Premium
DEFENSE‐SPACE EXPENDITURES AND WESTERN ECONOMIC GROWTH: THE NONMANUFACTURING IMPACT
Author(s) -
HOUSTON DAVID B.
Publication year - 1965
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1965.tb00913.x
Subject(s) - manufacturing , business , manufacturing sector , economics , labour economics , marketing
SUMMARY The five considerations just discussed– (1) the regional variation of direct defense contracts awarded to nonmanufacturing industries; (2) the special distribution and impact of R&D expenditures; (3) the varying proportions of value added in, and the indirect employment tied to nonmanufacturing versus manufacturing industries; (4) the possible variation in the input requirements from nonmanufacturing industries under defense versus nondefense contracts; and (5) the induced impact of nonmanufacturing defense expenditures – all encourage analysis of the nonmanufacturing sector separately from the manufacturing sector. The determination of whether or not this is necessary in a particular regional study should be one of the first questions decided. For example, having answered in the affirmative the basic question “Are aggregate defense expenditures a significant part of the economic activity in this region?” we should next examine the importance of the nonmanufacturing sector. If it is significant, then special studies are necessary. If direct awards to nonmanufacturing industries are not important, the fourth of the problems mentioned above remains, namely: Are there any unique indirect impacts on the nanmanufacruring industries as a result of defense contracts? The foregoing analysis has emphasized the need for studying nonmanufac‐turing industries in regional defense expenditure analyses. This of course is only a particular example of a more general problem. Whether the study is regional or national, defense oriented or not, it is generally the case that the nonmanufac‐ruring sectors (with the exception perhaps of agriculture and construction) are inadequately studied. All too often imputations take the place of observations, and heroic assumptions abound. This is particularly serious when we observe the high percentages of employment in SIC groups 40–89. Contemporary regional studies resemble icebergs, with small segments well perceived and outlined, but with larger parts obscured by the murky depths of proportionality and linearity assumptions. Input‐output analysis or variants thereof undoubtedly provide the most powerful framework for analyzing regional economic structure. However, the fact that this type of analysis is applied more easily to manufacturing industries than to nonmanufacturing industries, which produce less well‐defined goods and services, is not a sufficient reason to ignore the latter.