Ruhr Economic Papers

Ruhr Economic Papers #417

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

by Josselin Droff and Alfredo Paloyo

RWI, 06/2013, 35 S./p., 8 Euro, ISBN 978-3-86788-472-3 DOI: 10.4419/86788472



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.

JEL-Classification: O18, R11, R15

Keywords: Defense activities; public planning; regional impact methods