Assessing the Regional Economic Impacts of Defense Activities – A Survey of Methods

Abstract

Defense activities exercised in a specific region may alter the region’s economic/performances. An accurate assessment of the potential economic impacts of defense activities within a specific area is therefore a valuable undertaking, especially for regional planners who may want to prepare for changes. The variety in the methodological landscape, counting, among others, input-output models, economic base models, Keynesian regional multipliers, fixed-effects estimators, and casestudy approaches inspired by geography, sociology, or political science may pose a dilemma. In this paper, we detail the historical and theoretical background of each method, as well as select exemplary cases where these methods were successfully or inappropriately applied. By examining old and “new” methods based on the extant literature in regional economics, we aim to construct a methodological typology that could be extremely valuable to all stakeholders.

Keywords: Defense activities, public planning, regional impact methods

JEL Classification: O18, R11, R15