chapter  1
12 Pages

Competing Theories of Community Economic Growth and Decline

ByGerald L. Gordon

Theoretical constructs for forecasting economic success and/or economic decline were fairly basic. The first economic growth theory of renown was that of Thomas Malthus, who noted that population growth occurred in locations where people had expendable resources for non-essential items. More modern theories of economic growth and location suggest that the two primary inputs for economic growth are advances in technology and the availability of capital for research and growth. Economic Base Theory is that communities with an interest in attracting or growing businesses in a given line of work must provide them with the assets and amenities they require to be successful. Community growth and decline are largely due to differential growth rates based on the particular composition of industries the community hosts and the competitiveness of those industries in relation to those of other regions. The neoclassical model leads communities to gather in place the assets that firms expect in their locations of choice.