specialties are called basic activities, and their consequentional activities are referred to as nonbasic or secondary activities. The basic industries are those that produce for export from the region, while secondary industries serve the local market. The basic activity is one that has exogenous demand (independent of the region’s level of activity), while nonbasic activity is endogenous (dependent on the region’s level of basic activity). An increase in the external demand for a basic industry’s good results in an increase in the activity of the nonbasic industries as well. A major tenet of the export-base approach is that when a basic industry grows, it will increase nonbasic economic activity?6 The size of the increase depends on the relationship between basic and nonbasic activities. It is the addition of basic employment that acts as a catalyst to increase the nonbasic employment. Thus, if growth is to occur, the basic component of employment is the driving force. Export-base theory and location theory are connected in four ways. First, economists are concerned with the factors that cause basic industries to locate in a region; thus, export-base theory may be considered an extension of location theory. Second, export-base theory, as an extension of location theory, emphasizes the role of the economic base in attracting capital. Capital flows to the regional specialties offer higher rates of return on investment. Also, externally supplied capital not only increases the productive capacity of the region, but it also improves the economic environment for future growth. Third, expanding export-base industries such as SPS may serve to attract other export industries causing still further growth. Fourth, secondary impacts (nonbasic employment and income) accentuate growth. Each of these effects will be examined in Sec. 3. It should be noted that we have empahsized that energy availability and price are important determinants of industrial location. However, by itself, energy may not be a sufficient incentive for industry to relocate. The importance of energy in effecting the relocation of economic activity and population can be assessed only through further research. It is especially important to examine the effect SPS generated electricity may have on industrial relocation and population redistribution.
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