Community decision makers selecting an economic development strategy most appropriate for their local community must begin with an understanding of how their local economy functions, what its economic base is, and how changes in that base may affect local economic structure and performance. The economic base approach emphasizes the roles of exports and imports in generating local income and employment. Export promotion is a traditional strategy to stimulate more economic activity by enlarging the flow of income into the community. Import substitution is a strategy to decrease the leakage of income out of the community. Both the export promotion and import substitution objectives can be accomplished by attracting new firms as well as by retaining or expanding existing firms. Furthermore, the increasing importance of investment income and transfer payments as a major external source of earnings flowing into the community should not be overlooked in local economic development planning. This paper explains the process of local employment and income generation, illustrates several simple techniques for estimating the local economic base, and suggests how information on economic structure can be used to help select more promising economic development strategies. One Pacific Northwest regional economy--Baker County, Oregon--is used as an example. (JHZ)