In economic base analysis, what does a ratio greater than one indicate?

In economic base analysis, what does a ratio greater than one indicate?

• A. It indicates exporting
• B. It indicates importing
• C. It indicates no relation
• D. It indicates data error

Answer: (A)

In economic base analysis, activities are split into basic (export-oriented) and nonbasic (local-serving). The ratio compares the size of the export-oriented portion to the local-serving portion. If this ratio is greater than one, the export-oriented sector exceeds the local-serving sector, meaning the economy earns more from outside markets than it spends on local demand. That indicates the area is a net exporter. A ratio equal to one would show a balance, and a ratio below one would suggest the economy is more locally driven and less export-oriented.

In economic base analysis, activities are split into basic (export-oriented) and nonbasic (local-serving). The ratio compares the size of the export-oriented portion to the local-serving portion. If this ratio is greater than one, the export-oriented sector exceeds the local-serving sector, meaning the economy earns more from outside markets than it spends on local demand. That indicates the area is a net exporter. A ratio equal to one would show a balance, and a ratio below one would suggest the economy is more locally driven and less export-oriented.