Mark C. White

Troy D. Mix

Analyzing Economic 

Diversity: Demonstrating an 

Economic Diversity Webtool

March 11, 2014
About the project

• Research sponsored by 

the Appalachian Regional 

Commission

– Quantitative and 

qualitative research

– Guides for Action

• Motivation:

– Appalachia’s legacy of low 

economic diversity

– Little practical guidance for 

communities pursuing 

diversification

• Lead research 

organizations:

– University of Illinois at 

Urbana-Champaign’s 

Regional Economics 

Applications Laboratory

– Center for Regional 

Economic Competitiveness

• Research support from:

– RUPRI Center for Rural 

Entrepreneurship

– EntreWorks Consulting
Webinar Agenda

• Defining economic diversity

• Broad trends in economic diversity

• Demonstrating an economic diversity webtool

• Questions
Defining economic diversity

• Entropy measure of diversity

• Diverse places have:

– Employment in more categories

– More evenly distributed employment across 

categories

There are i=1 to k categories and 

piis the share of employment in 

the ith category

Data source: Employment by county and industry, 

Economic Modeling Specialists International, 2009 & 2012.
Three perspectives on diversity

• Industrial – 1,110 detailed industries

– Aircraft manufacturing

– Paper mills

– Architectural services

• Functional - 11 industry groups with similar inputs and final markets

– Engineering-intensive manufacturing

– Capital-intensive manufacturing

– Knowledge-intensive business services

• Occupational – 96 occupation groups with similar skill requirements

– Assemblers and fabricators

– Secretaries and administrative assistants

– Top executives
Urban counties tend to be more 

diverse

Low diversity counties

tend to be rural

(avg. pop. ~7,700)

High diversity counties

tend to be urban

(avg. pop. ~425,000)
Complex connections between 

economic diversity and outcomes

• Montour county, PA

–Low functional diversity

–HQ county of medical center

• Garrett county, MD

– Above average functional 

diversity

– Diverse strategies helped 

recover from economic 

shock in the mid-1990s

• Rutherford county, NC

– High functional diversity

– Declining base of 

manufacturing
Regional centers can influence 

effective county diversity

• Most counties lose 

more commuters 

than they gain

• Commuters flow 

toward diversity

• Specializations in 

regional centers play 

outsized role
Diversity’s role in economic 

development practice

• Good diversification strategies implement many successful 

specialization strategies simultaneously

– The goal is multiple specializations, not just a generic mix of industries

• Diversity is a scale dependent concept

• Places pursue diversification to help mitigate risk and take 

advantage of opportunities

• Achieving diversity requires sound economic development practice

– Establishing a process that enables the pursuit of a long-term vision 

– Thinking and operating regionally

– Working across silos

– Possessing strong regional leadership

– Being data-driven
The Diversity Webtool

• The tool helps practitioners be more data-driven 

in how they think about economic diversity

• The tool provides data, indicators and 

visualizations to help practitioners:

1. Understand basic growth trends,

2. Consider their community and region’s economic 

diversity, and

3. Identify other places with similar economic 

conditions.
We will cover four simple scenarios to 

demonstrate application

1. How is my economy doing? Relative to who?

2. How diverse is my economy?

3. How diverse is my workforce?

4. What counties have similar economies to my 

own?

• On to the tool:

– http://economicdiversityinappalachia.creconline.org/
To learn more about Economic 

Diversity

• Study results are available here:

– http://www.arc.gov/research/researchreportdetails.asp?REPORT_ID=108

• The summary report

– http://www.arc.gov/assets/research_reports/EconomicDiversityinAppalachiaStatisticsStrategiesandGuidesforAction.pdf

• Supporting documents

– Statistical portrait

• http://www.arc.gov/assets/research_reports/EconomicDiversityinAppalachiaStatisticalPortraitofEconomicDiversityinAppalachia.pdf

– Case study report

• http://www.arc.gov/assets/research_reports/EconomicDiversityinAppalachiaCaseStudiesinEconomicDiversification.pdf

– Guide to using the webtool

• http://www.arc.gov/assets/research_reports/EconomicDiversityinAppalachiaPractitionersGuidetoEconomicDiversityWebTool.pdf
Thank you! Questions?

• Data/metric-related questions:

– Troy Mix: troymix1@illinois.edu

• Diversity/webtool-related questions:

– Mark White: mwhite@crec.net

• For ARC-related questions:

– Kostas Skordas: kskordas@arc.gov

– Julie Marshall: jmarshall@arc.gov