Economic Professor’s Research Gauges Impact of Boeing Ground-Based Missile Defense Project
Boeing Company’s Ground-Based Missile Defense (GMD) program in North Alabama is expected to produce an average of 5,141 jobs per year between 1998 and 2007, with a corresponding increase in disposable income, according to research done by Dr. John P. Formby, James Patrick and Elizabeth Brannon Hayes Distinguished Professor of Economics at the Culverhouse College of Commerce and Business Administration.
Formby used what is called “a dynamic, general equilibrium, regional econometric model” to measure and forecast the direct and indirect economic impacts of the GMD program on Alabama and two multi-county regions in North Alabama and South Central Tennessee.
The model, Formby said, can be used to generate forecasts of key economic variables, including employment and income. One forecast establishes a baseline that assumes the program has no effect. An alternative forecast reflects economic developments when the program is fully operational, and the differences between the two forecasts shows the impact of the program across time.
For the state as a whole, Formby said, employment is projected to be above the baseline by 6,198 in 2007 when the program is fully operational, and real state disposable income, measured in 2000 dollars, is projected to be up by $278.7 million in 2007, as a result of GMD.
Boeing is the prime contractor for the GMD program, which involves the development, testing and potential deployment of a system to detect, track and destroy hostile intercontinental ballistic missiles before they can reach any of the 50 states.
Using both actual and projected data from 1998 to 2007, the study found that the GMD program pumps nearly $300 million annually into the bi-state region that covers 13 counties in northern Alabama and south central Tennessee. Other major economic impacts include:
- Creating an additional 150 indirect jobs for every 100 direct GMD jobs
- Stabilizing and sustaining a highly skilled, technical work force in the region
- Increasing the Gross State Product by $133.9 million in 1998 (measured in 2000 dollars); also projected to increase the GSP by $370.1 million in 2007
- Improving the standard of living in the region by providing high paying, non-polluting technical jobs. Compensation for the average GMD job in 2000 was 77.6 percent greater than the average job for Alabama workers.
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