The economic base of rural areas: A SAM-based analysis of the Western Isles, 1997

A model based on social accounting techniques is used to quantify the relative importance of traditional and nontraditional elements of the economic base of rural areas. Empirical analysis is focused on the Western Isles, Scotland. The results highlight the importance of central government funding of public services. They also indicate that exogenous transfers of income direct to households support 8% of jobs and 7% of factor earnings in the region. It is argued that, in addition to industry structure and input-output linkages, rural economic-base multipliers depend on the demographic profile of the local population and the extent of interdependencies between local production and consumption.