 Interpretation of Economic Base Analysis

The third page of spreadsheet “Output 1” automatically shows a graph summarizing both mix 

and growth ratios by industry, as illustrated in Table/Graph 3-5. Each dot represents a different 

industry, and the numbers next to each dot represent the corresponding SIC group. (Refer to the 

first two pages of the spreadsheet, as illustrated in the prior two tables, to see the correspondence 

between SIC numbers and industry names). Industries that are very small locally are excluded 

from the graph.

Table/Graph 3-5. 

Sample Spreadsheet Output: Mix/Trend Graph (Spreadsheet “Output 1” Part C)

c. Mix / Trend Analysis

Labels of Trend Categories Labels of Mix Categories

1= local growth faster than national growth 1= Low: locally underrepresented

2=local decline while national growth 2= Medium: locally average

3=local growth while national decline 3= High: locally over-represented

4=local decline slower than national decline

5=local growth slower than national growth

6=local decline faster than national decline
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Based on the preceding graph, we can classify the various business sectors in your area as falling 

into nine basic categories:

Mix 

Ratio

Trend 

Ratio

Interpretation

3 1 Local industry is strong

3 2,5 Local industry is threatened locally, may need attention

3 3,4,6 Local industry is in national decline, should diversify

2 1 Local strength, should be supported

2 2,5 Possible opportunity for more growth

2 3,4,6 Unstable industry, focus efforts elsewhere

1 1 New emerging local industry, should be nurtured

1 2,5 Weak local sector, should be investigated as possible growth opportunity

1 3,4,6 Weak local sector, in national decline, focus efforts elsewhere

The analysis model automatically identifies which local industries fall into each of the nine 

categories, and lists those results in a separate spreadsheet page called “Output 2,” as illustrated 

in Table 3-6 (on the next page).

3.5 Summary

In this chapter you collected information on your area’s business mix and growth trends, and 

compared them to other areas to identify the types of businesses that represent local economic 

strengths and weaknesses. The analysis model uses this data to calculate measures of the 

relative concentration of industries in your area, and the relative growth rates of industries in 

your area. This information will help you identify potential target types of business for 

economic development. In the chapters that follow, you will develop additional data on how the 

new highway link can affect those business growth and attraction opportunities, as well as the 

roles of other factors such as relative costs and availability of supporting resources. 
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Table 3-6

Sample Spreadsheet Output: Local Industry Vitality (Spreadsheet “Output 2”)

ARC Handbook Spreadsheet - Output Form 2 (Industry Vitality)

ARC-OPPS Economic Development Opportunities Model

Strong, Stable Local 

Industries

Local Industries Under 

Threat - May Need Attention

Local Industries in National 

Decline - Diversify

Mix Ratio of 3 and

trend ratio of 1

Mix Ratio of 3 and

trend ratio of 2 or 5

Mix Ratio of 3 and

trend ratio of 3,4 or 6

SIC LABEL SIC LABEL SIC LABEL

24 Lumber and wood 7 Agricultural services 26 Paper products

25 Furniture and fixtures 15 General contractors 37 Transportation equip

27 Printing and publishing 20 Food products 38 Instruments 

51 Wholesale – nondurables 30 Rubber and plastics 56 Apparel and accessories

53 General merchandise 33 Primary metal industries 60 Depository institutions

54 Foods stores 39 Misc. manufacturing 76 Misc. repair services

55 Auto & service stations 42 Trucking & warehousing

61 Nondep. institutions 58 Eating and drinking 

75 Auto repair and parking 80 Health services

83 Social services 86 Membership orgs

87 Engineering & mgmt 

Local Industries with 

Strength - Support

Medium Strength Local 

Industry with Possible 

Growth Opportunities

Unstable Local Industry -

Focus Elsewhere

Mix Ratio of 2 and

trend ratio of 1

Mix Ratio of 2 and

trend ratio of 2 or 5

Mix Ratio of 2 and

trend ratio of 3,4 or 6

SIC LABEL SIC LABEL SIC LABEL

64 Insurance agents, broker 17 Special trade contractor

78 Motion pictures 59 Miscellaneous retail

Emerging Local Industry -

Nurture

Weak Local Industry -

Possible Growth 

Opportunity

Weak Local Industry in 

National Decline - Focus 

Elsewhere

Mix Ratio of 1 and

trend ratio of 1

Mix Ratio of 1 and

trend ratio of 2 or 5

Mix Ratio of 1 and

trend ratio of 3,4, or 6

SIC LABEL SIC LABEL SIC LABEL

16 Heavy construction 32 Stone, Clay, glass 22 Textile mill products

47 Transportation services 48 Communications 49 Electric, gas services

52 Building & garden supply 50 Wholesale - durables

72 Personal services 70 Hotels, other lodging 

73 Business services

81 Legal services
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CHAPTER FOUR

MARKET ACCESSIBILITY

4.1 Overview

The unique impact of highway projects on economic development comes from changes they 

can cause in travel times between places. New and improved highways can expand job 

opportunities (for workers) and customer markets (for businesses), by reducing travel times 

to/from your area. We refer to this as “accessibility improvement.” It can reduce business 

operating costs and increase business sales in a variety of ways. This chapter describes a 

process to (1) analyze how highway improvements in your area affect local accessibility, and 

(2) identify the resulting effects on expanding economic opportunities. This information is 

later used in Chapter 6 to assess overall economic development opportunities.

Preview. In this chapter you will:

ß Identify different types of transportation accessibility improvements

ß Measure accessibility improvements and enter this data to the spreadsheet model

ß Interpret the results of the spreadsheet model findings on economic opportunities

4.2 Types of Market Accessibility Effects 

Highway projects can create economic opportunities by expanding labor and supplier markets 

for businesses, as well as expand customer markets for business products and services. Figure 

4-1 illustrates how a new highway segment can decrease the travel time within an area and 

thus increase the number of people and businesses that can access one another in a given 

period of time. 

Figure 4-1. Accessibility Before and After a New Highway Segment
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New projects may take many forms -- creating an entirely new connection between areas, 

improving an existing connection, bypassing certain areas, and/or improving access to certain 

areas. These changes can lead to any of six major economic market effects:

1. Reach residential customer markets. Highway projects may create economic 

opportunities for businesses by expanding the customer market that they can reach 

within a reasonable travel time. (Conversely, this may open up expanded and new 

shopping opportunities for consumers to shop elsewhere.) This may lead existing 

businesses to expand or new businesses to start up or move to the area. In general, this 

type of access improvement makes the area more attractive as a location for businesses 

whose market base is the surrounding residential population. 

2. Reach labor markets. Highway projects may create economic opportunities for new 

or growing businesses by effectively increasing the local labor supply available within 

a reasonable commuting time. Many businesses that are considering expanding or 

deciding whether to establish a presence in a new location value access to a good pool 

of labor. All else equal, businesses view a larger labor force as increasing their 

chances of finding qualified workers. Local residents benefit from increased access to 

jobs just as businesses benefit from a larger available work force.

3. Reach business supplier markets. Highway projects may create economic 

opportunities by making it easier for suppliers and producers to reach one another. If 

it becomes easier for businesses to get supplies and distribute their product, existing 

businesses may be able to expand and new businesses may locate in the area.

4. Reach recreation and tourism markets. Highway projects can also increase the 

reach of tourism markets. A highway project can open up tourism markets in two 

ways. First, pass-by traffic on a new highway segment may be attracted to tourist sites 

by signs or attractions on the side of the road. Second, the transportation project may 

make it possible for people to travel to the local area for day trips, whereas before the 

project it may have taken too long to get to the area. 

5. Serve “passing through” traffic markets. Highway projects may create economic 

opportunities for some businesses serving traffic passing through the area. They may 

also shift traffic away from other travel routes, decreasing traffic levels and business 

sales for businesses located along those routes. Any such shifts in traffic levels can 

have effects on growth or decline for specific types of businesses which cater to passby traffic, such as convenience stores, gas stations, motels tourist sites and gift shops. 

6. Access connections to other modes of transportation. Highway projects may create 

economic opportunities by improving access to other transport modes (e.g. 

river/seaport, airport or rail facilities), and the broader markets which they serve.
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4.3 Measurement of Accessibility Changes

In theory, the type of potential business growth opportunity created by a highway project may 

differ for every individual business, depending on the type of customers it serves, the type of 

jobs it provides and the type of input materials it needs. That brings a level of complexity 

that is not practical for this guide. So we simplify the process into two straightforward steps 

in a spreadsheet model: First you input your findings on the how the highway expands 

business markets for your area into Spreadsheet page “Input 3”, as illustrated in Table 4-1. 

Then the spreadsheet automatically identifies the resulting magnitude of economic growth 

opportunities, by type of business. You can estimate values for the potential change in market 

access and inter-modal connections by using maps and public data sources in a five-step 

process, which is explained starting on the next page.

Table 4-1 Spreadsheet Model Inputs for Accessibility Changes (Spreadsheet “Input 3b”)

ARC Handbook Spreadsheet - Input Form 3 Corridor V

b. Changes in Accessibility & Market Access

Type of Change Change %

Change in Labor Market 30.6%

Change in Customer Market 30.6%

Change in Business-to-Business Market 0.0%

Change in Tourism Market 0.0%

Change in Access to Airports 30.6%

Change in Access to River or Sea Ports 0.0%

Change in Access to Rail Centers 0.0%

Change in Pass-by Traffic 22.0%

Retail/Service Capture from Linkage Area 0.100

Step One: Estimate Changes in Travel Times from Your Area to Other Areas. Figure 4-

2 shows a map in which a community and surrounding areas have been divided into zones. 

The scale of the map and the zones depends on the length of the highway project and the 

region affected by it. Accordingly, those “zones” may be counties, townships, census tracts 

or traffic analysis zones. In this example, there are lines from the core community (or study 

area) to each of the outside areas, with labels showing the travel time to that area. This 

analysis must be done twice, representing conditions before and after highway completion. 
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250

330

220

130

180

510

460

520

370

2 8

400

440

410

150

210

420

470

530

560

250

330

220

130

180

510

460

520

370

2 8

400

440

410

150

210

420

470

530

560 Travel time to 

business district

Figure 4-2. Sample Travel times from Outlying Areas to a Retail Center

The travel time measures can come from either of the following two alternative methods:

• travel demand models. Some state DOTs have travel demand models -- computer 

software systems which estimate travel times across an entire regional highway 

network system, using information about highway volumes, capacities and 

mathematical equations that express the relationship between them. They are typically 

complex systems requiring trained personnel. If your state DOT has a travel demand 

model and is willing to do a study for you, then this is the preferred approach. If that 

travel distance and time data is available in a Geographic Information System (GIS) 

that also includes zonal characteristics (useful for Step 2), then that would be even 

better. In most cases, though, this is not an available alternative.

• “sketch planning” techniques. These are rough ways to estimate changes in travel 

times based on (1) measuring changes in travel distances along the road network 

before and after the highway project, and (2) measuring changes in travel speeds 

before and after the highway project. Total travel time is then calculated as: 

T=60 * (D/S), where: T=Travel time (minutes), D=Distance (miles), S = Speed in 

(miles per hour).

Measuring travel distance -- Engineers and planners at State DOTs often have 

information on road distances. Otherwise, you can measure road travel distances 

using a road map together with a planimeter (an electronic distance-measuring device) 

or a map wheel (a manual device). In either case, you need to set the map scale, trace 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group 4 - 5

the roadway system on the map connecting the two points in the analysis with the 

device, and then record the distance. If the measurement covers very long distances, 

or if you are only interested in an approximation, you can measure the straight-line 

distance between two points, and then multiply that distance by the scale. To account 

for the fact that the straight-line distance is shorter than the actual distance over the 

road system, a convenient rule of thumb is to multiply the straight-line distance by a 

factor of 1.2. 

Measuring travel speeds. Engineers and planners at State DOTs often collect 

information on speeds for individual highways. They are the first source of “expert” 

information on typical travel speeds for various kinds of roads. Alternatively, you can 

also directly measure travel speeds for existing conditions by driving on them, and you 

can estimate travel speeds for prior conditions or proposed future conditions based on 

speeds now existing on similar roads in your area. 

Step Two: Collect Population and Employment Information. 

All of the measures of market changes (i.e., customer markets, labor markets, business 

supplier markets and tourism markets) are based on some measures of the magnitude of either 

residential population or business activity (e.g., employment) in each zone. This information 

may be at the level of counties, townships, communities or census tracts, and should be 

obtained for the most recent available year. If your regional planning agency or state 

Department of Transportation has a GIS containing population and employment data for area 

communities and counties, then that information should be obtained. Otherwise, you can 

collect this information from available government data sources as specified in Table 4-2. 

Table 4-2 Sources of Residential and Business Data for Areas

Data Series Spatial Detail Update Source of Data

Sources of Residential Data

Population Estimates 

Program, Bureau of the 

Census (population)

States, counties, metro 

areas; places and county 

subdivisions

Every 

year

http://www.census.gov/population/www/

estimates/popest.html

Decennial Census 

(population, labor force)

Census tracts, towns, zip 

codes, counties, states, 

metro areas, U.S.

Every 10 

years

http:// www.census.gov/

Sources of Business Data

Local Area 

Unemployment Statistics

States, counties, large 

cities

Every 

month

Bureau of Labor Statistics (www.bls.gov) or 

State Labor Market Info. (LMI) agencies

Covered Employment and 

Wages (ES-202)

States, metro areas, labor 

market areas, counties, 

small cities and towns

Every 

quarter

www.bls.gov and State LMI agencies

County Business Patterns Counties, metro areas, 

zip codes

Every 

year

www.census.gov/epcd/view/cbpview.html

Regional Economic 

Information System 

(employment, earnings)

States, metro areas, 

counties

Every 

year

http://fisher.lib.Virginia.edu/reis/
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Step Three: Calculate Changes in Market Area Before and After the Highway Project

This step combines the zonal travel time information from Step 1 with the zonal population 

and business data from Step 2, to calculate the first four spreadsheet inputs on changes in 

economic market opportunities. These measures, which require comparison of market access 

before and after completion of the highway project, include:

• change in customer markets -- calculate the percentage increase in shoppers living 

within 45 minutes one-way driving time from your area (where 45 minutes represents 

a reasonable range of travel for home-to shopping trips). You can use the percentage 

change in population within that travel time, as a rough approximation of the change 

in shoppers. 

• change in labor markets -- calculate the percentage increase in workers living within 

45 minutes one-way commuting time from your area (where 45 minutes also 

represents a reasonable range of travel for home-to-work commuting trips; you may 

substitute other values in the 30-60 minutes range as deemed appropriate for your 

area). You can again use the percentage change in total population within that travel 

time, as a rough approximation of the change in labor market. 

• change in business supplier markets – calculate the percentage increase in business 

supply purchases occurring within 3 hours one-way truck driving time of your area 

(where 3 hours represents a reasonable distance for same-day round trip deliveries; 

you may substitute other values if deemed appropriate for your area). You can again 

use the percentage change in total business employment or output within that travel 

time, as a rough approximation of the change in business supplier purchases. 

• change in regional tourism markets – calculate the percentage increase in population 

living within 2 hours one-way travel time of your area (where 2 hours represents a 

reasonable level of attraction for day trip travelers and visitors coming from other 

population centers; you may substitute other values if deemed appropriate for your 

area). Note that tourism related to pass-through traffic will be covered in a separate 

analysis discussed later in this chapter.

Example -- Table 4-3 presents an example of how to compute these indicators of changes in 

market access. In this example, we have calculated the percentage change in households that 

can reach a community’s retail district within forty minutes by car. After the travel times 

have been calculated, the number of households in the 40-minute market area are added up for 

both the before and after cases. The percentage change is then calculated. Since we only care 

about the percentage change in the market area, it usually makes little or no difference 

whether we are measuring changes in total population or in number of households. 
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 Table 4-3: Change in Customer Market within 40 minutes of Local Business District

BASIC DATA BEFORE CASE AFTER CASE

Zone Number

of HH

Travel 

Time (min)

Within 

40 min?

# HH within 

40 min

Travel 

Time (min)

Within 

40 min7?

# HH within 40 

min

1 68 6 Y 68 5 Y 68

2 40 6 Y 40 5 Y 40

3 29 9 Y 29 8 Y 29

4 225 22 Y 225 19 Y 225

5 436 25 Y 436 22 Y 436

6 309 28 Y 309 22 Y 309

7 135 33 Y 135 30 Y 135

8 320 37 Y 320 31 Y 320

9 416 40 N 0 34 Y 416

10 251 41 N 0 41 N 0

11 21 42 N 0 42 N 0

12 195 44 N 0 38 Y 195

13 86 46 N 0 25 Y 86

14 53 47 N 0 47 N 0

15 207 52 N 0 31 Y 207

16 24 53 N 0 53 N 0

17 423 56 N 0 56 N 0

18 36 61 N 0 51 N 0

TOTAL ---- 1562 2466

In this example, the percentage increase in number of households within a 40-minute travel 

time is (2466 – 1562) / 1562 = 57.9%. You can then enter that percent increase in the 

spreadsheet input line for “Change in Customer Markets”.

Step Four: Estimate Changes in Pass-through Traffic. 

Your state DOT probably has estimates of how much traffic there was passing through your 

community, region or local business area before and after the highway changes were made. 

This would normally be measured in terms of Average Daily Traffic (ADT), which counts the 

total number of vehicles passing through a given point (counting both directions) in a typical 

day. If not, then you will have to estimate this change yourself. Calculate the change in 

traffic as a percentage of the original traffic level. For instance, this number would be +100% 

if the amount of traffic passing through doubled, and it would be –100% if the amount of 

traffic passing through fell in half. You can then enter this number into the spreadsheet input 

line for “Change in Pass-through Traffic Markets.”

Step Five: Estimate Changes in Linkage Access to Air/Water/Rail Facilities. 

If the highway project has significantly changed your access to air, water, or rail transit 

facilities, this may also influence the economic opportunities that are now available. You 

should assess whether the highway is likely to have significantly increased the use of any (1) 
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airport, (2) river or seaport and (3) train station or rail freight connection located within two 

hours driving time of the area. If not, then just enter zero into the spreadsheet input lines for 

“Change in linkage access to air, water and rail facilities.” Otherwise, enter your estimate of 

the percentage increase (+ value) or decrease (- value) in likely use of those facilities which is 

due to the new highway.

4.4 Overall Impacts on Market Access for Individual Industries 

The spreadsheet will combine your estimates of the changes in market access caused by the 

highway (as listed earlier in Table 4-3) with already-compiled information concerning the 

extent to which various types of businesses are dependent and sensitive to these factors. A 

typical set of default values for these business sensitivity factors are shown in the model’s 

“Assumptions” spreadsheet, as shown in Table 4-4. These values were derived from surveys 

of business purchases and activities (as shown in the “Transportation Satellite Accounts” to 

the national input-output tables, prepared by the US Bureau of Economic Analysis and the 

Bureau of Transportation Statistics), together with additional data derived from studies of 

just-in-time processing and roadside surveys. This information is already built into the 

analysis model, so no action is needed to use it. However, users wishing to update its values 

for specific cases may due so by changing the numbers in the Assumptions page of the 

spreadsheet model. 

By combining the market accessibility changes (as illustrated in Table 4-1) with the business 

sensitivity factors (as illustrated in Table 4-4), the spreadsheet system can calculate the extent 

of potential business cost reduction or revenue expansion for each type of business. For 

instance, improvements in customer market access (caused by the new highway link) are 

valued primarily by businesses that serve surrounding residential markets – particularly retail 

and personal services firms. On the other hand, improvements in labor market access are 

valued primarily by businesses that depend on workforce access – particularly office-based 

and service businesses. 

4.5 Summary

In this chapter you collected information on how the new highway segment has (or will) 

affect your area. This included growth in the market area for labor, business suppliers, 

customers, and tourists. It also included changes in local access to airports, rail facilities and 

other multi-modal transportation facilities, and changes in pass-by traffic. The analysis model 

uses this data to calculate measures of the relative change in costs and revenues for various 

types of businesses. This information is a critical part of the process of identifying potential 

opportunities for local economic growth made possible by the highway system improvement. 

This information will be combined with the local economic performance analysis in Chapter 

3, as well as the analysis of supporting resources and cost factors in Chapters 5-6. 
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Table 4-4 Typical Values for the Sensitivity of Businesses to Freight Access,

Shopper Market and labor Market Access Factors (Spreadsheet “Assumptions”)

Cost Reliance Customer Base Dependence Ratio

SIC Sector

Truck 

Trans

Worker 

Base

Resid 

Based

Passthrough 

Market

Just-in-Time 

Delivery

Use of 

Rail 

Link

Use of 

Air Link

Value 

Added 

7-9Agric services & forestry 0.07 0.42 0 0 L 0.001 0.008 Ratio1.70

10-14Mining 0.05 0.19 0 0 L 0.001 0.003 1.70

15-17Construction 0.07 0.23 0 0 L 0.002 0.001 1.00

20Food products 0.03 0.14 0 0 M 0.005 0.002 2.50

21Tobacco products 0.01 0.08 0 0 L 0.001 0.004 0.66

22Textile mill products 0.02 0.25 0 0 L 0.002 0.001 1.88

23Apparel and other textile 0.05 0.29 0 0 L 0.000 0.003 2.20

24Lumber and wood 0.04 0.25 0 0 L 0.008 0.002 2.70

25Furniture and fixtures 0.04 0.30 0 0 L 0.003 0.004 2.41

26Paper products 0.07 0.22 0 0 L 0.011 0.005 3.10

27Printing and publishing 0.04 0.30 0 0 M 0.002 0.010 1.84

28Chemical products 0.08 0.18 0 0 L 0.006 0.005 2.36

29Petroleum and coal 0.04 0.03 0 0 L 0.002 0.002 2.78

30Rubber and plastics 0.04 0.28 0 0 M 0.005 0.002 2.78

31Leather products 0.03 0.26 0 0 L 0.001 0.003 1.85

32Stone, Clay, glass 0.12 0.30 0 0 L 0.010 0.003 2.09

33Primary metal industries 0.07 0.19 0 0 M 0.012 0.002 2.36

34Fabricated metal prod 0.08 0.29 0 0 H 0.003 0.004 2.18

35Industrial machinery 0.13 0.37 0 0 L 0.001 0.005 2.21

36Electronic/electric equip 0.09 0.35 0 0 M 0.010 0.007 2.22

37Transportation equip 0.09 0.21 0 0 H 0.002 0.002 2.22

38Instruments 0.02 0.32 0 0 M 0.001 0.005 2.04

39Misc. manufacturing 0.02 0.28 0 0 L 0.002 0.004 2.36

41Passenger transit 0.01 0.43 0 0 L 0.001 0.001 0.26

42Trucking & warehousing 0.20 0.38 0 0 M 0.003 0.002 1.70

44Water transportation 0.05 0.03 0 0 M 0.001 0.011 1.31

45Transportation by air 0.09 0.38 0 0 M 0.001 0.044 1.35

46Pipelines, exc nat gas 0.03 0.30 0 0 L 0.001 0.011 1.31

47Transportation services 0.03 0.30 0 0 L 0.001 0.011 1.31

48Communications 0.01 0.35 0 0 L 0.000 0.002 1.93

49Electric, gas services 0.03 0.19 0 0 L 0.009 0.002 2.60

50Wholesale - durables 0.04 0.44 0 0 L 0.001 0.006 2.10

51Wholesale - nondurables 0.04 0.44 0 0 L 0.001 0.006 2.10

52Building & garden suppl 0.04 0.40 0.60 0.35 L 0.000 0.002 2.48

53General merchandise 0.04 0.40 0.65 0.25 L 0.000 0.002 2.48

54Foods stores 0.04 0.40 0.60 0.40 L 0.000 0.002 2.48

55Auto & service stations 0.02 0.40 0.40 0.60 L 0.000 0.002 2.48

56Apparel and accessories 0.04 0.40 0.65 0.25 L 0.000 0.002 2.48

57Furniture, furnishings 0.04 0.40 0.70 0.30 L 0.000 0.002 2.48

58Eating and drinking 0.04 0.29 0.50 0.40 L 0.001 0.003 2.29

59Miscellaneous retail 0.04 0.40 0.65 0.25 L 0.000 0.002 2.48

60Depository institutions 0.01 0.27 0.70 0.00 L 0.000 0.003 2.60

61Nondep. institutions 0.01 0.57 0 0 L 0.000 0.012 1.71

62Commodity brokers 0.01 0.57 0 0 L 0.000 0.012 1.71

63Insurance carriers 0 0.35 0.10 0 L 0.000 0.003 2.56

64Insurance agents, broker 0 0.35 0.30 0 L 0.000 0.003 2.56

65Real estate 0 0.04 0.20 0 L 0.000 0.000 1.50

67Holding and investments 0 0.57 0 0 L 0.000 0.012 1.71

70Hotels, other lodging 0.04 0.42 1.00 0 L 0.001 0.001 2.84

72Personal services 0.03 0.29 0.70 0.10 L 0.000 0.001 2.42

73Business services 0.05 0.42 0.50 0 L 0.000 0.004 2.20

75Auto repair and parking 0.02 0.21 0.50 0.20 L 0.001 0.001 2.44

76Misc. repair services 0.03 0.57 0.80 0.20 L 0.001 0.001 2.42

78Motion pictures 0.02 0.25 0.40 0.20 L 0.000 0.001 2.16

79Amusement & recreation 0.02 0.37 0.60 0.20 L 0.001 0.002 3.08

80Health services 0.02 0.49 0.40 0 L 0.001 0.003 1.31

81Legal services 0.01 0.46 0.50 0 L 0.000 0.016 1.31

82Educational services 0.04 0.52 0.90 0 L 0.000 0.013 1.31

83-86Social services, orgs 0.04 0.47 0.50 0 L 0.000 0.007 1.31

87Engineering & mgmt 0.01 0.46 0.50 0 L 0.000 0.016 1.31

89Services, other 0.04 0.46 0.70 0 L 0.000 0.003 1.31
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CHAPTER FIVE

ECONOMIC DEVELOPMENT RESOURCE ANALYSIS

5.1 Overview

The empirical analysis in Chapters 3 and 4 provide you with a basis for assessing which 

sectors of the economy represent potential growth prospects for your area, and are most likely 

to be affected by completion of a new highway segment. However, there is a remaining need 

to assess local factors that may enable or constrain prospects for business attraction and 

growth – the nature of the local labor force, existing facilities such as industrial land and 

buildings, condition of the area's business district(s), extent of natural and recreational 

resources, and availability of local economic development support programs. Thus, you need 

to assess your area's relevant resources, and conduct an inventory of existing economic 

development programs in your area. 

This chapter, unlike the preceding ones, relies on a series of self-assessment paper worksheets 

instead of using computerized spreadsheets. These paper worksheets provide a structure to

help you identify: (a) local strengths upon which to build your business attraction and growth 

strategy, and (b) local weaknesses that must be addressed in focusing your economic 

development strategy. You can then use this information as a basis for completing the final 

steps of the computerized analysis in Chapter 6.

Preview. In this chapter, you will assess one or more categories of economic development 

resources:

1. Existing economic development programs

2. Local stock of industrial parcels and buildings

3. Characteristics of the labor force

4. Characteristics of the downtown area

5. Tourism potential

5.2 Determining Your Economic Development Focus

Table 5-1 is your guide to determining which parts of this chapter you will focus on, and 

which worksheets you will complete. If your economic development targets and interests 

include industrial development, you should complete the sections on industry and labor. If 

your interests are in commercial development, you may wish to complete the section on the 

local downtown. If you are interested in tourism and/or outdoor recreation (grouped as 

"Recreational" on the Table), you may wish to complete the sections on downtown and/or 

tourism attractions. Choose your target(s) and proceed to those sections of this chapter.
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Table 5-1

Guide to Selecting Worksheets for Assessing Economic Development Resources

Target Sector Resource Assessment 

Econ. Devel. 

Programs

(5.3)

Industrial 

Facilities

(5.4)

Labor 

Force

(5.5)

Downtown 

Resources

(5.6)

Tourism Attraction 

Resources 

(5.7)

Industrial X X X

Commercial X X

Recreational X X X

5.3 Economic Development Programs. (Worksheet 5-1)

It is important to know what economic development programs exist in your area. Even 

though you have decided on particular target areas for your analysis, it is worth taking stock 

of all the different programs that exist, as you may find that some are receiving a lot of 

funding while not serving a high-priority purpose. In this section you will assess the 

economic development programs in your area.

Using your contact with other stakeholders and your combined knowledge, complete 

Worksheet 5-1. This worksheet lists the various types of programs by focus (existing 

business support, new business development, investment incentives, marketing and training) 

and by type of service (counseling, financing, training, land, building, etc.). For each type of 

program, list the names of specific programs related to economic development that exist in 

your area in the area along with information about their eligibility and loan funding levels (if 

applicable).

5.4 Industry Facilities Resource Assessment. (Worksheets 5-2 and 5-3)

This part need only be completed if your economic development targets include some 

industrial (manufacturing and/or distribution) types of businesses. To assess your area 

resources to accommodate industrial development, complete Worksheet 5-2 on the available 

industrial parks and industrial land in your area, and Worksheet 5-3 on the available standalong industrial buildings in your area. You can often get the needed information from 

economic development agencies, commercial real estate brokers, industrial property 

developers or utility economic development staff. Details for filling out these two worksheets 

follow.
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Worksheet 5-1. Economic Development Program Inventory

Program Type

(1)

Check if 

it Exists

(2)

Name of Program

(3)

Eligibility Rules / 

Target

(4)

Potential Funding 

to Applicant ($)

(5)

Importance 

(High, Medium, Low)

(6)

Support for Existing Businesses

 Counseling

 Financing X State loan programs Manufacturing only $10-100 million High

 Other 

Support for New Start-Up Businesses

 Counseling X Small Business 

Development Center 

entrepreneurship 

counseling program

NA Medium

 Financing X Micro Loan Program, 

Revolving Loan Fund

business must be <$1m 

annual revenue, 

$-5 million High

 Incubator Space X Tech College Incubator startups only, 2 years $10 – 100k Medium

 Other

Investment Incentive Programs

 Land X State land bank, brownfields reuse programexisting buildings variable, case by 

base basis 

Medium

 Buildings

 Equipment

 Other

Promotion & Marketing of the Area

 Tourism X State Tourism Office not applicable NA medium

 Industrial

 Downtown/Center

 Other

Training Programs

 Vocation Education

 College X entrepreneurship program start-ups NA high

 Other Specialized Training
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Industrial Land Parcel Assessment -- Worksheet 5-2

Step 1: Identify industrial land parcels in your area. A supply of vacant land suited and 

zoned for industrial development is critical for attracting new businesses into your 

community. Therefore, it is necessary to identify and record parcels suitable for industrial 

uses. A detailed, up-to-date inventory of available industrial property, both publicly and 

privately-owned, is a fundamental tool for successfully implementing an economic 

development strategy. Enter the name and location of industrially zoned parcels should be 

recorded in Worksheet 5-2, Column 1.

Step 2: Assess whether your industrial land meets basic requirements needed to attract 

industry. Identify whether these industrial parks or land parcels meet all of the basic 

characteristics required by many larger businesses, and note it in Worksheet 5-2, Column 2. 

Any deficiencies should then be listed in Column 3. Key criteria are:

ß Three or more acres zoned for industrial uses.

ß Space for at least three industrial buildings of 20,000 sq. ft. each.

ß At least one vacant lot or building.

ß Paved roads leading into the park and to the sites and buildings within the park.

ß Access to electricity, telephone lines, water, sewer or other wastewater facilities.

Step 3: Identify any special advantages of your industrial land parcels. Ask the 

appropriate stakeholders if the industrial land parcels in your area have any particular 

advantages, and fill this information in Worksheet 5-2, Column 4. Advantages are features 

above and beyond the basic requirements such as:

ß Access to an active rail line with a siding or with space for a siding.

ß Within 5 minutes drive time to a 4-lane highway.

ß Within 40 minutes from airport with scheduled passenger service.

ß Vacant building or shell structures already constructed.

ß In-place sewer, septic, natural gas and/or fiber optic cabling.

ß An incubator building for small businesses. An incubator is a building with small 

units, with shared facilities and services. 

ß Other special advantages.

Industrial building assessment - Worksheet 5-3

Step 1: Identify vacant, stand-alone industrial buildings. In today’s fast-paced economy, 

many businesses do not have the time, financial resources, or the long-term commitment to 

build their own buildings. Businesses interested in renting or buying buildings look for areas 

with a choice of competitively priced vacant properties. 

Stand-alone industrial buildings can be for sale or for lease. They may be designed to 

accommodate a single user, or they may be divided into a number of smaller units. They 

might be good “incubator” buildings (see definition under Step 6). They can contain a mix of 

industrial, office, and warehousing space. If there are vacant industrial buildings available in 

your area, list the major ones in Worksheet 5-3, Column 1. 
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Worksheet 5-2, Industrial Parks and Land Parcels

Do you have any industrial parks in your area? (circle one) Yes No (If yes, complete the rest of the worksheet)

Names & locations of 

industrial parks 

(1)

Meet 

Standards?

Yes / No

 (2)

Deficiencies

(3)

Advantages

(4)

County Wood Products 

Industrial Park

No Access roads not paved, no sewer, no high 

speed telecom available

20 acres available, electricity service, rail siding, 

2.5 miles from interstate

Worksheet 5-3. Industrial Buildings Assessment

Are there any vacant industrial buildings in your area? (circle one) Yes No (If yes, complete the rest of the worksheet)

Names & Locations of 

Industrial Buildings

(1)

Meet 

Standards?

Yes / No

(2)

Deficiencies

(3)

Advantages

(4)

American Twine Building no slow elevators, insufficient parking high ceilings, loading docks

Tech incubator yes limited space available, no rail access close to interstate highway, fiber optic line available, fee-based 

shared services 
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Step 2: Identify advantages and deficiencies of your industrial buildings. Identify 

whether these buildings meet all of the basic characteristics typically required by 

manufacturing and distribution facilities. This assessment should be noted in Worksheet 5-2, 

Column 2, and any deficiencies should then be listed in Column 3. Key criteria are:

ß 10,000+ sq. ft. in one unit ß elevators if multi-floor

ß loading docks ß basic utility services

ß 10+ foot ceilings ß sprinkler systems

Step 3: Identify any special advantages of your industrial buildings. Ask the appropriate 

stakeholders if any of the available building space in your area has particular advantages, and 

fill this information in Worksheet 5-2, Column 4. Advantages are features above and beyond 

the basic requirements, including factors such as:

ß incubator units for small 

businesses, with shared services

ß single-story building

ß newer construction or renovation (post 1985)

ß easy access to a 4-lane highway ß fiber optic wiring

ß municipal sewer

5.5 Labor Force Assessment. (Worksheet 5-4)

This part is usually necessary only if your economic development targets include some 

businesses requiring workers with skilled manufacturing capabilities or other technology 

training. To assess your local labor force resources, complete Worksheet 5-4. 

Identify the strengths & weaknesses of your labor force. One of the leading reasons why 

businesses choose to move into a new community is because there is a good supply of 

workers with the right skills for their industry. Worksheet 5-4 will help you to assess the 

perceived strengths and weaknesses of your local labor force among the key factors listed 

below. The primary information sources for this assessment are likely to be major employers 

and the local offices of the state departments of employment and training (that you listed on 

Worksheet 2-2). Notes on these findings should be entered in Worksheet 5-4, Columns 2 -

3. The key factors are: 

ß Worker Skills – Are the skills of the labor force appropriate for new businesses coming 

into the community? Be specific about types of skills and industries utilizing them. 

ß Educational Levels– Are there [enough] workers with high school diplomas, 2- and 4-

year college degrees, and technical training?

ß Education System – Are there programs available to train workers for new jobs 

brought into the community? If so, for what kind of training?

ß Availability of Workers- Although high unemployment is not desirable, it does 

indicate that there is a good supply of workers available. 

ß Wage rates – Are wages in the local area competitive with other similar places?
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Worksheet 5-4. Labor Force Assessment

Factor 

(1)

Strengths

(2)

Weaknesses

(3)

Worker Skills precision machine service skills (from closed 

plant), good work ethic 

Education Levels Two-thirds of the labor force does not have college education

Education System Training program at community college for basic 

office skills and computer / electronics

no four-year college in the region

Availability of 

Workers

high unemployment, available workforce for 

1000 job plant

Wage Rates 20% less than state average, attractive to 

businesses

Other:
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5.6 Commercial Business District Assessment. (Worksheet 5-5)

This part is usually necessary only if your economic development targets include retail stores 

or business service/financial offices. To assess your area’s commercial resources, complete 

Worksheet 5-5 for each major business district (which may be located in a traditional 

downtown area and/or along a strip of highway). The characteristics of these areas can be 

important for economic development strategies for any of three reasons:

1. New or expanded commercial development may be made possible as a result of 

increases in area pass-through traffic, or improvements in area accessibility.

2. Outsiders sometimes judge the quality of life in a community on the basis of the image 

presented by its commercial area, and that can affect industrial business attraction. 

3. Older downtown areas can also have an important role as a breeding area for new 

business startups because they provide low-cost space. 

Identify the strengths and weaknesses of your commercial business district. To assess 

the major commercial business district in your area, talk to the chamber of commerce and/or 

regional business leaders concerning what they see as the strengths and weaknesses of the 

area as a source of local image and local economic activity. The specific criteria to be 

considered are listed below, and notes on these findings should be entered in Worksheet 5-5, 

Columns 2 - 3. The key factors are: 

ß Vacancy / occupancy rates for land , storefronts and upper stories (if applicable)

ß Pedestrian environment & safety – crime, lighting, benches, amenities

ß Parking – availability and convenience

ß Mix of businesses – specialties featured or missing types of businesses

ß Costs of rent & real estate – particularly for commercial property

ß Other features considered to be local strengths or weaknesses.

5.7 Tourism Assessment. (Worksheet 5-6)

This part need only be completed if your economic development targets include tourism 

development. To assess your area’s tourism-related resources, complete Worksheet 5-6. 

Step 1: List the visitor attractions. Historic attractions may include cultural and historic 

buildings, event sites, museums and memorials. Scenic or natural resource attractions may 

include parks and trails, visitor and interpretive centers, and destination recreational sites. 

Other tourist attractions may include sports facilities, theaters or amusement parks. List these 

historic, scenic and special attractions in your area on Worksheet 5-6, Part A, Column 1. 

Step 2: Obtain basic descriptors of the visitor attractions. For each of the major visitor 

attractions, obtain information about their primary market draw (local, regional, statewide, 

multi-state, or national). Also obtain information about the volume of visitors to each 

attraction and their “strengths” (opportunities for growth in visitors) or “weaknesses” (factors 

limiting their appeal). Enter this information in Worksheet 5-6, part B, Columns 2 – 6.
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Worksheet 5-5. Commercial Business District Assessment

Complete this form for each major business district. 

Name and Location of the Commercial Business District ____________________________________________________________

Circle one: (a) Downtown (b) Highway Strip (c) Other 

Factor 

(1)

Advantages 

(2)

Disadvantages 

(3)

Vacancy/ Occupancy 

(Buildings & Lots)

14 vacant buildings , including two former bank bldgs 

with historic interest

run down facades, need painting

Pedestrian 

Environment & Safety

poorly lit, dark at night, some petty ctime

Parking Plenty of diagonal on-street parking 

Mix of Businesses two restaurants, three antique shops, barber shop and 4 

general retail stores plus gas station

no clothing stores or drug stores

Cost of Rents &

Real Estate

low rents compared to other nearby towns

Other: potential for historic district
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Worksheet 5-6. Tourism Resources

A. Attractions

Visitor 

Attractions

(1)

Market 

Area

(2)

Visitors 

per Yr

(3)

Strengths 

(4)

Weaknesses

(5)

Planned 

Investments

(6)

Historic Attractions

birthplace of country music star national 30,000 national name no good access road, 

limited promotion

Scenic Attractions

federally-designated “Wild & Scenic 

Rover”, with nearby Crystal Lake

state 20,000 beauty, recognized by 

Audobon Society

no signage for boat 

ramp or parking

proposal for resort 

and canoeing center

Other Visitor Attractions

general store and antique center regional not available seasonal opening only

County historical museum local

B. Facilities for Visitors

Local Services for Visitors

(1)

Number of 

Establishments

(2)

Total 

Capacity

(3)

Strengths 

(4)

Weaknesses

(5)

Planned 

Investments

(6)

 Hotels/Motels 2 80 clean seasonal operation

 Campgrounds 1 36 near national forest seasonal operation

 Restaurants 3 60 two are lunch only

 other
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Step 3: Assess your area's capacity for supporting more visitors. Obtain information on 

the number of hotels/motels, campgrounds and restaurants, and their capacity. Enter this 

information in Worksheet 5-6, part B.

5.8 Interpretation and Use of these Results

You should use the results of these worksheets to identify whether your area has the required 

facilities and resources needed to support and attract various types of business growth –

including industrial growth, commercial growth and tourism/recreation growth. This 

information can be used in two different ways:

• Some of the very basic requirements – such as the availability of industrial park sites with 

full supporting infrastructure, availability of office/commercial locations with full 

supporting infrastructure, and availability of business sites near the highway – can be 

directly rated and that information used in calculating opportunities by the analysis model 

(described in Chapter 6). 

• Many other factors -- such as the nature of business support programs and incentives, or 

the image of downtown or the quality of tourism attractions – cannot be simply turned 

into a numerical rating, and must instead be considered in the development of an 

economic development strategy plan (described in Chapter 7).

Either way, the information in these worksheets will help you to identify needs for additional 

local action. The nature of those actions will depend on the potential business targets (to be 

identified in Chapter 6). For instance, if the data analysis identifies a possible opportunity for 

financial services offices, then it may be particularly useful for you to consider the availability 

of first class office space with fiber optic telecommunications access. If the data analysis 

identifies a possible opportunity for machinery assembly plants, then it may be particularly 

useful to consider the availability of industrial park tracts with space for large, one-story 

buildings. If the data analysis indicates a possible opportunity for electronics manufacturing, 

then it may be particularly useful to consider labor force skills and the availability of training 

programs.

Of course, some of the deficiencies identified here can be addressed more quickly than others. 

Problems that might be addressed within a couple of years might include expansion of job 

training programs, upgrading of telecommunications services, and improving capacity to 

accommodate visitors with lodging, restaurants and fuel services. On the other hand, 

problems that may be more difficult to address in the short run may include cost of electricity, 

distance of existing industrial parks to the new highway, and limited airline service. 

The next chapter completes the process of accounting for local cost factors and local 

infrastructure and site limitations, in order to identify the nature of project economic 

development opportunities. 
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CHAPTER SIX

CALCULATION OF OPPORTUNITIES

6.1 Overview

This chapter completes the process of analyzing local strengths and weaknesses, and it 

describes the final results of the analysis model. It describes three additional sets of factors 

that are addressed in the analysis model: (1) relative costs of doing business locally, including 

labor, power, tax and local prices; (2) the availability and adequacy of local infrastructure, 

land, facilities and resources; and (3) opportunities for development of industry “clusters” 

that provide jobs in complementary industries. 

Preview. In this chapter you will:

ß Compare the local cost of doing business with newly linked areas

ß Rate the local availability of sites for new business, with adequate infrastructure

ß Identify opportunities for additional growth of complementary industries

6.2 Business Costs

The cost of doing business and living in your area is influenced by the cost of labor, by the 

cost of electricity, and by state and local tax rates. A cost comparison can show how the cost 

of doing business and living in your area compares with that of the newly linked areas. This 

information can help to determine whether relative costs are an advantage or a disadvantage 

in your area. 

To conduct the analysis of relative cost advantages (or disadvantages) for your area, you must 

input information on labor costs, productivity, power costs and taxes into spreadsheet table 

“Input-3”, parts B and C, as illustrated in Table 6-1 (on the next page). While there are many

more types of cost factors that can affect businesses, the current version of this table is limited 

to those measures of cost which are most easily obtainable online (via the world wide web). 

The following sources of data can be used:

• Labor Cost. You can calculate the average cost of manufacturing labor by obtaining 

the payroll and number of employees, and calculating the average ratio of payroll 

dollars per employee. This information is available, by industry, for all states and 

counties from the economic census, and it is also available for non-agricultural 

industries from county business patterns. (Both are available on the web at 

www.census.gov/datamap/www/ . Select a state and county and then select either 

Economic Census or County Business Patterns.)
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• Electricity Cost. State-level data on electricity cost is available from the Energy 

Information Administration at http://www.eia.doe.gov/emeu/states/_states.html 

(Select a state and then select Electricity Profile; the average cost of electricity will be 

listed in Table 1.) Local cost per kWh of electricity is available for individual electric 

utility companies from Energy User News www.energyusernews.com (Select 

Statistics, Trends and Energy Data.). 

• Tax Burden. Information on statewide corporate and personal tax rates, and overall 

tax burden, is available at www.bizsites.com/Toolkit/bythenumbers.html (Select 

Topics-Economy.) You can also calculate the average local, county and state tax 

burden per capita. To do that, you first obtain tax revenues for the applicable

city/town, county and state and then divide it by the population of the applicable area. 

Tax data can be found at http://www.cache.census.gov/govs/www/cog.html (Scroll 

down to Finance Phase. For state revenues by type of tax, go to State and Local 

Finances and select viewable data for the state of your choice. For data on individual 

local governments, go back to the menu for Finance Phase, scroll down to 

Publications, select Census of Governments and then view the relevant pdf files on 

municipal, county and special districts. Note that most of the tables show statewide 

averages of local governments, but later tables break it down for individual local 

governments.) Population data is available at www.census.gov/datamap/www/ . 

The analysis model automatically averages costs among the study area counties and among 

the linkage area counties (with appropriate adjustment for the number of actual counties 

listed). It then calculates a ratio of the two, indicating whether costs in your area are higher, 

lower, or equal to costs in the comparison area. If the cost ratio is greater than 1, it means that 

costs in your area are higher than in the linkage area. This may influence businesses to locate 

in other areas where costs are lower. If the cost ratio is equal to 1, your costs are the same as 

the comparison area. If the ratio is less than one, your costs are less, which indicates that your 

area may have a competitive advantage in terms of the cost of doing business relative to the 

comparison area. 

Table 6-1. Sample Input Table for Cost Data (Spreadsheet "Input 3" Part A)

ARC Handbook Spreadsheet - Input Form 3

ARC-OPPS Economic Development Opportunities Model

a. Relative Costs

Study Area Linkage Areas

Cost Categories

Pontotoc 

County

Lee 

County

Lafayette 

County

Panola 

County

Labor Cost (Mfg $ / hr) 9.66 9.66 9.66 9.66 

Electricity Cost (c/kwh) 5.00 4.91 5.00 5.00 

Overall Tax ($ of income) 8.50 8.60 8.60 8.60 
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It is best to consider this analysis as a means of screening out manufacturing industries that 

could find your area uncompetitive in terms of costs. However, it is also important to 

recognize that high labor costs can sometimes be an indicator of an area that is a good site for 

business location. For instance, some commercial businesses with a higher valued 

merchandise or services, may seek areas with a high income population. It is beyond the 

ability of the current analysis model to distinguish commercial businesses catering to higher 

income customers from commercial businesses catering to lower income customers. 

However, either one could be an appropriate source of economic growth in certain situations.

6.3 Development Constraints and Incentives

Your area may have an abundance of industrial parks sitting empty, just waiting for a business 

to walk in and instantly find vacant buildings and plots that are already hooked up with ample 

sewer, water, electricity, broadband communications, rail spurs and access roads. However, it 

is quite common, particularly in areas that have historically been economically depressed, to 

find that there is a significant lack of readily available industrial parks, buildings or sites that 

are located near the new highway and are available with full infrastructure support. Similar 

types of limitations may also apply for office space or for commercial/retail space that is now 

available in your area. 

It is actually quite logical that in an economically depressed area, no private investor would 

want to put money into developing buildings, access roads and supporting infrastructure that 

will remain unused for the foreseeable future. For that reason, such investment may become a 

local need and priority if your area is to be successful in realizing the economic growth 

opportunities potentially made possible by a new highway segment. 

Sometimes there are constraints on the availability of desirable business location sites that 

cannot be overcome. This may occur if the most desirable sites along the highway or nearby 

and accessibility to it are all already taken, or if the most desirable locations cannot be built 

upon because of topography or designation as wetlands, parklands or Native American 

reservations. 

The analysis model provides you with a way or recognizing situations that represent either 

particularly advantageous or particularly limited opportunities for highway-related 

commercial business, industrial plants or office development. Based on the worksheets you 

completed in Chapter 5, you should be able to rate the extent to which there are readilyavailable and attractive sites for these three types of business development. In most areas, the 

currently available offerings will given a rating somewhere between zero (representing no 

attractive sites readily available) and one (representing plenty of readily-available and 

attractive sites). In some exceptional cases, the available offerings may be given a rating 

greater than one (representing exceptional incentives). The values for most areas are likely to 

be in the range of 0.3 – 0.8. You should input these ratings into spreadsheet “Input 3,” part C, 

which is illustrated in Table 6-2. 
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Table 6-2. 

Sample Input Table for Development Constraint Data (Spreadsheet "Input 3" Part C)

ARC Handbook Spreadsheet - Input Form 3

ARC-OPPS Economic Development Opportunities Model

c. Development Constraints or Incentives 

factor<1 indicates infrastructure or development factor that constrains growth

factor>1 indicates incentive factor that enhances growth

Availability of Highway-Related Commercial Land 0.80

Availability of Industrial Park Sites with Full Infrastructure 0.80

Availability of Office/Commercial Development Sites 0.80

The effect of these ratings are to increase or decrease the projection of potential business 

growth opportunities for particular types of businesses, depending on the extent to which each 

type of business relies upon commercial, industrial or office-related land and buildings. You 

can run the analysis model twice, if you wish to compare results for the current situation with 

limitations on the available sites, and for a future situation in which those limitations have 

been overcome through public investment in infrastructure and utility development. (If you 

do that, you must resave the spreadsheet data file with a new name for each separate run.) 

6.4 Complementary Industries

It is important to also consider opportunities for building upon inter-industry linkages – in 

other words, buyer-supplier relationships between different types of business. 

“Complementary industries” are types of business which are not primary target industries, but 

which may nevertheless represent growth opportunities because they are suppliers of goods 

and services to the primary target industries. In this case, any direct opportunities for business 

growth created by Appalachian highways may also indirectly create opportunities for growth 

in complementary industries that do not directly depend on highway access. 

We identify opportunities for growth in complementary industries through use of “inputoutput” tables, which show inter-industry technology (buyer-supplier) relationships. This 

calculation is done automatically in the spreadsheet, using data on linkages between industries 

and on industry concentrations in your area and the areas that your area is now linked to. You 

would not normally want to change the table of inter-industry technology relationships, 

though it can be accessed and changed if desired through the “Assumptions” spreadsheet. A 

small portion of that very large table is illustrated in Table 6-3 (on the next page).
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Table 6-3. 

Sample Table for Inter-Industry Relationships (Spreadsheet "Assumptions")

ARC Handbook Spreadsheet - Assumptions

c. Threshold Matrix of Direct Coefficients (U.S. '97)

SIC Sector

Furniture

Paper

Rubber 

prod

Leather 

prod

Stone, 

glass, prod 

Primary 

metals

Fabricated 

metals

Industrial 

Machinery

Electrical 

equipment

Transport

 equipment

Scientific

instruments

22Textile mill products 0.052 0 0.015 0.019 0 0 0 0 0 0 0

23Apparel 0 0 0 0 0 0 0 0 0 0 0

24Lumber and wood 0.07 0.04 0 0 0 0 0 0 0 0 0

25Furniture and fixtures 0 0 0 0 0 0 0 0 0 0.013 0

26Paper products 0.016 0 0.022 0 0.02 0 0 0 0 0 0.018

27Printing and publishing 0 0 0 0 0 0 0 0 0 0 0

28Chemical products 0.013 0.054 0.186 0.035 0.032 0.014 0.015 0 0.011 0 0.012

29Petroleum and coal 0 0 0 0 0.013 0 0 0 0 0 0

30Rubber and plastics 0.042 0.028 0 0 0.012 0 0.013 0.019 0.024 0.03 0.03

31Leather products 0 0 0 0 0 0 0 0 0 0 0

32Stone, Clay, glass 0 0 0 0 0 0 0 0 0 0 0

33Primary metal 0.037 0 0 0 0 0 0.167 0.069 0.033 0.037 0.02

34Fabricated metal prod 0.059 0 0.01 0 0 0.014 0 0.041 0.033 0.067 0.039

35Industrial machinery 0 0 0.012 0 0 0.02 0.013 0 0.015 0.03 0.019

36Electronic/electric equip 0 0 0 0 0 0 0 0.064 0 0.037 0.104

37Transportation equip 0 0 0 0 0 0 0 0 0 0 0

38Instruments 0 0 0 0 0 0 0 0 0 0.017 0

39Misc. manufacturing 0 0 0 0 0 0 0 0 0 0 0

6.5 Calculation and Interpretation of Changes in Economic Opportunities

The spreadsheet analysis model system calculates the extent of potential employment growth 

for each type of business based on the following five considerations:

• Comparison of your area’s economic mix and trends to those of outside areas to 

which it is now linked (by the new highway segment). This analysis provides an upside estimate of the maximum additional growth that your area could potentially 

achieve IF: (a) it were to grow its under-represented industry sectors up to the 

proportional representation already achieved by the linked areas, and (b) it were to 

grow its under-performing industry sectors up to the rate of growth being achieved by 

those same industries elsewhere. These would represent reasonable possibilities if the 

previous lack of good highway access were the only real factor holding back 
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economic growth in the study area. The economic profile and performance analysis 

was described in Chapter 3.

• Comparison of changes in Market Access and Linkage Connections. As was shown 

in Table 4-4, improvements in customer market access (caused by the new highway 

link) are valued primarily by businesses that serve surrounding residential markets –

particularly retail and personal services firms. Improvements in labor market access 

are valued primarily by businesses that depend on workforce access – particularly 

office-based and service businesses. Improvements in supplier access are valued 

primarily by businesses that depend on input materials – particularly manufacturing 

businesses. Thus, the findings of potential business growth from the preceding two 

comparisons (area profile/trends and cost advantage) are further reduced to just 

recognize that portion of the potential growth which is likely to be related to highway 

access factors. This access analysis was described in Chapter 4. 

• Comparison of the relative business cost advantage or disadvantage. If the local 

area has higher costs of doing business than elsewhere, then its potential for 

manufacturing growth is reduced over what might otherwise be possible (from the 

other factors). The cost comparison can increase or diminish the potential for 

business growth from what would otherwise be predicted by the analysis of 

comparison of area profiles and trends. This cost analysis was described in Section 

6.2. 

• Assessment of development constraints and incentives. The extent to which 

business expansion and attraction opportunities are likely to be realized will depend 

on the extent to which industrial, commercial and/or office buildings and sites are 

available for occupancy and fully supported by local public infrastructure and 

utilities. The assessment of land, buildings, infrastructure and resources was designed 

to provide a basis for determining local needs for improvement in order to realize 

economic growth potentials. This analysis of development constraints was described 

in Chapter 5 and Section 6.3. 

• Industry buyer-supplier relationships. There can be additional economic growth 

opportunities associated with businesses that supply parts, materials and/or services to 

other industries that are the primary highway-related business attraction opportunities. 

This is automatically calculated by the spreadsheet system based on the inter-industry 

direct requirements matrix from the US Bureau of Economic Analysis’ input-output 

tables. This complementary industry (cluster) analysis was described in Section 6.4.

The result of this spreadsheet analysis is an estimate of how much economic growth could 

potentially result from the highway project, if your area also has the necessary land, buildings, 

support infrastructure and business climate to support them. The results are provided in the 

“Output 3” spreadsheet, as illustrated in Table 6-4. They show an estimate of the current 

potential for additional employment in each industry that could be directly affected by the 

new highway segment. A separate column shows the additional “indirect” potential 

associated with suppliers to the directly-affected types of business.
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None of these potentials, either the direct ones or the indirect ones, will automatically come to 

your area because of a new Appalachian highway segment. Rather, a strategy plan is 

necessary to address remaining needs and to actively entice such business growth and 

attraction. The next chapter discusses ways to identify what you need to do to facilitate and 

encourage the potential growth to occur, and how to develop an action plan and strategy to 

make that happen. 

Table 6-4 

Illustration of Model Output: Potential for Additional Business Growth and Attraction

(spreadsheet “Output 3”)

SIC LABEL Business

Attraction

Supplier

Attraction

22 Textile mill products 4 23

24 Lumber and wood products 47 30

25 Furniture and fixtures 423 0

28 Chemicals and allied products 0 12

29 Petroleum and coal products 0 0

30 Rubber and misc. plastics products 24 19

33 Primary metal industries 7 17

34 Fabricated metal products 2 27

37 Transportation equipment 11 1

39 Miscellaneous manufacturing industries 16 0

50 Wholesale trade - durable goods 11 48

51 Wholesale trade - nondurables 21 48

52 Bldg materials & garden supplies 13 0

53 General merchandise 43 0

54 Foods stores 65 0

55 Auto dealers & service stations 29 0

56 Apparel and accessory stores 11 0

58 Eating and drinking estabs 43 0

65 Real estate 0 18

67 Holding, investment offices 0 18

73 Business services 3 32

76 Miscellaneous repair services 12 0

80 Health services 20 0

83 Social services 14 0

87 Engineering & management 3 13

Total 877 361 
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6.6 Summary

This chapter examined how accessibility improvements provided by the highway can interact 

with characteristics of local industry mix, trends, costs, and facilities in order to affect the 

area’s economic growth potentials. That information provided the basis for estimating the 

nature of potential economic growth and attraction prospects for your area. Of course, many 

other factors such as local business climate, quality of education, climate and others may also 

affect your area’s economic prospects. No model can analyze all of these factors. For that 

reason, the produced by this spreadsheet analysis model must be viewed as merely a screening 

tool to help you identify growth opportunities. The development of an action plan and 

strategy for addressing any such opportunities is described in the next (and final) chapter. 
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CHAPTER SEVEN

PROCESS FOR DEVELOPING A STRATEGIC PLAN

7.1 Overview 

In the previous three chapters, we have discussed how to gather data to assess your area’s 

economic performance, the potential opportunities provided by highway access 

improvements, and your area’s facilities and resources. In this final chapter, we lay out a 

general process for you to work with other area agencies and leaders in forging a strategy plan 

for pursuing greater economic growth. 

The strategic planning process consists of three basic steps:

• Part 1: SWOT Review: Where are we now? You discuss the area’s Strengths, 

Weaknesses, Opportunities and Threats (SWOT) with other interested parties. You 

can do this through a review of findings from the analyses described in previous 

chapters, (local economic performance, highway access, and facilities/resources 

assessment) and a discussion of its implications. 

• Part 2: Mission Statement: Where are we going? You discuss how the SWOT 

findings and your community values combine to determine a vision of feasible and 

desirable future directions for the area. This serves as a foundation for developing 

long-term goals and objectives. Finally, stakeholders should agree on measurable 

milestones and specific targets for economic development.

• Part 3: Strategic Plan Development: How do we get there? You develop a program 

of action steps to work toward achievement of the vision and goals. You must agree 

on organizational, staffing and financing plans to pursue the goals, as well as some 

form of monitoring and evaluation to assure their effectiveness.

7.2 SWOT Review: Where are we now?

A fundamental step in assessing where your area now stands for encouraging economic 

growth and development is the identification of strengths, weaknesses, opportunities, and 

threats (SWOT) facing your area. The strategy and program that you develop will build upon 

your area's strengths, pursue opportunities, and consider how to improve upon areas that are 

currently weaknesses or threats. You will not be able to “fix” all weaknesses. Those that 

cannot be fixed should nevertheless be noted, as they will influence your decisions about the 

types of businesses your strategy will pursue.

Preliminary Summary of Findings. The first step in the SWOT Review is to draw together 

the information gathered in the previous chapters. You should use the information from the 

prior chapters to: 
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1. summarize findings on the types of business that are either the largest current sources 

of jobs in your area or job growth in your area (based on spreadsheet data analysis 

from Chapter 3) , 

2. summarize findings on the market changes and potential nature of business growth 

associated with completion of the highway project (based on spreadsheet data analysis 

from Chapter 4), 

3. summarize findings on the strengths and weaknesses of your area’s economic 

development resources and facilities (based on worksheets from Chapter 5), and

4. summarize the competitive and structural factors affecting future economic growth 

opportunities (based on the spreadsheet analysis and results from Chapter 6).

SWOT Analysis Strategy Meeting. The second step is to convene a strategy meeting of 

stakeholders to develop a common understanding of your area’s economic situation, prospects 

and needs. The group should use the summary of information to: (1) identify the types of 

business that are currently the largest sources of jobs in the area, and the types of business that 

offer the largest potential for future job growth in the area; (2) rate their relative importance 

as either sources of current jobs or potential sources of future jobs, and (3) assess strengths 

and weaknesses of the area’s internal resources (e.g., facilities, programs and labor force) for 

promoting those types of business. The group should also discuss: (4) opportunities and 

threats posed by external factors (e.g., technology change, global economic change or 

government regulations) affecting the area’s prospects for those types of business. Put this 

information into a concise statement such as the SWOT form that is shown in Table 7-1.

7.3 Vision and Goal Formulation: Where are we going?

Once you have assessed your strengths, weaknesses, opportunities, and threats, a separate 

series of meeting of key stakeholders in the community should be conducted to achieve 

agreement on: (1) a strategic focus and mission, (2) overall goals for economic development 

and (3) measurable milestones and targets along the way. 

Formulate a Strategy Focus and Mission Statement. It is important to discuss the major 

trends (opportunities and threats) facing the area, and the values of area residents and 

businesses relative to economic change and quality of life. From that discussion, there should 

be some general agreement on how the community or area wants to see economic growth 

evolve over the next five to ten years. This represents the strategy direction. The mission 

statement should include: a statement of the strategy direction and its reasons, as well as a 

specific time frame, target area and focus on target industries to be pursued. 

In completing this step, it is often helpful for the group to develop: (1) a probable future 

scenario for the area based on no intervention, and (2) a preferred scenario based on 

intervention to pursue economic development targets. The preferred scenario will serve

as a basis for the vision statement. This can agreed upon before the end of the meeting or it 

can be drafted afterwards and circulated among participants for comment and refinement. 
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Table 7-1. Sample Form for SWOT Review

Type of Business Coal mining Automotive parts suppliers

Current Importance 

in your Area

Largest employer Small but growing

Competitive Position 

of your Area

Weak, relative to surrounding areas Previously weak, made stronger due to 

highway connection

Area Strengths 

(Supporting Growth)

Labor force is well skilled Well positioned location relative to 

two auto assembly plants 

Area Weaknesses

(Threatening or 

Constraining)

None Limited labor force skills, no suitable 

industrial park properties 

Potential Opportunities 

for Growth

None Could double in our county due to 

expansion of nearby auto plants

Potential Threats 

to Retention or Growth

The industry is shrinking nationally Strong competition from adjacent 

surrounding counties, uncertainty 

about the auto industry
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It is also important to achieve consensus among stakeholders about priorities for the types of 

economic development intervention to be considered. These can include some or all of the

four major types of economic development: (1) retention of existing industries that are

threatening to leave your area, (2) promoting expansion of existing industries already in your 

area, (3) attraction of new industries and recruiting new businesses to relocate to your area,

and (4) promoting startups of new business within your area.

Formulate Goals. In a subsequent meeting, the vision statement should be then translated 

into one or more specific goals. Goals to provide initial direction to the economic 

development strategy and they also provide a yardstick against which to measure progress. 

The goals may include economic, physical or organizational changes, such as:

ß Retain or increase employment in the area (reducing unemployment)

ß Retain or increase the area’s population base (reducing the outflow of young people)

ß Increase average income levels (reducing poverty)

ß Improve the quality of jobs (reducing under-employment)

ß Diversify the area’s economic base

ß Stabilize or augment the local tax base

ß Improve local infrastructure, assets, and facilities

ß Improve the capacity of local organizations for promoting economic development 

ß Increase funding mechanisms to promote economic development. 

Designate Measurable Milestones and Specific Targets. General goals for the strategy 

should be translated into specific targets in terms of the types of businesses to be recruited, 

retained, supported, or encouraged. Targets should be types of business that represent local 

strengths as well as those presenting new opportunities for growth in your area. They should 

be screened from the list of potential targets in the technical analysis (analysis in Chapters 3 -

6), based on your community’s ability to support them by offering the relevant access to 

markets and suppliers, labor pool, infrastructure, and growth support programs. Secondary 

screening criteria might also include community values regarding environmental 

considerations, quality of jobs, and nature of required land development. 

7.4 Strategy Development: How do we get there? 

The next phase of strategic planning is to determine the way that the community's goals will 

be achieved. There are six basic elements in the implementation of a typical economic 

development strategy aimed at business growth and attraction:

1. Community Information: Create and distribute a package of basic information about 

the area and what it offers to business. This is often known as a “fact book”.

2. Sales Representation: Meet with other allies such as state economic development 

agencies.

3. Business Visitation: Work with existing businesses in the area to assure them that they 

are wanted and appreciated. Help them to stay and grow in the community.
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group 7 - 5

4. Ambassadors: Establish a point of contact for firms interested in starting up, 

expanding or moving to communities in the area.

5. Business Support: Implement supportive programs to help meet business needs for 

location and expansion in the area (such as financing, job training, and infrastructure 

development).

6. Ongoing Effort: Maintain your program of effort (items 1 – 5, above) over time.

Who to Involve. Discussions with politicians, other local stakeholders and other allied 

organizations are needed to fund and implement such a strategy. No economic development 

program can work without political support. By building consensus among political leaders, 

you will facilitate the allocation of sufficient public resources and the approval of local 

regulations that help rather than hinder economic growth (such as business zoning and tax 

rates). Politicians, like other stakeholders, need to be involved in the strategic planning 

process from the start. It is particularly helpful if the political leadership can initiate the 

planning process. Involvement of both the private and public sectors in planning usually 

improves the ability to successfully implement an economic development strategy.

Turning a General Strategy into an Action Plan. Your strategy should be translated into 

specific annual goals and milestones for the next three to five years. Table 7-2 shows an 

example of an action plan for regional economic development that is implemented by a new 

voluntary partnership with no full time staff or real funding sources. Table 7-3 shows an 

example of a funding plan with potential revenue sources and fundraising goals.

Table 7-2: Sample Action Plan for a New Regional Economic Development Partnership

Strategy Element Year One Year Two Year Three

Business 

Attraction

Research target industry 

needs

Step up downtown 

renewal

New training programs 

for target industries

Develop regional brochure Develop internet web 

site materials

Identify related cluster 

industries

Business 

Retention

Form business networking 

groups

Launch business 

opportunity initiative

Launch regional imagebuilding campaign

Annual postcard survey of 

business

Develop incubators & 

managed workshops

Promote private 

industrial development

Training Work with local college to 

offer computer training

Begin school to work 

programs

Tailored training to met 

new businesses needs

Financing Sponsor business banking 

fair

small business tax & 

accounting seminars

Revolving loan fund for 

business startups

business accounting course 

offered by community 

college

Promote SBA loan 

programs

Work with Chamber to 

identify future needs
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group 7 - 6

Table 7-3: Sample Economic Development Funding Plan

Source Year 1 Year 2 Year 3

Existing Funding

 State Office of Economic Development $ xx,xxx $ xx,xxx $ xx,xxx 

 Community Development Block Grant Funds $ xx,xxx $ xx,xxx $ xx,xxx 

 Working Capital (Bank Donations) $ xx,xxx $ xx,xxx $ xx,xxx 

New Sources of Funds 

 Federal Welfare-to-Work Grant $ xx,xxx $ xx,xxx $ xx,xxx 

 City Planning Funds $ xx,xxx $ xx,xxx $ xx,xxx 

 Sponsoring Business Memberships/Donations $ xx,xxx $ xx,xxx $ xx,xxx 

 State Dislocated Worker Program $ xx,xxx $ xx,xxx $ xx,xxx 

 Private Foundations $ xx,xxx $ xx,xxx $ xx,xxx 

Total Funds in Place $ xx,xxx $ xx,xxx $ xx,xxx 

Total Fundraising Goal $ xx,xxx $ xx,xxx $ xx,xxx 

7.5 Monitoring & Evaluation

Once the action plan is in operation, periodic monitoring and evaluation of the program is 

critical to keep it on target while maintaining enough flexibility to respond to new challenges. 

The monitoring and evaluation process should assess the extent to which immediate action 

items (as discussed in Section 7.4) have been implemented, and it should also assess the 

extent to which there is movement towards achieving longer-term goals (as discussed in 

Section 7.2). 

There are three main purposes for monitoring and evaluation of on-going programs. First, 

evaluation serves as an internal feedback system that identifies how efficiently and effectively 

a program is achieving its goals. Secondly, it serves as an external tool of accountability and 

justification. The evaluation process provides useful information to community residents and 

leaders who want evidence that the program is accomplishing its goals. Use of a periodic 

summary of accomplishments is helpful in maintaining support. Finally evaluations can help 

increase the effectiveness of the plan, by showing when adjustments should to be made as 

new opportunities and circumstances arise. 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 1

Appendix A

Blank Worksheets
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 2

ARC Handbook Spreadsheet - Input Form 1

ARC-OPPS Economic Development Opportunities Model

© 2000, Economic Development Research Group, Inc.

a. Header for 

Pages

Scenario Title

Today's Date

b. Define Study 

Area

State County

County

c. Hwy Linkages to Other 

Areas

1

2

3

4

d. Years for Economic Data

Most Recent

Earlier Time
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 3

ARC Handbook Spreadsheet - Input Form 2 Corridor V

Current Employment in Thousands Study 

Areas

Linkage 

Areas

United 

States

1993 1997 1993 1997 1997 1997 1997 1997 1993 1997 

United States

SIC LABEL 0 

7 Agricultural services

8 Forestry

9 Fishing

10 Metal mining

12 Coal mining

13 Oil and gas extraction

14 Nonmetallic minerals

15 General contractors

16 Heavy construction

17 Special trade contractors

20 Food and kindred products

21 Tobacco products

22 Textile mill products

23 Apparel & other textile s

24 Lumber and wood products

25 Furniture and fixtures

26 Paper and allied products

27 Printing and publishing

28 Chemicals and allied products

29 Petroleum and coal products

30 Rubber and misc. plastics 

31 Leather and leather products

32 Stone, Clay, and glass 

33 Primary metal industries

34 Fabricated metal products

35 Industrial machinery 

36 Electronic and electric 

37 Transportation equipment

38 Instruments 

39 Miscellaneous manufacturing 

41 Local and passenger transit

42 Trucking and warehousing

44 Water transportation

45 Transportation by air

46 Pipelines, except natural gas

47 Transportation services

48 Communications

49 Electric, gas services

50 Wholesale - durable goods

51 Wholesale - nondurables

52 Bldg & garden supplies

53 General merchandise
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 4

54 Foods stores

55 Auto dealers & gas service 

56 Apparel and accessory stores

57 Furniture and home stores

58 Eating and drinking estabs

59 Miscellaneous retail

60 Depository institutions

61 Nondepository institutions

62 Security & commodity brokers

63 Insurance carriers

64 Insurance agents, services

65 Real estate

67 Holding, investment offices

70 Hotels and other lodging 

72 Personal services

73 Business services

75 Auto repair, services, parking

76 Miscellaneous repair services

78 Motion pictures

79 Amusements & recreation 

80 Health services

81 Legal services

82 Educational services

83 Social services

84 Museums, botanical, zoos

86 Membership organizations

87 Engineering & management 

89 Services, other

99 Unclassified establishments

SUBTOTAL
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 5

ARC Handbook Spreadsheet - Input Form 3 Corridor V

ARC-OPPS Economic Development Opportunities Model

a. Relative Costs Study Area Linkage Area(s)

Cost Categories

Labor Cost (Mfg $ / hr)

Electricity Cost (c/kwh)

Overall Tax ($ of income)

b. Changes in Accessibility & Market Access

Type of Change Change %

Change in Labor Market

Change in Customer Market

Change in Business-to-Business Market

Change in Tourism Market 

Change in Access to Airports

Change in Access to River or Sea Ports

Change in Access to Rail Centers

Change in Pass-by Traffic

Retail/Service Capture from Linkage Area

c. Development Constraints or Incentives 

factor<1 indicates infrastructure or development factor that constrains growth

factor>1 indicates incentive factor that enhances growth

Availability of Highway-Related Commercial Land

Availability of Industrial Park Sites with Full Infrastructure

Availability of Office/Commercial Development Sites
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 6

Worksheet 2-1. Input Table for Key Stakeholders

Stakeholder

Group

Organization Name, 

Address, Contact 

Person, Tel

(1)

Marketing Role

(describe)

(2)

Business Development & 

Financing Programs

(describe)

(3)

Other Roles in Economic 

Development

(describe)

(4)

What data on 

target area / 

linked areas?

(5)

What data on ED 

resources?

(6)

State ED 

Agency

statewide database of 

economic development 

programs

County/

Regional ED 

Agency

--

Local ED 

Organization --

Local 

Government community taxes, 

major employers, land 

use data

Electric 

Utility

industrial park 

inventory

Chamber of 

Commerce

business directory and 

product/service 

purchasing guide

State Trans 

Agency

traffic counts and 

speeds., for major 

roads

Non-Profit

--
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 7

Worksheet 5-1. Economic Development Program Inventory

Program Type

(1)

Check if 

it Exists

(2)

Name of Program

(3)

Eligibility Rules / 

Target

(4)

Potential Funding 

to Applicant ($)

(5)

Importance 

(High, Medium, Low)

(6)

Support for Existing Businesses

 Counseling

 Financing

 Other

Support for New Start-Up Businesses

 Counseling

 Financing

 Incubator Space

 Other

Investment Incentive Programs

 Land

 Buildings

 Equipment

 Other

Promotion & Marketing of the Area

 Tourism

 Industrial

 Downtown/Center

 Other

Training Programs

 Vocation Education

 College

 Other Specialized Training
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 8

Worksheet 5-2, Industrial Parks and Land Parcels

Names & locations of 

industrial parks 

(1)

Meet 

Standards?

Yes / No

 (2)

Deficiencies

(3)

Advantages

(4)
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 9

Worksheet 5-3. Industrial Buildings Assessment

Names & Locations of 

Industrial Buildings

(1)

Meet 

Standards?

Yes / No

(2)

Deficiencies

(3)

Advantages

(4)
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 10

Worksheet 5-4. Labor Force Assessment

Factor 

(1)

Strengths

(2)

Weaknesses

(3)

Worker Skills

Education Levels

Education System

Availability of 

Workers

Wage Rates

Other:
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 11

Worksheet 5-5. Commercial Business District Assessment

Complete this form for each major business district. 

Name and Location of the Commercial Business District ____________________________________________________________

Circle one: (a) Downtown (b) Highway Strip (c) Other 

Factor 

(1)

Advantages 

(2)

Disadvantages 

(3)

Vacancy/ Occupancy 

(Buildings & Lots)

Pedestrian 

Environment & Safety

Parking

Mix of Businesses

Cost of Rents &

Real Estate

Other:
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group A - 12

Worksheet 5-6. Tourism Resources

A. Attractions

Visitor 

Attractions

(1)

Market 

Area

(2)

Visitors 

per Yr

(3)

Strengths 

(4)

Weaknesses

(5)

Planned 

Investments

(6)

Historic Attractions

Scenic Attractions

Other Visitor Attractions

B. Facilities for Visitors

Local Services for Visitors

(1)

Number of 

Establishments

(2)

Total 

Capacity

(3)

Strengths 

(4)

Weaknesses

(5)

Planned 

Investments

(6)

 Hotels/Motels

 Campgrounds

 Restaurants

 other
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group B - 1

Appendix B: Corridor T Case Study 

The purpose of this case study was to examine an area in which a highway project was 

completed and to test how the model predicts the economic opportunities of the project. 

B.1 Case Study Area

Southwestern New York state is a largely rural area with a history of economic distress. It is 

officially classified by the Appalachian Regional Commission as a transitional area, one that 

is not yet competitive with national averages. In 1995, the median household income 

(approximately $29,500)of the two westernmost counties, Chautauqua and Cattaraugus) was 

13% lower than the state average, and the population of the area has declined since 1990 

while the population of the state has grown. The area is not densely populated, and 

comprised only 1.2% of the total New York state population in 1999. 

Corridor T

Exhibit 1 shows the study area. Our study focuses on the impacts and opportunities created 

by Appalachian Corridor T, which runs west to east from I-90 outside of Erie, PA to I-390 in 

Bath, NY. Corridor T was a two-lane rural highway before it went through a series of 

upgrades. It was first upgraded into a limited access two-lane route with interchanges, and 

then expanded into a four-lane freeway west of Jamestown. The highway also crosses 

Chautauqua Lake and continues due west to intersect I-90 near Erie. The original State Route 

17 had skirted Chautauqua Lake to the east and connected to I-90 near Fredonia. The entire 

freeway is now known as the Southern Tier Expressway, or I-86.

Exhibit 1 Study Area in Southwestern New York

Corridor T connects southwestern New York with many previously less accessible places. 

The link between Jamestown, NY (in Cattaraugus county) and Erie, PA has been greatly 

improved through the upgrade of the two-lane route to a four-lane interstate in the 1990s, as 

well as by a bridge across Chautauqua Lake completed in 1980. Through its link to I-90 in 

the west, the corridor also improves the accessibility of Buffalo, NY. The eastern portion of 

the corridor links the area to I-390, thereby improving the link with New York City, and also 

improves accessibility to the Finger Lakes region of New York state. 

Over the past twenty years, three major highway improvements have been completed on 

Corridor T. In 1980, a bridge across Chautauqua Lake was completed, which significantly 

Bath

 Corridor T, 2-lane to 4-lane upgrade
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group B - 2

reduced travel times and increased accessibility between Jamestown (and other NY points) 

and Erie County, Pennsylvania. Before the bridge was completed, traffic traveling between 

Jamestown and the Pennsylvania State line had to travel around the lake on lower-speed 

secondary routes, or use a small ferry with uncertain travel and arrival times. The other 

improvements were the expansion of Corridor T from a 2-lane road to a 2-lane limited access 

facility, and later to a 4-lane freeway. This improvement, which provided passing lanes, full 

shoulders and medians, resulted in increased safety and capacity. 

Cattaraugus and Chautauqua Counties

and the Greenfield Township of Erie County

Although Corridor T spans part or all of five counties, we focus on the western portion of the 

corridor. Specifically, the study area for our analysis included Chautauqua and Cattaraugus 

counties as well as the Greenfield township in Erie County, PA. Several unique attributes 

make this portion of the Corridor T impact area interesting for study. These include the 

presence of tourism activity centered around Chautauqua Lake, a state park, an Indian 

reservation, and several notable population centers. The cities of Jamestown, Olean, and 

Salamanca, and the town of Allegany, have a combined population of 62,939. Jamestown and 

Olean are the key centers of business and commerce in the study area. 

In our economic performance analysis, we compared the core study area (Chautauqua and 

Cattaraugus Counties, NY) to the area directly east of the study area (Steuben County, New 

York) and the area directly west (Erie County, PA). Steuben County lies to the east of the 

study area and Erie County lies to the west. 

B.2 Regional Economy

The extent to which improvements to a highway will generate opportunities for economic 

growth depend on several factors. Of great importance is the nature of the existing economy 

and its relationship to the wider regional economy, including the mix of industries and 

industry trends.

Business Mix and Trends

An analysis of the local economy of Cattaraugus and Chautauqua counties shows an area that 

is going through some economic changes. In keeping with the national economy, service 

industries are employing a large portion of the workforce in recent years. Health services and 

social services were the largest service employers in 1997, accounting for 10.2% and 4.8% of 

the study area’s employment, respectively. Personal and health services are increasing in 

importance, gaining 499 and 251 jobs, respectively, between 1993 and 1997. Retail (general 

merchandise) sales are also increasing in importance, gaining 480 jobs from 1993 to 1997. 

However, while food and apparel manufacturing industries lost the most jobs over the last 

few years, not all manufacturing is in decline. Industrial machinery and equipment gained 

the most jobs of any industry from 1993 to 1997 (286 jobs) and also accounted for a large 

portion of the study area’s jobs (6.2%) in 1997. 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group B - 3

The ARC-OPPS Model compared the study area’s economic mix and trends to those of the 

comparison counties. Based on this analysis, the following industries were classified as 

shown in the tables below. 

Table B-1 Local Economic Performance Findings

Strong, Stable Local 

Industries (A)

Local Industries Under 

Threat – May Need 

Attention (B)

Local Industries in 

National Decline -

Diversify (C)

Nonmetallic minerals

Furniture and fixtures

Communications

Wholesale - nondurables

General merchandise

Foods stores

Eating and drinking 

Personal services

Business services

Motion pictures

Amusement & recreation

Oil and gas extraction

Special trade contractor

Lumber and wood 

Rubber and plastics 

Stone, Clay, glass 

Fabricated metal prod

Industrial machinery 

Trucking & warehousing

Transportation services

Wholesale - durables

Furniture, furnishings

Health services

Educational services

Social services

Apparel and other textile 

Paper products

Electric, gas services

Insurance carriers

Medium Strength Local 

Industries, Possible Growth 

Opps (D)

Weak Local Industries in 

National Decline – Focus 

Efforts Elsewhere (E)

Emerging Local 

Industries – Nurture (F)

Weak Local Industries –

Possible Growth 

Opportunities (G)

Real estate

Apparel and accessories

Depository institutions

Misc. repair services

Heavy construction

Auto & service stations

Engineering & mgmt

Agricultural services

Printing and publishing

Electronic/electric equip

Passenger transit

Miscellaneous retail

Insurance agents, broker

Hotels, other lodging 

Auto repair and parking

(A) Strong, Stable Local Industries – have a substantially higher concentration of employment than the same 

industry in the comparison area, and are growing faster locally than nationally. 

(B) Local Industries Under Threat – have a substantially higher concentration of employment than the same 

industry in the comparison area, and are growing nationally while declining or growing more slowly locally

(C) Local Industries in National Decline – have a substantially higher concentration of employment than the 

same industry in the comparison area, but are declining nationally

(D) Medium Strength Local Industries with Possible Growth Opportunities - have a slightly higher or slightly 

lower concentration of employment than the same industry in the comparison area, and are growing 

nationally while declining or growing more slowly locally

(E) Weak Local Industries in National Decline – have a lower concentration of employment than the same 

industry in the comparison area, and are declining nationally

(F) Emerging Local Industry - have a lower concentration of employment than the comparison areas, and are 

growing faster locally than nationally

(G) Weak Local Industry, but Possible Growth Opportunity – have a lower concentration of employment than 

the comparison areas, and are growing nationally while declining or growing more slowly locally

There are two more possible categories, but none of the industries in the study area fall in them. The first is 

Unstable Local Industries, which have a slightly higher or slightly lower concentration of employment than the 

same industry in the comparison area, and are declining nationally. The second is Local Industries with 

Strength – Support, which have a slightly higher or slightly lower concentration of employment than the same 

industry in the comparison area, and are growing faster locally than nationally
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group B - 4

Business Costs

A significant difference in the cost of doing business in two areas can give one an advantage 

in attracting business. The main study area in New York state is bordered to the west and 

south by Pennsylvania state, which has no sales tax on clothing. This puts the study area at a 

disadvantage in attracting commercial enterprises. However, Chautauqua county recently 

eliminated the sales tax on purchases of clothing and shoes of less than $110, which may help 

the area to attract more commercial enterprises and generate more local shopping activity. 

Property and corporate tax are lower in New York than in Pennsylvania but that is reported to 

be changing to some extent. 

Because the economy of the study area has been stagnant, a housing stock of medium to 

high-priced housing does not exist. This deters the attraction of executives, who would suffer 

capital gains losses if they purchased the lower-priced homes in the study area. 

As the New York state sales tax is higher than that of Pennsylvania, the study area (which is 

composed mainly of two New York counties) is expected to have a greater sales tax revenue 

per capita than the comparison area (which includes a county in Pennsylvania). However, the 

average sales tax revenue collected per capita in 1998 was lower in the study area ($683) than 

in the comparison area ($745). This is because people go outside of the study area to shop. 

This is particularly due to Pennsylvania's proximity and lower sales tax, but may also pertain 

to the limited shopping options within the study area. The corporate and personal income tax 

revenue collected per capita in 1998 were higher in the study area ($172 and $1,006 

respectively) than in the comparison area ($151 and $754 respectively) due to higher tax rates 

in the study area. 

B.3 Impact of Highway on Users

The primary access benefit of Corridor T is faster east-west travel between Erie, PA and 

Binghamton, NY. The Corridor also improves access to the Finger Lakes region of New 

York State. 

Estimated Change in Travel Times 

The bridge and twinning improvements have reduced commuting and shopping times 

between Jamestown and Erie by an average of 16 minutes, from 76 minutes to just under one 

hour. This amounts to a 21% decrease in average travel times between the two areas, and 

brings them just under the outer threshold for daily travel between two places in urban areas. 

Travel time improvements also resulted, as shown in Table B-2 below. 

Table B-2 Estimated Travel Time Improvements for Corridor T

Improvement Travel Time Before 

Improvement

Travel Time After

Improvement

Difference

I-90 (PA) to Chautauqua Lake 23 minutes (50MPH) 19.1 minutes (60 MPH) -18%

bridge over Chautauqua Lake 22 minutes (30 MPH) 9.2 minutes (60 MPH) -58%

Chautauqua Lake/ Jamestown 

to I-390 (near Bath)

126 min. (55 MPH) 107 min. (65 MPH) -15%
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group B - 5

Estimated Change in Travel Volumes

Traffic volumes have increased substantially on I-86 since the bridge and twinning projects 

have been completed (see Table B-3 below). Between 1978 and 1988, highway traffic 

increased by 66% on highway sections west of the bridge (away from Jamestown). During 

the same time period, traffic almost doubled (increased by 100%) on the Jamestown side of 

the bridge. This suggests that a good deal of regional traffic has been attracted by the bridge 

construction; it also suggests that local traffic has been attracted to the high-speed facility to 

an even greater extent. Traffic increases between 1988 and 1999, corresponding to the period 

covering the twinning project, are more modest than those following the bridge project. 

Traffic west of the bridge increased by 33% during the ten-year period, while traffic west of 

the bridge grew by 25%. 

Table B-3 Average Annual Daily Traffic at Selected Locations on I-86 (1978-1998)

Location

1978 1988 % Annual 

Increase

1998 % Increase 

1988-1998

West of Bridge 3,500 5,800 6.6 7,700 33%

East of Bridge 4,550 9,000 4.9 11,300 25%

Jamestown 5,250 9,350 4.4 11,400 22%

These traffic increases do correspond with enhanced economic opportunity in Chautauqua 

County. While population and employment declined slightly between 1980 and 2000, the

value of manufacturing output and retail sales increased significantly. Concluding that these 

highway improvements caused these increases would be misleading and overstating the case, 

since there are so many factors that cause a firm to start up, relocate or expand and ultimately 

succeed in any particular area. However, we know from many past studies that retail and 

manufacturing industries do rely heavily on good highway access in order to succeed. The 

improvements on I-86 have certainly provided significantly greater access to and from 

Jamestown and have contributed to that success. 

B.4 Resources for Economic Development

Industrial Parks

Existing industrial parks are some distance from the highway. There is little evidence of 

signs on the highway or at interchanges advertising existing industrial parks. There appear to 

be many sites that could become industrial parks, but they are largely unadvertised and many 

are undeveloped or not yet served by utilities and road infrastructure, such that they are not 

yet ready for occupancy. 

According to a database maintained by the Southern Tier West Regional Planning and 

Development Foundation, there appear to be about 75 parcels of land in Cattaraugus and 

Chautauqua counties that are now operating as industrial parts or designated as future 

industrial park sites. A total of 57 of the land parcels are within 5 miles of the highway 

corridor. There is municipal water service at 46 of the 75 sites, and about 15 of them have 

municipal sanitary disposal services. Six sites are 50,000 square feet or larger, though over 

35 have three or more acres. Some have rail access. 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group B - 6

Economic Development Programs

Chautauqua County has a number of economic development programs through the Industrial 

Development Authority, the County Department of Economic Development, the Workforce 

Investment Board, Jobs Chautauqua, and Chautauqua Opportunities, Inc. The County of 

Chautauqua Industrial Development Agency (CCIDA) has the principal role of attracting new 

business and industry to the area and helping businesses secure financial assistance, 

providing advocacy services and developing infrastructure and industrial parks. The CCIDA 

has Financial Assistance programs geared mainly toward manufacturing firms and provides 

assistance with import/export, site information, community development, permitting, and 

skills training.

Southern Tier West Regional Planning and Development Board is the organization that 

oversees many regional economic development programs in Chautauqua, Allegany, and 

Cattaraugus counties. Southern Tier West includes the Business Resource Center, a 

Development Foundation, a Regional Planning and Development Board, and an Enterprise 

Development Organization. The Southern Tier West Development Foundation is involved in 

several economic development programs through its disbursement of seed grants of $2,000 to 

$10,000. Funding is focused on supporting planning, infrastructure pre-engineering, capacity 

building, and inter-municipal cooperation. The Southern Tier West Business Resource 

Center provides below-market rentals of office space, shared services, business advice, and 

networking with other small business assistance programs for business start-ups in office 

space at the Center for Regional Excellence and in a new business incubator.

Other Facilities and Resources

There are several educational resources in the area, including the Fredonia School (known for 

its programs in music and education), St. Bonaventure, Olean Business Institute, Jamestown 

Business College and Jamestown Community College. Alfred University is located just east 

of the study area and hosts an internationally known ceramics school. 

B.5 Economic Beneficiaries and Impacts to Date

Key Economic Beneficiaries

The following categories of business are viewed as beneficiaries of the now-completed 

highway project.

ß The trucking industry is a major beneficiary of the I-86 improvements, since a high 

proportion of truck travel is long-distance travel. The highway improvements have 

enhanced the attractiveness of I-86 and Jamestown from Erie and the I-90 corridor, 

and strengthened the long-distance connection between the Erie region and New York 

City. Available traffic data indicate that truck travel comprises 20 percent of average 

daily traffic on I-86 between the New York/PA State line and Jamestown. 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group B - 7

ß The wine/juice industry both in the study area and outside of the corridor may benefit 

from the improvement in the highway corridor. Fruit is trucked from the Finger 

Lakes region of central New York to the southwestern part of New York and to Erie 

county, PA, where it is pressed. Some juice is sent back to the Finger Lakes region to 

make wine. Faster travel along the corridor provides shipping cost savings for wine 

and juice manufacturers. One large juice manufacturer in the study area is Welch's, 

which has plants in North East, PA just four miles from the interchange of Corridor T 

with Route 89, and several miles north on I-90 in Westfield, NY.

ß The furniture and wood industry within the study area is another beneficiary from the 

highway. The local furniture industry uses wood that is trucked from northern Illinois 

and Ohio to production facilities in Jamestown and Erie, where it is processed into 

office and home furniture. (Bush Furniture is headquartered in Jamestown, NY and 

has another facility in Erie, PA.) Hardwood timber is also a local primary resource; 

however, a substantial amount of this wood is sent overseas with only rough-mill 

local processing, and so has no value-added component for the area. The raw material 

goes to Buffalo and then by train to Montreal where it is containerized, or it goes to 

NYC or Philadelphia out of ports there. The main route to NYC now is Route 17 

(Corridor T) to 82. 

ß The Salamanca area is within the Seneca Nation reservation. It has reservationrelated development, primarily small shops selling tax-free gasoline and cigarettes. 

These businesses can benefit from higher traffic volumes in the Corridor.

ß Tourist attractions in the study area can benefit from the improved access provided by 

Corridor T. Attractions include the Allegany State Park which draws about a million 

visitors a year, and the Holliday Valley Ski Resort (the biggest private resort in the 

country) which draws about 500,000 visitors a year. The highway has reportedly had 

a large impact on Holliday Valley, which draws many visitors from Canada. There 

are a few other ski resorts in the area, some of which are reported to be affected by the 

highway. A significant amount of tourism activity in the summertime is focused 

around Chautauqua Lake, including the unique Chautauqua Institution, a retreat which 

reportedly attracts visitors from a wide area including New York City and Pittsburgh. 

The Zippo factory in Bradford, PA, a short drive from I-86, also draws a significant 

number of visitors. Tourism industry representatives believe that tourist travel may 

make up as much as one-third of all travel in the I-86 corridor. For this travel market, 

I-86 is a reliable and safe access route within Chautauqua and Cattaraugus Counties, 

and a vastly improved means of long-distance travel to and from Pennsylvania.

ß Residents of Jamestown and the surrounding area may benefit from easier access to a 

range of shopping locations. To the west, Erie, PA has large regional malls. Within 

the study area, Olean has strip shopping centers featuring Wall-Mart and Big K. 

Olean, Cuba, and Jamestown all have downtown areas with specialty stores. 

ß Although there is very little development at the Cuba and Bath interchanges, officials 

at the Southern Tier regional planning commission believe that there is a potential for 

development in these areas. 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group B - 8

Economic Growth Impacts to Date

• Highway Related Business. Traffic has doubled in the past 20 years, as the highway 

improvements have been phased in over that period. Truck traffic, in particular, has 

increased since the Southern Tier Expressway became designated as an interstate 

highway (see Section III). This is primarily evidenced by the emergence of new motels, 

restaurants, and gas stations at highway interchanges. New motels include Red Roof and 

Comfort Inn. New restaurants include McDonald's and Bob Evans. In addition, there are 

two new truck servicing businesses along the highway. Since the corridor is still not 

listed on interstate highway maps, even more traffic is expected once the new highway 

maps are distributed. 

• Manufacturers Relying on Truck Shipping. Since completion of the highway project, 

the following business attraction and expansion has occurred: 

o Juice Products --Cliff Star, a large juice processor , has located its world headquarters 

in the local area along the Corridor. Red Wing has solidified its plans to stay in the 

area. There has been some growth of small-scale wineries locally, but a decline in 

local wining acreage - it is unclear how much of this is related to transportation.

o Dairy Products-- Several local dairy producers, including Cuba Cheese and 

Friendship Dairies, are also expanding.

o Electronics -- There are also some small electronics firms in the area, such as Acme, 

Current Controls (an offshoot of Acme), ExelCo (which has a contract with the air 

industry), Dresen Rand (which works with oil companies as part of Ingerson Rand, 

and is moving its world headquarters to Olean soon). 

• Labor Impacts. From the perspective of people who commute from Erie, the main 

impact of the new highway is that it is faster to get to Jamestown and points east. 

However, few workers are thought to commute to and from Jamestown. Similarly, some 

people commute from Olean to Bradford and from Jamestown to Warren for work, but 

many were making the same commutes on the old roads, so while these people save time 

and expense, the impact of the highway is uncertain. 

• Retail Development. In the last five years there has been significant development in 

Olean on Constitution Ave., which runs parallel to Corridor T. A Wall-Mart, Big K, and 

related commercial stores have been established. However, it is unclear if these 

developments were related to the Corridor T, as they grew out of already existing 

development. The Interstate may make it easier to get supplies to the stores on 

Constitution Ave; however the development does not seem to be attracting traffic from 

the interstate.

• Other Development. A NASCAR racetrack at the interchange of I-90 and I-86 in 

Greenfield township will be the first significant development in Erie County since the 

highway's completion. The developer is putting in infrastructure with enough capacity to 

serve the surrounding area. Local officials expect more economic development once the 

area is equipped with proper infrastructure. 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group B - 9

B.6 Projected Opportunities

Existing Constraints to Economic Development

There are three main existing constraints holding back economic development along the 

highway:

(1) Land Use. Much of the land directly adjacent to the highway alignment is not available 

for development. The Salamanca stretch of the corridor it is Seneca Nation Reservation 

land, which imposes constraints to development. The Allegany State Park, also nearby along 

the Salamanca stretch, also inhibits development in its land. Finally, a large area of wetlands 

east of Chautauqua Lake also restricts development there.

(2) Transportation System. Improvements in North-South access are thought by local 

officials to be a remaining need which must be met in order for more significant 

improvements in the economy to occur. Plans are underway for an expansion of NY route 

219 which could have synergistic effects with Corridor T.

From the perspective of Erie city and county, additional economic impacts of the highway are 

also constrained by traffic bottlenecks that make it hard to get in and out of downtown Erie, 

and by a lack of infrastructure to support potential businesses in the surrounding area. No 

local infrastructure is in place west of the bridge at any of the highway interchanges, where 

the area consists of farmland and woods.

Finally, there is scheduled air service in the area, but it is fragmented. Some people from the 

study area use the Erie airport (which they access via the Corridor T) or the Buffalo airport. 

Some people use the Toronto or Cleveland airports. There is an airport in Jamestown but a 

lack of competition between airlines makes flights out of Jamestown more expensive.

(3) Labor Force. Following many years of stagnant or declining economic opportunities, 

young people tend not to remain in the study area due to a lack of significant job 

opportunities. 

Projected Opportunities, Given Current Constraints on Facilities

Given current constraints on the labor market and industrial park facilities, the ARC-OPPS 

model projects that development will likely focus on commercial and visitor-related 

activities. Projected growth is highest in the following industries: general merchandise sales, 

service stations and auto dealers, miscellaneous retail, eating and drinking establishments, 

and hotels and other lodgings. Table B-4 shows the estimated potential number of employees 

resulting from direct and indirect business attraction, given current constraints.
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group B - 10

Table B-4 Projected Growth Opportunities for Corridor T Area 

– Given Current Constraints

Potential No. of Employees

Direct Indirect

Business Business

Corridor T - Given

Current Constraints

Attraction Attraction

15 General contractors 0 11

16 Heavy construction 0 11

17 Special trade contractors 0 11

20 Food and kindred products 3 49

24 Lumber and wood products 21 1

27 Printing and publishing 4 12

30 Rubber and misc. plastics products 17 3

35 Industrial machinery and equipment 29 2

36 Electronic and other electric equipment 23 3

42 Trucking and warehousing 22 3

50 Wholesale trade - durable goods 38 36

51 Wholesale trade - nondurables 103 36

52 Bldg materials & garden supplies 54 0

53 General merchandise 194 0

54 Foods stores 109 0

55 Auto service stations 172 0

56 Apparel and accessory stores 52 0

57 Furniture and home stores 24 0

58 Eating and drinking establishments 350 0

59 Miscellaneous retail 194 0

60 Depository institutions 27 19

65 Real estate 1 81

67 Holding, investment offices 0 81

70 Hotels and other lodging 147 0

72 Personal services 15 0

73 Business services 26 104

75 Auto repair, services, parking 24 1

76 Miscellaneous repair services 17 0

78 Motion pictures 14 0

80 Health services 116 0

82 Educational services 82 0

83 Social services 41 0

87 Engineering & management 16 34

These results are generally consistent with local observations (previously described), which 

has been that the corridor has had several new hotels, restaurants, auto service stations and 

truck servicing businesses locate along the highway since its expansion to a four-lane 

freeway. There has also been significant expansion of electronics businesses and food 

products businesses since that time. Thus, the business sectors actually appearing along the 

highway were the same business sectors forecast identified as growth opportunities by the 

ARC-OPPS model. More warehousing is also expected to occur once the highway becomes 

more widely recognized as part of the interstate system. 

However, both the above model forecast and the actual experience to date have been subject 

to constraints concerning availability of infrastructure support for industrial parks, as well as 

labor skills. The next section discusses how much broader economic growth could be 

possible if those constraints are addressed. 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group B - 11

Projected Opportunities with Improved Industrial Infrastructure

If maximum efforts are made to develop industrial park facilities with supporting 

infrastructure, the ARC-OPPS model projects that other industrial development could occur. 

Projected growth opportunities would exist for industries including industrial machinery and 

equipment, furniture and fixtures, fabricated metal products, and electronic and other electric 

equipment. In addition, opportunities are projected for trucking and warehousing, wholesale 

trade in durables and non-durables, and business, health, educational, and social services. 

Table B-5 shows the estimated potential number of employees resulting from direct and 

indirect business attraction, assuming maximum efforts to alleviate current constraints.

Table B-5 Projected Growth Opportunities for Corridor T Area 

– with Infrastructure Improvements

Potential No. of Employees

Direct Indirect

Business Business

Corridor T - with Infrastructure 

Improvements

Attraction Attraction

15 General contractors 0 12

16 Heavy construction 0 12

17 Special trade contractors 0 12

20 Food and kindred products 8 49

24 Lumber and wood products 62 2

25 Furniture and fixtures 24 0

26 Paper and allied products 15 4

27 Printing and publishing 12 12

28 Chemicals and allied products 1 16

30 Rubber and misc. plastics products 51 6

32 Stone, Clay, and glass products 27 0

34 Fabricated metal products 26 10

35 Industrial machinery and equipment 87 3

36 Electronic and other electric equipment 68 7

42 Trucking and warehousing 22 8

48 Communications 0 27

49 Electric, gas & sanitary services 0 18

50 Wholesale trade - durable goods 38 53

51 Wholesale trade - nondurables 103 53

52 Bldg materials & garden supplies 54 0

53 General merchandise 194 0

54 Foods stores 109 0

55 Auto service stations 172 0

56 Apparel and accessory stores 52 0

57 Furniture and home stores 24 0

58 Eating and drinking establishments 350 0

59 Miscellaneous retail 194 0

60 Depository institutions 27 20

65 Real estate 1 82

67 Holding, investment offices 0 82

70 Hotels and other lodging 147 0

72 Personal services 15 0

73 Business services 26 110

75 Auto repair, services, parking 24 1

76 Miscellaneous repair services 17 0

78 Motion pictures 14 0

80 Health services 116 0

82 Educational services 82 0

83 Social services 41 0

87 Engineering & management 16 35
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group C - 1

Appendix C: Corridor V Case Study 

The purpose of this case study was to examine an area in which a highway project has been 

planned but not yet implemented, in order to demonstrate how the spreadsheet model can 

make estimates of the potential results of a future project.

C.1 Case Study Area

On the western edge of the Appalachian Region, Pontotoc County is officially designated as a 

transitional county which is not yet competitive with U.S. averages. There is optimism 

among local leaders about Pontotoc’s opportunities for growth, and this study is designed to 

forecast the potential opportunities from a planned highway improvement that would increase 

Pontotoc’s accessibility. The city of Tupelo, about 18 miles east of Pontotoc in Lee County, 

has demonstrated significant growth in the past several years, and there is optimism among 

local leaders about the possibility for Pontotoc County to benefit from its proximity to 

Tupelo. Exhibit 1 shows Pontotoc County’s position in Northeastern Mississippi.

Exhibit 1 Pontotoc and Corridor V

 completed highway

 2-lane portion

Corridor V

Appalachian Corridor V runs east to west from South Pittsburg, TN (west of Chattanooga) 

through Northern Alabama and into Northwestern Mississippi; however, this study focuses 

on a segment of Corridor V from Tupelo, MS in the east to Pontotoc, MS in the west (see 

dotted line in Exhibit 1 above). The planned upgrade of this portion of Corridor V, a 2-lane 

rural highway, would complete a four-lane connection between I-55 at Batesville and U.S. 45 

near Tupelo. The new segment of Corridor V is expected to decrease travel times to Pontotoc 

from Tupelo and points north, south, and east of Tupelo, and to result in a significant increase 

in the amount of pass-by traffic through Pontotoc County and City. 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group C - 2

Pontotoc County

Although the segment of Corridor V from Pontotoc to Tupelo includes traverses Pontotoc 

County and a portion of Lee County, this study focuses on Pontotoc County, which stands to 

benefit from a more efficient connection to rapidly growing Tupelo in Lee County. For this 

study, Pontotoc County is compared to Lee County (which lies directly to the east), Lafayette 

County (which lies directly to the west) and Panola County (which borders Lafayette county 

to the west and through which I-55 runs north to south). 

Although the population of Pontotoc County was estimated (at 25,685) to comprise just under 

one percent of the total Mississippi population in 1999, it grew 15.5% between 1990 and 

1999, more than twice as fast as that of Mississippi state overall. In addition, the median 

household income of Pontotoc County in 1995 was approximately $27,409, slightly higher 

than the $26,501 average for Mississippi state. 

The City of Pontotoc, in which the county’s employment is concentrated, is expanding 

geographically as well as showing signs of economic growth. It recently annexed a plot of 

land to the north of the city, and local officials believe it will eventually annex all the land 

between the city and the major highways to the north and east of the city. 

C.2 Regional Economy

The extent to which improvements to a highway will generate opportunities for economic 

growth depend on several factors. Of great importance is the nature of the existing economy 

and its relationship to the wider regional economy, including the mix of industries and 

industry trends.

Business Mix and Trends

The furniture and fixtures industry continues to dominate the Pontotoc economy: in 1997, 

over 50% of the county’s workforce were employed in the industry. The industry showed 

overall growth from 1993 to 1997; in fact, the furniture and fixtures industry gained the most 

employees (+940) of any industry during this time period. Lumber and wood products 

(6.0%) was the second largest employer in the county and also showed the second highest 

growth from 1993 to 1997, gaining 180 jobs. 

Although the economy continues to be led by traditional industries, other industries are 

becoming increasingly important. In 1997, industries that employed large portions of the 

county’s workforce included food stores (3.6% of county employment), legal services 

(3.3%), eating and drinking establishments (3.1%), and general merchandise sales(2.6%). 

Furthermore, declines were noted from 1993 to 1997 in traditional industries such as apparel 

and textile products (-649 jobs) and rubber and miscellaneous plastics products (-478 jobs), 

further indicating shifts in the area’s economy.
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group C - 3

The ARC-Opps model compares the mix and trends of local industries (Pontotoc County) 

with those of industries in the comparison area (Lee, Lafayette, and Panola Counties). The 

following tables present a sample of industries classified by the ARC-Opps model into 

categories:

Table C-1 Local Economic Performance Findings

Strong, Stable Local 

Industries (A)

Local Industries Under 

Threat – May Need 

Attention (B)

Local Industries in 

National Decline -

Diversify (C)

Local Industries with 

Strength – Support (D)

Agricultural services

Lumber and wood 

Furniture and fixtures

Printing and publishing

Wholesale - nondurables

General merchandise

Foods stores

Auto & service stations

Non-depository institutions

Auto repair and parking

Social services

General contractors

Food products

Rubber and plastics 

Primary metal industries

Misc. manufacturing 

Trucking & warehousing

Eating and drinking 

Health services

Membership orgs

Engineering & mgmt

Paper products

Transportation equip

Instruments 

Apparel and accessories

Depository institutions

Misc. repair services

Insurance agents, brokers

Motion pictures

Medium Strength Local 

Industries, Possible 

Growth Opps (E)

Weak Local Industries in 

National Decline – Focus 

Efforts Elsewhere (F)

Emerging Local 

Industries – Nurture (G)

Weak Local Industries –

Possible Growth 

Opportunities (H)

Special trade contractor

Miscellaneous retail

Textile mill products

Electric, gas services

Heavy construction

Transportation services

Building & garden supplies

Personal services

Business services

Legal services

Stone, Clay, glass 

Communications

Wholesale - durables

Hotels, other lodging

(A) Strong, Stable Local Industries – have a substantially higher concentration of employment than the same 

industry in the comparison area, and are growing faster locally than nationally. 

(B) Local Industries Under Threat – have a substantially higher concentration of employment than the same 

industry in the comparison area, and are growing nationally while declining or growing more slowly locally

(C) Local Industries in National Decline – have a substantially higher concentration of employment than the 

same industry in the comparison area, but are declining nationally

(D) Local Industries with Strength – have a slightly higher or slightly lower concentration of employment than 

the same industry in the comparison area, and are growing faster locally than nationally 

(E) Medium Strength Local Industries with Possible Growth Opportunities - have a slightly higher or slightly 

lower concentration of employment than the same industry in the comparison area, and are growing 

nationally while declining or growing more slowly locally

(F) Weak Local Industries in National Decline – have a lower concentration of employment than the same 

industry in the comparison area, and are declining nationally

(G) Emerging Local Industry - have a lower concentration of employment than the comparison areas, and are 

growing faster locally than nationally

(H) Weak Local Industry, but Possible Growth Opportunity – have a lower concentration of employment than 

the comparison areas, and are growing nationally while declining or growing more slowly locally

There is one more possible category (Unstable Local Industry – Focus Elsewhere), but none of the industries in 

Pontotoc fall into this category. Industries in this category have a slightly higher or slightly lower 

concentration of employment than the same industry in the comparison area, and are declining nationally.
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group C - 4

Business Costs

A significant difference in the cost of doing business in two areas can give one an advantage 

in attracting business. For this study, because Pontotoc County and the comparison counties 

are all in northeastern Mississippi state, many factors that contribute to business costs (such 

as corporate income tax) are identical. However, there are some differences that distinguish

Pontotoc county from the comparison counties. 

Pontotoc County has a slight advantage in terms of sales tax rates. The Mississippi sales tax 

rate is 7%; however Lafayette County and the City of Tupelo each have an additional local 

sales tax of 2% on restaurants and on certain types of hotels and motels (hotels and motels 

with ten or more units in Tupelo and those with six or more units in Lafayette county). The 

City of Tupelo also charges an additional 0.25% on all sales and services. This may give 

Pontotoc county an advantage in attracting visitors to stay in hotels and motels or eat at 

restaurants. Although there are currently very few hotels and motels or restaurants in the 

county, the sales tax advantage may also present an opportunity for Pontotoc to develop its 

retail sector, which was classified by the ARC-Opps model as a "weak but possible growth 

opportunity" industry (see table in previous section).

 

Another advantage for Pontotoc in terms of business costs is that the City of Pontotoc does 

not have a property tax. (The city's fiscal revenue depends on user fees for natural gas, 

sewage, and water and on school and county taxes.) The absence of a property tax may help 

to attract businesses to Pontotoc City. 

C.3 Impact of Highway on Users

The primary access benefit for Pontotoc from the planned segment of Corridor V is faster 

east-west travel between Tupelo and Pontotoc. The Corridor also improves access to 

destinations east of Tupelo and West of Pontotoc, and establishes a 4-lane connection 

between I-55 and US-45.

 

Projected Change in Travel Times

The U.S. 6 improvements will improve travel conditions through Tupelo, reducing travel 

times from points north, south, and east of Tupelo to Pontotoc and points west. During the 

peak hours of travel, travel from Pontotoc through Tupelo takes upwards of 40 minutes. 

Based on discussions with staff from the Mississippi DOT, we estimate that the U.S. 6 

improvements will reduce travel times significantly. Estimated travel time benefits resulting 

from the new highway are shown in Table C-2 for selected towns.
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group C - 5

Table C-2 Projected Travel Time Improvements of Highway 6 for Selected Towns 

Town Travel Time (mins) 

to Pontotoc Before 

Improvement

Travel Time (mins) 

to Pontotoc After

Improvement

Percent Decrease in 

Travel Time

Baldwyn 63 43 31.7%

Fulton 70.6 50.6 28.3%

Marietta 73.9 53.9 27.1%

Nettleton 68.4 48.4 29.2%

Okolona 63 43 31.7%

Plantersville 60.8 40.8 32.3%

Saltillo 58.6 38.6 34.1%

Shannon 63.0 43.0 31.7%

Tupelo 32 12 62.5%

Verona 41 21 48.8%

Projected Change in Travel Volumes

The growth in Average Annual Daily Traffic (AADT) on U.S. 6 has been modest since 1990. 

Overall, traffic has grown at an average annual rate of about 2.0% per year. U.S. 6 near the 

Natchez Trace Parkway, on the western outskirts of Tupelo, has experienced the highest rate 

of growth since 1990, at around 4.5%. Average daily traffic on that section was 45,000 

vehicles per day, indicating a high likelihood of traffic congestion in the peak hours of travel. 

It is expected that the amount of traffic passing along Corridor V between Batesville/I-55 and 

Tupelo will increase substantially once there is a continuous 4-lane connection between the 

two points. An increase in pass-by traffic through Pontotoc County could be expected to 

generate opportunities for businesses that rely on pass-by traffic, and would also make the 

land near the highway more attractive as a business location.

C.4 Resources for Economic Development

The extent to which an area can benefit from opportunities arising from improved 

transportation and access connections also depends upon local resources for economic 

development. These include the availability of industrial land and building sites served by 

basic infrastructure, on existing economic development programs and capacity, and on other 

factors that make the area more or less attractive as a location for business activity.

Industrial Parks

Pontotoc has some capacity to attract industry, based on its available land and buildings. 

There are five industrial parks in Pontotoc county, three of which lie within Pontotoc city. 

One of these is full, and the remaining four have from 15 to 265 available acres. There are 

nine available buildings in the county ranging from 17,000 to 216,000 square feet. 
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Economic Development Research Group C - 6

Economic Development Programs

The Pontotoc County Chamber of Commerce and the Three Rivers Planning and 

Development District are the primary agencies responsible for promoting and managing the 

development of Pontotoc County. The Pontotoc County Chamber of Commerce serves as the 

local city and county development agency. The Chamber of Commerce is involved with 

housing development, development planning, business support, industrial recruitment, 

community promotion, education support, community beautification, downtown 

development, and other programs. 

The Three Rivers Planning and Development District (TRPDD) includes Pontotoc and seven 

other counties. The TRPDD office assists local areas with planning and economic 

development through the administration of several programs, including Economic 

Development Financing, Local Government Technical Assistance, Employment and Training 

Programs, and Computer Software Development and Support. 

Other Facilities and Resources

Northeastern Mississippi is rich in educational resources. The University of Mississippi (Ole' 

Miss) is located in Oxford, several miles west of Pontotoc in Lafayette County, and also has a 

branch in Tupelo. In Pontotoc County, the Pontotoc Ridge Career and Technology Center 

serves over 370 area high school students from North Pontotoc, South Pontotoc, and Pontotoc 

High Schools with courses in furniture manufacturing technology, automotive technology, 

metal trades, agribusiness, and other local trades. 

The public school system in Pontotoc is credited by local officials as the main draw for 

people who move to Pontotoc County. Both the city and county school system have had 

level 5 accreditation for over 5 years. With the westward spread of growth from Tupelo, 

officials report that many people move just over the Lee county line in order to take 

advantage of Pontotoc's good schools.

C.5 Projected Opportunities

ARC-Opps Model

The ARC-OPPS model was applied to forecast the types of new business activity that could 

occur as a result of the future highway project completion. These projections were designed 

to help local officials identify economic development opportunities, and thus target their 

efforts to help support future business attraction and expansion. Any actual future growth 

will depend on the availability of sites, supporting infrastructure and local business climate.

The model results indicated that the largest element of manufacturing growth resulting from 

the highway is likely to be in the furniture and fixtures industry, with additional growth 

opportunities for lumber and wood products, rubber and plastics products, and miscellaneous 

manufacturing industries. In addition, commercial/retail growth opportunities are projected 

for establishments including food and general merchandise sales, eating and drinking 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group C - 7

establishments, and service stations. Smaller opportunities are projected for the health care 

industry. A breakdown of the forecast economic opportunities is shown in Table C-3.

Table C-3 Forecast of Economic Growth Opportunities

Associated With Completion of Corridor V from Pontotoc to Tupelo, MS*

Potential No. of Employees

Direct Indirect

SIC Industry Business Business

Attraction Attraction

22 Textile mill products 4 23

24 Lumber and wood products 47 30

25 Furniture and fixtures 423 0

28 Chemicals and allied products 0 12

30 Rubber and misc. plastics products 24 19

33 Primary metal industries 7 17

34 Fabricated metal products 2 27

37 Transportation equipment 11 1

39 Miscellaneous manufacturing industries 16 0

42 Trucking and warehousing 8 10

50 Wholesale trade - durable goods 11 48

51 Wholesale trade - nondurables 21 48

52 Bldg materials & garden supplies 13 0

53 General merchandise 43 0

54 Foods stores 65 0

55 Auto service stations 29 0

56 Apparel and accessory stores 11 0

58 Eating and drinking estabs 43 0

65 Real estate 0 18

67 Holding, investment offices 0 18

73 Business services 3 32

76 Miscellaneous repair services 12 0

80 Health services 20 0

83 Social services 14 0

87 Engineering & management 3 13

Local Expectations

We can also learn about the potential impacts of the upgrade of the Corridor V segment from 

Pontotoc to Tupelo by assessing the impacts of the already completed upgrade of the Corridor 

from I-55 to Pontotoc. Since the construction of this 4-lane segment, there has been 

significant business development in Pontotoc County. Much of this development has been 

along Highway 15 between Pontotoc City and the intersection of Route 15 and Highway 76, 

and local officials believe it is primarily attributable to the four-lane upgrade. New 

businesses and facilities include:

• a new restaurant 

• a new medical center

• a new facility that will consolidate two existing facilities of Stayfast South and 

accommodate an expansion

• the 84 lumber company 

• several new used car lots

• a chiropractic clinic on Highway 76 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group C - 8

Local officials believe that businesses have been attracted to Route 15 and the surrounding 

area because of the quick access it provides to Highway 76 and from there to I-55 to the west, 

or along Route 9 to US 78 on the east. Officials believe that once the corridor is built from 

Tupelo (I-45) to Pontotoc, growth will move east along the existing Route 6 and along the 

new 4-lane segment.

Following are the key categories of business and personal travel that are expected to benefit 

from the highway project:

ß Furniture. Local expectations indicate that the furniture industry within Pontotoc 

County can expand its market and grow as a result of improved access to Interstate 

highways for distribution of their products. 

ß Automotive Parts. Improved access may help encourage diversification of the 

economy and in particular help attract automotive parts suppliers to Nissan plants. 

Local officials hope that existing industries can modify or alter their product lines to 

become suppliers to Nissan; for instance, it is possible that foam manufacturers, 

upholsterers of furniture, and some plastic parts manufacturers could produce supplies 

for truck seats. Pontotoc is located in between the Nissan headquarters in Smirna, TN 

and an upcoming truck assembly plant in Jackson, MS. Improved highway access in 

general could help enable Pontotoc to enter the supply chain, making parts that could 

be trucked to Jackson. 

ß Shopping. Residents of Pontotoc and the surrounding area may benefit from easier 

access to Tupelo, PA for shopping. Residents of Pontotoc, Tupelo, and other counties 

will benefit from faster commuting times. 

ß Labor Market for Manufacturing. Businesses in Pontotoc will benefit from a 

larger available pool of labor within commuting distance. Monroe County is one 

county in the surrounding area with a particularly high unemployment rate, and its 

residents may find more work in Pontotoc County once the highway is completed. 

The expectations of local economic development professionals are generally consistent 

with the opportunities forecast by the ARC-OPPS model. In particular, local expectations 

are confirmed by the model’s forecasts of growth in the furniture industry and retailing in 

Pontotoc County. The one partial except concerns automotive parts industries. The 

ARC-OPPS model forecasts a growth of 51 jobs in plastics, transportation equipment and 

misc. manufacturing – which are primary components of the automotive supply industry. 

However, that could be an under-estimate of the potential economic growth opportunity, 

as the Nissan factory locations were not included in the linkage areas selected for this 

study.

Existing Constraints

The region has a limited workforce; certainly not large enough to support the siting of a 

major auto assembly plant. A shortage of affordable housing in the area also makes it 

difficult to attract workers, many of whom live in Calhoun and Chickasaw counties to the 

south of Pontotoc. Monroe county, which would be better connected to Pontotoc following 
Handbook for Assessing Economic Opportunities from Appalachian Development Highways

Economic Development Research Group C - 9

the building of the Corridor V highway segment, has about 10% unemployment, so workers 

could in the future also be drawn from that area to Pontotoc County.

Local officials consider a good highway network to be fundamental for the future economic 

development of the area. They believe that Pontotoc and the surrounding area’s many 

strengths would be tied together and propelled into opportunities by future improvements to 

the region’s highway system. 
Basic Instructions for Use of the ARC-Opps Model

Software

To use the ARC-Opps model, you must have a spreadsheet software program. The model is 

designed for use with Microsoft Excel. While other spreadsheet packages may be able to read 

the model file, it is possible that the macros which are included in the model will not work. 

That may affect the graph the graph in Section 3 of the Output 1 tab and the category listings in 

the Output 2 tab. However, the final results shown in the Output 3 tab may still be correct.

Loading

First, copy the spreadsheet model file from the diskette onto your hard/C drive. We 

recommend that you save the model with a different name, and that each time you use the 

model you save it with a new name. This will allow you to perform multiple simulations and 

keep them in separate files. When you no longer need a simulation, you can delete that file.

Once you have copied the model onto your hard drive, start your spreadsheet software program 

(e.g. Excel) and open the model file. You may be asked whether you wish to enable macros 

when you open the file; if so, then click Yes or “Enable Macros”. 

Data Entry

You will notice that there are tabs along the bottom of the screen once the file is opened. The 

tab labeled START contains the instructions for the use of the model. There are three input 

tabs, Input-1, Input-2, and Input-3, where you will enter data. The data should be entered into 

the green cells. 

The tab labeled Assumptions contains assumptions about industries, their relationships to one 

another, and their dependence on highway infrastructure. You can change this information if 

you want to, though we recommend that you do not change it. 

There are three output tabs, Output-1, Output-2, and Output-3, where you will view results of 

the model’s calculations. 

Printing

Any of the Input or Output tabs can be printed simply by using the print function in your 

spreadsheet program.
Use of the ARC-Opps Model for 

General Economic Analysis (Non-Transportation Applications)

Although the ARC-Opps model was designed to identify potential growth opportunities 

resulting from transportation access improvements, it can be used to identify growth 

opportunities even when there has not been a change in transportation or accessibility. 

Input Data

To use the ARC-Opps model in this way, enter the requested data to the Input 1 and Input 2 

tabs. This data includes the following:

• The name of the study area

• The name of one to four areas to which you wish to compare the study area (Enter this 

information in the Linkage Area section of Input 1)

• Employment by 2-digit SIC for two years (the most recent year for which data is available 

and a year 5-10 years prior to the most recent year) for

1. The study area

2. The U.S.

• Employment by 2-digit SIC for the most recent year for which data is available for the 

comparison area(s)

Output Data

Then, look at the output information on the Output 1 and Output 2 tabs. This information 

includes mix and trend ratios for each industry, and a listing of potential employment growth in 

each industry, and can be used as follows:

• Mix ratios provide information about the concentration of employment in each industry in 

the study area relative to the concentration of employment in the same industry in the 

comparison area(s), as explained in Chapter 3 of the ARC-Opps Handbook. This 

information can be used to identify industries with potential for increased employment in 

the study area.

• Trend ratios provide information about the growth rate of employment in each industry in

the study area relative to the growth rate of employment in the same industry nationwide, 

as explained in Chapter 3 of the ARC-Opps Handbook. This information can be used to 

identify industries that are lagging in growth locally relative to their national growth rate, 

and which therefore may have potential for increased growth rates locally. It can also 

identify industries that are declining nationally; depending on their local concentrations, 

this information may be used to identify vulnerable local industries and to highlight the 

need for diversification away from these industries.

Cost-Competitiveness and Cluster Analysis

The ARC-Opps model includes an analysis of cost-competitiveness and of industry-buyer 

relationships that contributes to the identification of potential growth in each industry. 

However, the use of that information in the ARC-Opps model is contingent upon information 

on highway changes, and can therefore not be used as part of a general diagnostic analysis of 

local industry opportunities. Future versions of the ARC-Opps model may make the use of 

these segments of the local economic analysis possible.