The Economic Base of North Dakota: A Measure of the State’s Economy in 2012

The growth and composition of the North Dakota economy can be measured using economicbase analysis. Economic base is defined as the value of goods and services exported from aneconomic unit. Economic base also can be called a region’s export base because industries (or‘basic’ sectors) earn income from outside the area. North Dakota’s economic base is comprisedof those activities that produce a product or a service purchased by individuals, governments,and businesses located outside of the state.Economic base estimates represent dollars coming into the economy in exchange for exportedgoods and services. By contrast, economic impact and economic contribution assessments forindustries examine the net and gross in-state business volumes, respectively. Comparisons ofeconomic base estimates to economic contribution or economic impact assessments are notappropriate as those evaluations represent different economic measures. Also, measuringthe state’s industries using Gross State Product does not provide comparable metrics toeconomic base, economic impact, or economic contribution assessments.The numbers presented in this report are part of an ongoing data set used to measure exportsales in North Dakota. That data base is often used to illustrate changes in the state’s economyand differences in the relative sizes of industries in various regions of the state.North Dakota’s economy has traditionally been driven by natural resource-based activities,i.e., agriculture, coal, and petroleum. Growth in the state’s basic sector industries hasaccelerated since 2000 with agriculture and energy providing the impetus for this expansion.Efforts to diversify the state’s economy in the 1990s and early 2000s can be linked to theexpansion of the state’s economic base, as growth in previous periods was steady, but moderate.More recently, the development of shale oil in the Williston Basin has created the largest changein the state’s economic base.North Dakota’s economic base has grown from $8.3 billion in 1990 to $42.3 billion in 2012when measured in current (nominal dollars). In terms of constant dollars (removal of the effectsof inflation), the state’s economic base went from $13.9 billion in 1990 to $42.3 billion in 2012.From 2011 to 2012, all economic base activities in the state grew in real terms except Federalpayments. Agriculture grew by 13.7 percent from 2011 to 2012 (please note that agriculturalprocessing and farm input manufacturing are not included with the agriculture industry due todata limitations). The petroleum sector grew by 100 percent from 2011 to 2012 (gas and crudeoil processing is included as data is available to estimate those activities separately from oil andgas production). Manufacturing (which includes agricultural processing and farm inputmanufacturing) grew by 14.3 percent. Coal mining and conversion was nearly constant from2011 to 2012, as growth was only 0.1 percent. Tourism grew in real terms by 3.3 percent from2011 to 2012. Exported services, from 2011 to 2012, grew by 6.5 percent in real terms. Federalpayments declined by 5.7 percent over the period. Overall, the state’s exports from