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THE BASIC-NONBASIC CONCEPT OF URBAN
ECONOMIC FUNCTIONS
John W. Alexander
developed for applying the fledgling idea. that a part of manufacturing in every
In subsequent years the concept industrial city produces only for local
received attention in different disciplines consumption and that the most mean-
where scholars refined the theory or ingful map of a manufacturing region
added new concepts. The most thor- would locate concentrations of industry
ough analysis of this historical develop- producing over and above local de-
ment is presented in a recent series by mands. To arrive at some measurement
Professor Richard B. Andrews.5 of this (which actually could be termed
As far as the author has been able to "basic" manufacturing) the author
determine, the first geographer to apply mapped industrial wage earners for all
this idea to a specific city was Richard cities with over 10,000 population,
Hartshorne in a study of Minneapolis- subtracting from each city's total of
St. Paul published in the July, 1932, industrial wage earners a factor of
issue of the Geographical Review. On 10 per cent of the population. The
page 437 the author writes, "The con- assumption was that 1000 wage earners
version of this particular pair of towns in manufacturing would be required
. . . into a metropolitan district of to meet the needs of a city of 10,000
three-quarters of a million in 1930 was people. Hartshorne subsequently con-
based largely on the establishment of cluded7 that this factor was too high
that district in the period of rail con- and probably should have been 8 per
struction as the one all-important focus cent. Nevertheless his study was a
of rail lines of the central northwest. pioneer effort to measure what is herein
This may be readily seen from a brief termed "basic" effort, applying it to a
analysis of the external functions of the single type of endeavor, manufacturing.
urban district. In any city these tend The next advance in methodology
to be obscured somewhat by the large was an analysis of the economic func-
number of functions developed to serve
tions of Oskaloosa, Iowa by the research
simply the residents of the city itself.
staff of Fortune magazine.8 By measur-
In Minneapolis-St. Paul the 'internal'
ing the balance of payments between
functions employed, in 1919, more than
half the total number of men workers. Oskaloosa and "the rest of the world"
Of the remainder, the railroads, includ- they arrived at a distinction between
ing the car shops, employed more than the city's payments to local creditors
a fourth-by far the largest single and to nonlocal creditors.
group." The author does not explain A third advance in methodology was
how he determined these proportions. Homer Hoyt's outline of six steps for
That a city's economy consists of two measuring basic activity which appeared
components was obvious, but nothing in a book published in 1939.9 In ad-
appears to have been done in formulat- vancing this method Hoyt also suggested
ing a methodology for applying the new terminology: "urban growth " for
concept until Richard Hartshorne I Personal conversation with the author.
8 "Oskaloosa vs. the United States," Fortune:
worked on the United States manu- April, 1938, 55-62 ff.
facturing belt.6 IHartshorne reasoned 9Arthur M. Weimer and Homer Hoyt,
"Principles of Urban Real Estate," New York,
5 Richard B. Andrews: "Mechanics of the 1939. The criteria here quoted appear in the
Urban Economic Base," Land Economics, text in Chapter VI, "The Future Growth and
Vol. 29, 1953. Structure of Cities." For the background of
6 Richard Hartshorne: "A New Map of the Hoyt's experience which led to the formulation
Manufacturing Belt of North America," Econ. of his ideas see Richard B. Andrews' study in
Geogr., Vol. 12, 1936, pp. 45-53. Land Economics, 1953, op. cit.
THE BASIC-NONBASIC CONCEPT OF URBAN ECONOMIC FUNCTIONS 249
" basic " and " urban service " for " non- sidered as representing "urban growth"
basic." The six steps are as follows: employment.
1. From census reports, or from local 6. Total the figures arrived at in
sources such as chambers of commerce, paragraphs 2-5 above and compute the
local establishments, local trade associa- percentage which each type of "urban
tions, and employment offices, determine growth" employment represents of this
the number of persons engaged in the total. These percentages will indicate
principal types of employment. It the relative importance of manufactur-
may be necessary to use estimates in ing, extractive industry, trading, and
some cases, especially in communities the other types of activity in the eco-
for which there are few published nomic development of the city.
statistics. In 1942 Harold McCarty expanded
2. Determine the number engaged the concept to apply to regional econ-
in manufacturing, excluding those firms omies as well as community economies.
whose production is intended predom- He described basic-nonbasic activities
inantly for the local market. in relation to what he called the occupa-
3. Determine the number engaged tional pyramid: "The base of the
in extractive industry obviously in- pyramid consists of that group of
tended for the nonlocal market. occupations whose presence in the area
4. Determine the number engaged is not predicated on the existence of
in nonlocal governmental, transporta- other types of production. . . . The
tion, or communication services and the base of the pyramid dictates the pattern
number employed in lines of work of the remainder of the structure..
catering to amusement seekers, tourists, The workers in basic industries are not
or travelers. self-sufficing individuals, and the local
5. From published sources (for ex- economic organization must provide
ample, the periodical Sales Management) them with many types of goods and
determine the percentage of the national services including merchandising estab-
income that is earned by the city being lishments, as well as transport facilities,
analyzed. Then apply this percentage business, and personal services, and
to the total number of persons engaged each of these groups in turn requires
in trading, financing, professional, and workers to care for its needs."'0
related activities in the country, as J. H. Jones, in a volume on national
shown by the figures of the Bureau of planning for Britain's postwar recon-
the Census and the Department of struction of damaged cities, introduced
Labor. Assume that the number by the idea that city planners should give
which local employment in these lines priority to basic activities. " These
exceeds this percentage is "urban industries (including services) are the
growth" employment. For example, foundation upon which the town has
suppose 15,000,000 persons are employed been built, and may therefore be called
in these activities in the United States 'basic' industries. Their size will deter-
and that the city being analyzed has mine the size of the industrial structure
1 per cent of the total national income. and population of the town; no town
On this basis, it may be assumed that
can grow merely by adding to an
150,000 persons will be required to
already adequate supply of local indus-
perform the trading and related activi-
1OHarold H. McCarty: "A Functional Anal-
ties of the city. If 200,000 are so
ysis of Population Distribution," Geogr. Rev.,
employed, then 50,000 may be con- Vol. 32, 1942, pp. 287-288.
250 ECONOMIC GEOGRAPHY
TABLE I
EMPLOYMENT IN OSHKOSH AND MADISON, WISCONSIN
Oshkosh Madison
A. TOTAL Employment
1. Services......................................................... 3,100 14,500
2. Government .......... ....................................... 1,200 14,300
3. Manufacturing....... . ........................................ 8,200 12,100
4. Trade.......................................................... 2,700 10,200
5. Others...................8........0........................0...... 80 2,400
B. BASIC Employment
1. Services..........................................................900 4,500
2. Government . ....................................................... 120 11,300
3. Manufacturing................................................... 7,880 10,100
4. Trade ..... 950 3,000
5. Others ................... ....................... ............ 250 300
5900, the percentage breakdowns are As yet, this concept has not been
much alike. Table II and Figure 2 applied in the analysis of enough cities
reveal that in spite of differences in to produce much evidence about the
overall size, each city has exactly -the nature of B /N ratios. Moreover, the
same per cent of nonbasic employment few case studies available have em-
in trade (30 per cent), nearly the same ployed so many different methods for
in services (38 per cent compared to measuring the basic component that
41 per cent), and somewhat similar the resulting ratios are scarcely com-
percentages in government and manu- parable. However, studies by the same
facturing. Thus, Table II and the analyst employing the same method-
graph of percentage employment in ology in the case of the two cities
nonbasic activity are remarkably sim- already cited (Oshkosh and Madison)
ilar. To be sure, evidence from just revealed that the B /N ratio varied from
two cities is insufficient to warrant the 100: 60 to 100: 82 (Table I). Madison's
conclusion that nonbasic structures are nonbasic component is a third greater
constant from city to city. Neverthe- than that in Oshkosh. Obviously, the
less, the facts on Oshkosh and Madison ratio can vary considerably. More
are presented to suggest that if nonbasic detail on its variation is presented in
structures are similar from city to city the following section on specific case
then they definitely should be isolated studies. With the limited information
so that any functional classification of as yet available it seems plausible that
settlements can be based on the basic urban geographers will find the B /N
functions which do differ from city to ratio a useful criterion for the compara-
city without being confused with func- tive study of cities.'6
tions which are not much different. (4) Provision of the B /N ratio also
In any case, nonbasic activity should enables a new classification for indi-
be culled out in order to provide an vidual economic endeavors. To illus-
unobstructed view of the city supports, trate, a business which makes all of
those activities which connect a com- its sales to the local market is distinctly
munity with its supporting territory different from one which makes all its
and therefore serve as the best criteria sales to the outside market. Both
for a geographical classification of cities businesses might be factories. The
in terms of function. traditional method of classifying eco-
(3) The basic-nonbasic concept pro- nomic activities would consider them
vides a new ratio which may have to be in the same category: namely,
significance in differentiating types of manufacturing. And yet, in terms of
cities. This is the "basic-nonbasic spatial relationships with market areas
ratio" which, for short, can be termed they are opposites; one is basic activity,
the "B/N" ratio. Suppose, for ex- the other is nonbasic. One is tied to the
ample, that a city has a total of 50,000 local region for its sales; the other is
people employed, with 25,000 engaged tied to the surrounding region.
in basic and 25,000 in nonbasic activity. A second illustration: A mail order
The B/N ratio then is 100: 100, which establishment employs 1500 people who
means that for every 100 basic employees
16 Homer Hoyt, leading student and advocate
there are 100 nonbasic employees. But of the basic-nonbasic concept, says, "I believe
another city also with 50,000 employees that every city has its own distinctive ratio
between primary and secondary employment
might have 30,000 basic and 20,000 or between basic and nonbasic." (From per-
nonbasic giving a different ratio: 100: 66. sonal letter to the writer, December 27, 1952.)
254 ECONOMIC GEOGRAPHY
?/O8 Basic
Basic
50i5%~50 c
FIG. 3.
THE BASIC-NONBASIC CONCEPT OF URBAN EcONOMIlc FUNCTIONS 255
university, if over 75 per cent of its with other areas, by providing a regional
service is in response to a demand from service criterion for classifying cities
the non-local market region it is in in terms of regional function, by provid-
category B (Basic). Category Bn ing the B/N ratio as another criterion
(mostly basic, but at least 25 per cent for distinguishing between cities, and
nonbasic) includes stores, factories, the- by a new method of measuring indi-
atres, and other enterprises which bring vidual business firms-the basic-non-
in more money from the outside than basic concept contributes to the geo-
from the city but are more dependent graphical understanding of cities.
on the nonbasic market than is category
B. The two remaining categories de- APPLICATION OF THE BASIc-NONBASIC
basic component so that the ratio might be ascribed to basic effort. See
becomes 100: 65. Table III in this article.] . . .
Another early effort to measure basic "In each occupational group the
endeavor appears in Harris' study of relation of the total employed in Salt
Salt Lake City. In this, his Ph.D. Lake City to the total employed in the
dissertation at the University of Chicago state gives a clue to the regional im-
in 1940, Harris observed, "The im- portance of the city in that occupation.
portant basic occupations of the city . . . [E.g., Salt Lake City contains
are those which serve the hinterland 28 per cent of Utah's population but
as well as the city. Two measures of 71 per cent of the state's employment
the extra-city function in any given in wholesale trade.]18
occupance are (1) the number engaged In 1944 Homer Hoyt applied to
beyond the estimated local needs of the New York City the method he proposed
TABLE III
GENERAL OCCUPATION ANALYSIS OF SALT LAKE CITY*
54,069 10.100
city and (2) the per cent of the total in the 1939 edition of the textbook
state employment concentrated in Salt already cited.'9 Employed by the
Lake City. Regional Plan Association of New York
"The criterion of employment beyond to make an economic base study, he
local needs suggests that about 10,000 determined that for every 100 basic
of the 54,000 people employed in Salt employees in Greater New York there
Lake City are engaged in activities of were 215 nonbasic employees. He
primary regional significance.... The explains his method as follows: "For
other 44,000 are of local or secondary wholesale trade it was assumed that
regional significance in that they serve all the workers in the Region in excess
partly the population of the immediate of the number of wholesale workers
hinterland of Salt Lake County and employed on the average by the same
partly the people of the city or county population in the United States outside
who are engaged directly in regional '8 Chauncy Harris: "Salt Lake City, A Re-
activities. [Thus there are at least gional Capital," University of Chicago, 1940,
10,000 basic employees, and a portion pp. 8-9.
19Wiemer and Hoyt, "Principles of Urban
of the remaining 44,000 apparently Real Estate."
THE BASIC-NONBASIC CONCEPT OF URBAN ECONO-Iic FUNCTIONS 25 7
the Region, could be attributed to ponent. Or, the ratio could be 100: a
wholesale activities for the benefit of figure less than 215.21
persons outside the Region. For manu- Also in 1944 the Detroit City Plan
factures it was estimated that the Commission issued its Economic Base of
New York Region would consume its Detroit which states that for every 100
share of the total national production primary employees in Detroit the city
based on its percentage of the total has 117 secondary employees. No spe-
United States population (9.8 per cent) cific explanation is made of the method
or purchasing power (14.7 per cent), by which these ratios were determined,
and that the excess of its production but it appears that all manufacturing is
above this percentage of the national considered to be primary and that all
production was attributed to production other employment is considered to be
for persons outside the Region. For secondary.22 Indeed, "service" activi-
clothing it was assumed that the New ties are specifically declared to be en-
York Region consumed slightly more tirely secondary, "Detroit has no
than its percentage of the national primary employment in services."23
income, or 15 per cent, because expendi- An analysis of Cincinnati in 1946
tures for clothing tend to increase with sponsored by the City Planning Com-
income; but for food it was assumed mission, with Victor Roterus as research
that the New York Region consumed director, estimated -that the ratio was
more than its percentage of the total 100: 170 between " urban-growth "
population but less than its percentage (basic) and "urban-serving" (nonbasic)
of the national income. In this manner, activity. The ratio was derived by
the number of persons working in New much the same technique as that used
York for persons outside the Region, by Hoyt in New York, "Urban-serving
was calculated, and it is estimated . . . employment for each activity can be
that approximately 1,500,000 persons, calculated by assuming that the popu-
or about 32 per cent of the total number lation of the area will consume its
proportionate share of the national
employed in 1940 in the Region, were
production of goods and services. For
working on goods or services to be sold
example, if in the United States in
outside the Region. This means that
1940, 25.2 persons per 1,000 population
for every 100 persons so engaged,
were employed in supplying professional
another 215 persons are employed in
services, then professional employment
local manufacture or in service lines."20
in the same ratio (amounting to 19,830)
Hoyt later concluded that the nonbasic
in the Cincinnati area would be classed
component of this ratio was too high
as urban-serving. Employment above
because many people were on relief.
the figure would be considered urban-
Since relief payments are a form of
growth (serving persons outside the
basic support, they could be considered
area)." This study made clear that
to represent the equivalent of a certain
the formula would have to be varied
amount of basic employment. Thus
with each activity because urban con-
the 215 nonbasic employees in the
21 Personal letter to the writer, December 27,
foregoing ratio should be linked with a
1952. Mr. Hoyt credits Professor Richard U.
figure exceeding 100 for the basic com- Ratcliff with observing this discrepancy in
the ratio.
20
Regional Plan Association of New York: 22 Detroit City Plan Commission: "Eco-
"The Economic Status of the New York Metro- nomic Base of Detroit," 1944, pp. 5, 47.
politan Region in 1944," p. 6. 23 Ibid., p. 15.
258 EcONoMIc GEOGRAPHY