Using our online array of 3142 county-level I/O models and applying diagonalized vectors of final demand to each model, we can provide improved contribution analysis for all US counties in a way that compares a region's gross and base output (see Figure 1). With this approach, regional competitive advantage can be inferred from the interaction between gross and base measures of output.

Their relative abundance is interpreted as contributions to export expansion associated with base output, i.e., bringing money into the economy and import substitution with gross output, i.e., keeping money in the economy. The measures of output are the effective number of sectors derived from the antilog of the Shannon index of the sector output shares. A pattern of economic development is suggested by correlating the number of sectors and income. These results are derived from data on 3,142 U.S. counties, for 5 sectors and nine household and in one year—2012 (see Figure 2).

The approach appears mathematically coherent, statistically correspondent, simple and workable. The approach could be a way to test theories of economic development using I-O data to link net export expansion and import substitution sectors. It could also be used as a bench mark for regional development decisions to know where they stand and to suggest strategies for further development.


FIGURE 1. Gross vs Base Output Comparison


                    FIGURE 2. Shannon-Weaver Diversity Indices for US Counties