Student Corner: Economic Base Theory & Red Springs: Does it work?

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Student Corner: Economic Base Theory & Red Springs: Does it work?

By CED Program Interns & Students

Published September 30, 2010

Lindsay Moriarty is a graduate student at UNC-Chapel Hill pursuing dual masters’ degrees in Health Behavior and Health Education and City and Regional Planning.  She is currently working with the Lumber River Council of Government through the Carolina Economic Revitalization Corps (CERC).

Recently in my economic development seminar, we read and discussed the arguments and wide-spread application of economic base theory.  Though I understood the tenants of the argument, I found it puzzling the idea that regardless of size, demographics, or context, that the basic sector should always be considered the engine for economic growth.

Having worked in eastern North Carolina all summer, I couldn’t help but question the relevance of this theory to towns that offer little in the way of exportable goods.  Using my experiences in the towns of Red Springs, I’d like to explore how economic base theory fits in with current economic development plans, restraints, and the realities of this community.

Like many small towns, Red Springs is undergoing gross economic change.  In addition to a dwindling population and tax base, Red Springs faces a number of quality of life issues including low performing public schools, a largely low-income, low-education workforce and minimal public resources and amenities.  Combined with low capacity, these issues have prevented Red Springs from fully realizing their revitalization potential, and have left them at odds with what to do next.

Although the town manager is actively involved in efforts to recruit a new export industry, he has had little success thus far.  This begs the question, how is economic base theory relevant?  Should these efforts to develop the basic sector continue to be the primary strategy leveraged by Red Springs?  If so, which industry should they target in order to make this pursuit worthwhile?

An alternative way of examining how export base theory applies to Red Springs is to examine the growth of the basic sector at a more regional-level.  Red Springs is 30 minutes from Fayetteville and Fort Bragg.  Unlike Red Springs, these areas continue to experience growth and have already developed a strong basic sector.  Keeping this in mind, is it more appropriate to frame economic development from the perspective that these larger areas will be the engines for growth for the region, thereby creating a spill-over effect that Red Springs may experience in the form of demand for their non-basic sector?  If so, perhaps it would be more advantageous for Red Springs to invest in local-serving businesses such as restaurants and cafes, grocery stores, drycleaners, pharmacies, boutiques, theaters, parks and recreation and ‘the arts’?  An economic development strategy of this nature plays to Red Springs’ strengths, and could focus on entrepreneurship, downtown revitalization, and in essence, making Red Springs a more happening place to live.

Throughout the summer, I struggled with questions like these.  To me, the economic base theory does not fit Red Spring’s model for growth, unless considering the region at large.  At the local-level  it seems unrealistic and misguided, and does not adequately take into account the individual context of small, rural towns.