What is your local economy?


North Carolina has a lot of local governments. To be exact, there are 100 counties and 552 municipalities in the state. North Carolina is one of only seven states with triple-digits in the number of counties, with Texas taking the prize at 254. We’re 18th among states in the number of municipalities, but far below the record holder of Illinois with 2729.

Many of us identify with our nearest local government, particularly when it comes to the economy. For example, an out-of-state friend may ask you how the economy is doing in Greensboro. Or, a traveler eating at a diner in Richmond County could ask some locals if businesses are hiring.

Politics and statistics also cause us to focus on county and city boundaries. Both entities have elected officials who are concerned about economic development in their jurisdictions. Also, many numbers and statistics are regularly released describing economic conditions in counties and cities.

But do local economies start and stop at county and municipal lines? Aren’t there many people who live in one city or county but work in another? And what about buying? Even if you’re a fan of “buying local,” does this mean you won’t hop over to the next county to visit a mall, shopping center or restaurant?

Economists observe all kinds of cross-county and cross-city transactions. This is why most economists don’t think a county or city is the best description of a local economy.

But then what is? While there are many possibilities, a system developed several decades ago by the U.S. Census Bureau seems – at least to me – to make considerable sense.

The Census has three categories of a local economy. The first is a metropolitan area (technically called a metropolitan statistical area). A metropolitan area has a core city of 50,000 or more people together with surrounding counties having a high degree of social and economic interaction with that city, such as commuting for jobs and buying.

The second local economy category is a micropolitan area. This is a region having a core city of between 10,000 and 50,000 people and nearby counties with strong employment and buying ties.

The third category is termed rural because it has no core cities of 10,000 population or more. With no significant central place serving as a magnet, economic interactions are more limited in rural areas than in the metropolitan and micropolitan regions.

Based on these definitions, North Carolina has fifteen metropolitan areas and twenty-four micropolitan areas. There are also three counties associated with metropolitan areas outside the state. Brunswick County in the southeast is part of the Myrtle Beach metropolitan area, and Gates and Currituck Counties in the northeast are components of the Virginia Beach/Norfolk metropolitan region.

A total of twenty-six counties in North Carolina are not part of a metropolitan or a micropolitan area and so are considered to be rural according to this classification scheme.

Do these categories for local economies make sense? As someone who has visited most regions of our state several times in my almost 40-year career at NC State University, I would say yes. For example, driving around the Raleigh metropolitan area where I live, the counties of Johnston, Wake, and Franklin – which compose the Raleigh metro area -certainly seem to be tied together.

Likewise, the two counties of the the Sanford micropolitan area – Lee and Harnett – appear to be joined in commerce. And the downeast counties of Sampson, Duplin, Bladen and Columbus – which are neither in a metropolitan or micropolitan category – seem to represent the tradition of what is considered to be rural in North Carolina.

These classifications can change over time as residential and business patterns evolve. For example, after the 2020 census I wouldn’t be surprised to see Lee and Harnett Counties become part of the Raleigh metropolitan region, partly due to the extension of I-540. Similarly, with the increased cargo activity occurring in Norfolk as a result of the expanded Panama Canal, more northeastern North Carolina counties could become linked to that metropolitan area.

There are numerous private and public implications of thinking about local economies in this way. Advertisers and transportation planners can use them to understand how and where people shop. Business recruiters – who are often county-based – can use the categories to estimate how a new business in one county or city can impact nearby counties and cities.

I don’t think many of us will give up emotional allegiances to our home county or city. I know I haven’t. But economic linkages change over time. The geographic region best describing current local economies can be quite different from those existing decades ago.

Still, is anyone going to say they’re from the Hickory-Lenoir-Morganton Statistical Area, instead of simply Catawba County? You decide.

Mike Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook, and public policy.

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