THE ENVIRONMENTAL SCAN — ANALYZING THE LOCAL ECONOMY

Strategic planning is based on an objective assessment of the economic characteristics of the local community and its place in the regional economy. Here we focus on two central tasks:

1. Analyzing the demographic and economic structure and the physical environment of the municipality and preparing a community profile.
2. Evaluating the city’s existing business climate through a business attitude survey.

The first task makes use of regularly published data to identify economic characteristics and recent trends. The second involves a survey of major employers and entrepreneurs to gain insights into specific strengths and weaknesses of the local business environment. The data analysis required to produce the community profile should be sufficiently comprehensive to enable the Commission to agree on the critical issues affecting the city´s development.

In the absence of members with backgrounds in economics or planning, the Strategic Development Commission may have only limited capacity to collect and analyze data. However, there are sources of much useful information. City Hall departments will be essential sources of information, and department heads should be invited to serve on the community profile sub-commission. Local universities are another source of assistance. They can offer research and planning services to local communities and will be willing to serve on this sub-commission.

Community Profile

Commission members are informed citizens and, therefore, have their own “databases,” based on their professional or personal experience. They also have subjective opinions on almost everything concerning their city. In contrast, the community profile is an objective view of the community — a collection of a wide range of information based mostly on statistical measures and key economic indicators.

The profile should also explain the relationship among the various characteristics and economic indicators, for example, the relationship between demographic trends and labor market or the relationship between labor market development and the structure of the economic base.

Deciding on the geographic area of local economy. Economic development strategic plans are usually prepared for administrative areas allocated to cities by physical law, because these are the spheres of their influence. However, the community’s economy is usually related to, and influenced by, nearby smaller communities and administrative units that may also be dependent on the city’s economy. Therefore, it is necessary to define the local economy and then also describe it — in a larger sense than the administrative borders of the city.

In assessing their local economies, municipalities will need to compare and evaluate local data with the larger area of which they are a part, i.e., the raion or oblast. This is necessary for two reasons:

1. A smaller community is almost always strongly affected by trends and events outside its borders.
2. Economic data for smaller municipalities is quite limited. Most economic data is available only at the raion and oblast level.

Much necessary information will be inevitably collected only at the raion level. However, since many local economies extend beyond the city’s administrative borders, a valid approximation of the borders of the economic area may be based on work-commuting patterns. In such cases, it is reasonable to use the raion data, which may be more relevant than the selected municipal data.

Data Requirements. The following data categories will be useful in conducting community assessments:

• Population, education, and housing.
• Labor market and unemployment.
• Employment structure and earnings.
• Structure of local economy and major employers.
• Infrastructure.
• Environment.

These data can be complemented by information on the range and quality of local public services. This impacts the image of the city and its economic development potential and reflects how local businesses and potential investors perceive the city.

Framework for Analysis. Quantitative analysis can be limited to current levels of key economic and demographic indicators and trends. Meaningful interpretation, however, requires comparisons with levels in the regional and national economies and analysis of trends over time. Comparing the municipality's data with that available from the oblast or national level will be very useful, as will comparing the data to similar-sized cities with which the community competes for jobs and investment.

Trend analysis requires collecting comparable data for at least two points in time. Care must be taken to identify intervals long enough to capture important changes.

The objectives of local economic analysis are:

• To evaluate local indicators and trends and compare them with regional and national data to determine the differences and commonalties of local economic growth.
• To identify local specifics — unique features of the local situation — which may be the comparative advantages or threats.
• To analyze local economic structure and mutual relationships of the industries and topics described in the profile.

Sources and Uses of Data

There are two principal resources for gathering the data: (1) the Statistical Office, and (2) various authorities and businesses where more current and detailed data can be obtained. However, the latter may be more difficult to access. To the extent possible, this data should be obtained for both the city and the oblast for at least one of the previous five years and for the most recent year available. This will establish a benchmark for future trend analyses.

The principal source of information is the Statistical Office. In addition to the its headquarters, the Statistical Office maintains regional offices.

Other local institutions gathering data about local economy:

• National Labor Offices.
• City Hall departments.
• Local businesses, operators and owners of infrastructure — individual data collections unavailable elsewhere.

In dealing with these institutions, it is necessary to rely on their willingness to cooperate, because they are not required to share these data, which may be considered nonpublic. It is, therefore, necessary to request assistance on an individual and personal basis.

Community Profile. The collected information and data analysis will become the community profile. The profile will be a collective effort of the Strategic Development Commission and will serve as a reference for the members as they discuss and reach consensus on the critical issues facing their community. The profile will also be used in the SWOT analyses. Identification of characteristic features of the local economy and evaluation of development trends in comparison with the national trends are essential elements of the analyses.

The profile is important because each member of the Commission, being a resident or employer of the municipality, will naturally have his or her own attitudes and impressions concerning the city’s economic conditions. However, to reach consensus on the issues that must be addressed in the strategic planning process, the members' individual biases must be tempered by access to a shared factual background regarding demographic and economic trends, infrastructure, environment and other relevant information.

The Community Profile should include the following:

Introduction

1. History: Focus on past 50-70 years, including events that formed city’s current economy.
2. Geography: Description of region and city within region and state; administrative position of city.
3. General description: Area, size, urban structures, specific and unique features.
4. Population: Density, urbanization, settlement structure within the region/district and role of city as regional center.
5. Long-term demographic trends.

Population

1. Analysis of population
   • Growth trends since 1960, detailed since 1995; structure of population change, including migration, births, deaths.
   • Gender.
   • Age.
   • Ethnic origins.
   • Education levels within basic education categories, differentiated between men and women.
   • Population prognosis.
2. Comparisons of migration pattern of Ukrainian cities of comparable size, with which the municipality competes.

Households and Housing

1. Households
   • Number of households.
   • Number of people per household.
2. Housing
   • Comparisons of rentals with ownership.
   • Structure of housing.
   • Vacancy rates; availability.
   • Housing costs — rental and ownership.
   • Availability of sites and financing for construction of new residential units.

Employment and Income

1. Unemployment rates - current and trends; unemployment structure; job vacancies.
2. Income - by occupations and family units.
3. Structure of work force by occupation and industry.

Economy

1. Brief analysis of primary, secondary and tertiary sectors.
2. Employment and capital investment trends by sector.
3. Major employers by sector and number of employees.
4. Number of residential, commercial, and industrial building permits issued for each of last three years.

Infrastructure

1. Water supply and waste water treatment facilities.
2. Electric power and heating supplies.
3. Telecommunications.
4. Transportation facilities and networks.

Environment

1. Air quality.
2. Water quality.
3. Waste treatment and disposal.
4. Noise abatement.

It is appropriate to include in the community profile a separate section discussing any important aspect of the municipality's economy that may affect its development. For instance, in tourism centers, tourism development will influence the city's economic future, and therefore, should be assigned a separate chapter in the profile.

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