
DATE: Friday, November 21, 1997             TAG: 9711210662

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY MICHAEL CLARK, STAFF WRITER 

                                            LENGTH:   73 lines

STATE OUTPUT OUTRANKS AREA'S

Hampton Roads is a big piece of Virginia's economic pie. It's just not as big a piece as it used to be.

Since 1969, the region's contribution, or ``gross regional product,'' has declined from 23.2 percent of the ``gross state product'' to 18.8 percent, said Gilbert R. Yochum, chairman of Old Dominion University's economics department.

Comparing state and regional figures, Yochum said the 28-year decline happened ``in a fairly continuous manner.''

``Almost all of the decline occurred prior to 1989,'' he said. ``It falls fairly continuously in the '70s, begins to rise in the '80s, after the Iranian hostage crisis and an infusion of money into the military, then begins to fall in the late '80s and '90s. It falls in '96 to 18.7 and finally rises to 18.8 percent in 1997.''

The findings are the result of one economic measure leading to another.

Last week, Yochum and two ODU colleagues, Vinod B. Agarwal and Mohammad Najand, announced the development of their gross regional product for the local economy. On Thursday, they released the gross state product. Both measure the total output of goods and services.

The professors applied the technique used to develop the regional product to estimate the state product because the measure gives ``more of a real-time sense of what's going on,'' Yochum said.

Yochum said the numbers represent real growth rates, adjusting for year-to-year price changes.

John Whaley, economist for the Hampton Roads Planning District Commission, said the region's drop as a portion of the state economy isconsistent with a decline in population, he said.

``People live in proximity to economic activity,'' Whaley said.

Population growth in the region has slowed ever since defense cuts took hold in the late 1980s.

``When defense spending decreases, on average, we grow at 75 percent of the national (population) growth rate,'' Whaley said.

When defense spending increases, the area grows at 125 percent of the national rate, he said.

In addition to Hampton Roads' declining proportion of the state economy, the gross state product showed Virginia's economic growth rate has slowed to match the nation's since federal defense reductions began in 1988.

``What the data show is that the private sector is growing in the state like it is in the region,'' Yochum said. But it's growing faster in the state.

Hampton Roads' economic growth rate since 1970 is 3.14 percent, Yochum said. The average growth rate for the national gross domestic product over the same time has been 2.8 percent while the state has averaged 3.8 percent.

Part of the reason is that Hampton Roads has a mix of slow-growing industries, Whaley said.

Besides defense industry cuts, which Whaley said have twice the impact in Hampton Roads compared to the nation, tourism is not a rapid-growth industry. The port is doing well, but it has not fueled rapid growth in employment. ILLUSTRATION: IAN MARTIN/File color photo

The competitive travel and tourism industry...

ASSOCIATED PRESS/File color photo

Defense spending, which has twice as much impact on Hampton Roads...

MOTOYA NAKAMURA/File color photo

The port of Hampton Roads...

Graphic

ROBERT D. VOROS/The Virginian-Pilot

HAMPTON ROADS: A SMALLER PIECE oF VIRGINIA'S ECONOMY

SOURCE: Old Dominion University

[For complete graphic, please see microfilm] KEYWORDS: ECONOMY VIRGINIA HAMPTON ROADS

TOURISM