Bacon's Rebellion

James A. Bacon

Behind the Numbers

This page outlines the method I used to calculate the contribution of the Virginia Economic Development Partnership's announced deals to Virginia's economy.

Here was my question: How significant to Virginia's economy were the corporate expansion and relocation projects tracked by the Virginia Economic Development Partnership and its regional economic development partners? Did those deals account for a large percentage of Virginia's total economy growth, or only a modest amount?

The first task trick was calculating the total investment that all businesses made in Virginia every year. As far as I could tell from my Internet research, that number is not available. Here's how I derived an estimate.

The Bureau of Economic Analysis publishes a breakdown of "Gross Domestic Product" by state. From those numbers, I was able to ascertain what share of the national economy is contributed by Virginia (yellow column).

 

Virginia GDP as % of National GDP
(In billions of dollars)
Year	U.S.	Virginia	Va. %
1997	$8,238	$212	2.57
1998	8,680	227	2.61
1999	9,201	243	2.64
2000	9,749	261	2.67
2001	10,058	277	2.75
2002	10,398	286	2.75
2003	10,886	303	2.78
2004	11,634	325	2.80
2005	12,373	351	2.83
2006	13,149	369	2.81
Source: Bureau of Economic Analysis

Next, the Bureau of Economic Analysis publishes a statistical series breaking down the components of the national economy, including numbers for private, fixed, non-residential investment. The number excludes government investment and it excludes investments in residential housing, providing a good proxy for overall business investment. The BEA does not break down the number by state, so I applied the number derived above -- Virginia's share of national GDP -- to estimate Virginia's share of business investment (lavender column).

 

Virginia Business Investment (in billions of dollars)
Year	U.S.	Va %	Virginia
1997	$  968.7	2.57	$24.90
1998	1,052.6	2.61	27.47
1999	1,133.9	2.64	29.93
2000	1,232.1	2.67	32.90
2001	1,176.8	2.75	32.36
2002	1,066.3	2.75	29.32
2003	1,077.4	2.78	29.95
2004	1,154.5	2.80	32.33
2005	1,272.1	2.83	36.00
2006	1,397.7	2.81	39.28
(Gross private fixed non-residential investment)
Source: Bureau of Economic Analysis

Those are the numbers I used in the main article as a basis of comparison for VEDP-driven deals. They should be regarded only as a guesstimate, not a precise calculation.

-- October 1, 2007