Abstract:
The purpose of this study is to evaluate the role of the agricultural sector's output and
trade on the economic growth and development of the State of Oregon. Economic base
theory is applied in the analysis of Oregon's Gross State Product (GSP) between 1977 and
1991. The basic sector is defined to include the agricultural sector, the forest products
sector, and all other manufacturing sectors.
A static Local Quotient method is utilized to define Oregon's exporting sectors. Linear
regression analyses are applied to measures of Oregon's exports, as well as the GSP of
total output, based on the economic base theory. The results of the Location Quotient
method using Oregon's covered employment data for the year 1991, indicate that the
agricultural sector is a net exporting sector, a criteria for establishing base industry status.
Regression analysis of Oregon's GSP, indicates that the aggregate manufacturing sector
(SIC 20-3 9), is significant in explaining changes in GSP as well as changes in the GSP of
all non-manufacturing industries. In contrast, the agricultural sector including
manufactured food products (SIC 20), is found to be relatively insignificant in explaining
variation in the State total GSP over the period 1977-1991. Foreign Direct investment is
also found to be a significant variable in explaining variations in state GSP over this time.
Conclusions remain guarded, however, due to relatively high collinearity among
explanatory variables.
Regression results to more directly measure economic growth based on first differences
in GSP indicate that the aggregate manufacturing sector is again statistically significant in
explaining variations in Oregon's non-basic industries GSP as well as the state total GSP.
On the other hand, the agricultural sector is found to be statistically insignificant in
explaining variations in the growth of Oregon's non-basic industries GSP, and the state
total gross state product over the study's period of time 1977-1991.
Data show that the agricultural sector constitutes the largest portion of Oregon's
foreign exports and has significant power in explaining the state total foreign exports.
However, comprehensive data is not available to establish total out-of-state exports.
Results of regression analysis of Oregon's total covered employment show that the
agricultural sector is significant in explaining variations in Oregon's total covered
employment, while manufacturing industries exhibit relatively low significance and
predictability in explaining Oregon's total covered employment. This apparent
contradiction in findings of the GSP model are attributed to the fact that employment is
not a good proxy for regional economic activity. A regression analysis of an alternative
specification of employment data based on payroll indicates that the aggregate
manufacturing sector is significant in explaining changes in Oregon's covered employment
payroll. In this model specification, the agricultural sector's total covered payroll is found
to be of only modest significance and exhibits substantially lower impact on Oregon's total
covered payroll.
