Gross National Product has become a leading and well understood indicator of national economic activity since its inception in the 1940s. Between 1976-78, Regional Plan Association undertook a major effort to calculate the Gross Regional Product for the 31-county New York Urban Region and four of its subregions. This pioneering work in regional accounting was made possible by a grant from The Andrew W. Mellon Foundation.
The project results, including 70 statistical tables and numerous charts are being published in three issues of Regional Plan Bulletin under the general title The Region’s Money Flows: I. Government Accounts (July, 1977); II. Business Accounts (April, 1979); III. Household Accounts (forthcoming). Combined, they will also appear in book form. There will be an additional publication pertaining to the Region’s nonprofit organizations.
This issue of Regional Plan News represents a digest of the findings of the second volume of The Region’s Money Flows on Business Accounts. That volume portrays the Gross Product originating in the Region’s economy by industry, as well as the Income Gross Regional Product, which shows payments to labor, capital and other factors of production.
The third volume, now in preparation, will show Demand Gross Regional Product, emphasizing consumption by households and patterns of investment. It will also summarize the Region’s balance of payments.
The information presented in this series is new in many respects. Unlike all earlier economic studies of the Region, this study for the first time measures the output of the Region’s economy in dollar terms. It provides previously unknown measures of profit, depreciation and taxes by industry. It offers some crude measures of productivity, and it estimates total private investment in the Region.
The Gross Regional Product, as presented in this study, is broken down by three major components of the private sector: large national corporations, small business, and nonprofit organizations. This breakdown sheds new light on the strengths and weaknesses of the Region’s economy. The study also offers new insights on the issue of corporate headquarters relocation.
The accounting procedures used are those employed in the calculation of the Gross National Product in order to assure comparability. Thus, the caveats customarily used in interpreting the Gross National Product are applicable to this work as well. It is not a complete measure of regional production or well-being; its productivity indicators are rough and not so meaningful for the public sector. Furthermore, it does not teach us how to attain well-being at a minimum cost in resources. Still, income and product accounting has proven its worth at the national scale, and an extension of its process to the regional level can help to improve its decision-making.
A basic limitation of the study is that it portrays only two points in time: 1972 and 1975. The latter year was atypical because of the national recession. Obviously, instead of two snapshots in time, a film strip running for two decades would allow more dependable, comparative analysis. Regional Plan Association is seeking ways to provide for a periodic updating of the accounts. Yet, even short of that, the accounts are already finding application in economic studies and development efforts by several agencies in the Region.