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Regional Economic Impact Analysis

Learn about economic impact analysis, its importance in local economies, and the use of input-output models to measure impacts and multipliers. Explore how economic activities affect different sectors and how tools like IMPLAN can aid in analysis.

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Regional Economic Impact Analysis

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  1. Regional Economic Impact Analysis

  2. What Is Economic Impact Analysis? • Any activity that generates payments and buys products has an effect on other parts of the economy • If those products are locally produced and payments are made locally, the effect of buying and paying them has an impact across other sectors of the local economy • Economic impact analysis measures these effects

  3. Why Use Economic Impact Analysis? • To measure impacts of: • New industry • Business expansion, downsizing, or closure • To understand: • The role and contribution of existing industries • Local economic development planning

  4. Structure of Local Economy with Biomass Energy Sector

  5. Measures of Economic Activity • Output is the value of production for a given time period • Employment is the number of jobs for each industry • Value added consists of employee compensation, proprietor income, other property income, and indirect business taxes—represents the difference between purchases and sales

  6. Input-Output (I-O) Models • I-O models are one way to conduct economic impact analysis • Used to quantify the relationships and interactions between industry sectors, households, and governments within a local economy • Constructed from a transactions table that shows the value of goods and services exchanged between different parts of the local economy in one year

  7. Example I-O Transactions Table

  8. What Are Multipliers? • Measure the total impact of a change in one or more industries on all other industries within the local economy

  9. Input-Output Multipliers • Categories of multipliers • Output • Employment • Value-added • Multipliers estimate three components of total change within the local economy • Direct effects • Indirect effects • Induced effects • Total effects = direct + indirect + induced

  10. IMPLAN System • Software tool and database to help economists construct regional input-output models for any area of the United States

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