Chapter 3 Comparative Analysis of the Region’s Economy Mark D. Partridge C. William Swank Chair in Rural-Urban Policy Department of Agricultural, Environmental, and Development Economics, The Ohio State University John M. Ulimwengu, Ph.D. Consultant Executive Summary This chapter provides an assessment as to how the Alabama-Mississippi WIRED region is faring relative to the nation. Then, it identifies the region’s strengths and weaknesses to guide decision makers for the next policymaking steps. In particular, it examines the determinants of 1990-2004 employment growth, 1990-2004 population growth, and 2004 per-capita income growth at the county level in the WIRED region. A key feature is a decomposition as to how much a Alabama- Mississippi WIRED county's differential from the national average is due to its unique demographic characteristics, initial economic structure, and whether the county is simply faring better than what would be expected given its underlying characteristics. Specifically, the latter measure would be an indicator of how “efficiently” a county is utilizing its current economic, demographic, and social-capacity resources. The regional overview in section 3 describes how the Alabama-Mississippi WIRED region is mainly comprised of nonmetro counties and is highly manufacturing-oriented. In addition, relative to the nation, the WIRED region is characterized by low educational attainment as well as a low employment rate. More than 70 percent of WIRED counties have experienced 20 percent or higher poverty rate in each of the last four censuses, 1970, 1980, 1990, and 2000, which compares to about 12 percent for the US as a whole. Regression results suggest that remoteness from larger urban centers and the size of the nearest urban center play a significant role in promoting employment growth. Especially in rural communities, per-capita income is inversely associated with distance to larger urban centers. Likewise, the analysis indicates strong spillovers among neighboring counties. Overall, the findings suggest that there are economic gains to building regional critical mass and to form tighter rural-urban linkages. The statistical results of the county by county decomposition can be summarized as: • WIRED rural county employment growth lagged national employment growth during the 14 year spell by an average 14 percentage points, while average job growth in the region’s micropolitan and metropolitan counties lagged the national average by about 13 to 19 31