1. ECONOMIC IMPACT ANALYSIS

2. ECONOMIC IMPACT ANALYSIS
can help community leaders predict changes in local output, employment and income resulting from a change in economic activity.

3. Examples
Tourists visit your town for a festival. How will their expenditures will impact the economy?
A new manufacturing plant is opening in your town and will employ 200 people with a payroll of $5 million. What will the total impact be?
Your local hospital is destroyed by a tornado. Sixty jobs are immediately lost, but how many more?

4. Examples
Across the country, urban highways have increased property values. How much will property values increase in our city?
Through the years, increased municipal spending on economic development projects has been associated with increases in sales tax collections.

5. FISCAL IMPACT ANALYSIS
An effort to estimate the impact of a development or land use change on local government costs and revenues.
There are 4 basic procedures:
Determine population generated by growth
Translate population into public service costs
Project revenues induced by growth
Compare development induced costs with revenues

6. Examples
A new housing development will raise property tax collections for the school district, but there are operating costs associated with each new student in the school district . What is the net fiscal impact for the district?
Should the Corps of Engineers build a dam? What are the costs and benefits of such a project?

7. Dimensions of the Economy
Important Economic Indicators
Gross National Income (GNI)
GNI/capita
Income Distribution
Private consumption
Unit labor costs
Exchange rates
Inflation rates
Interest rates

8. International Economic Analysis
Sources for Economic Information
The Commercial officers in embassies
The World Bank
The United Nations
The International Monetary Fund
The Organization for Economic Cooperation and Development

9. Dimensions of the Economy
Gross National Income (GNI)
The measure of the income generated by a nation’s residents from international and domestic activity
Preferred over GDP
GNI/Capita
Used to compare countries with respect to the well-being of their citizens and to assess market or investment potential

10. Purchasing Power Parity
The number of units of a currency required to buy the same amount of goods and services in a domestic market that $1.00 would buy in the U.S.
Helps to make comparisons possible across economies

11. Dimensions of the Economy
Income Distribution
A measure of how a nation’s income is apportioned among its people
Reported as the percentage of income received by population quintiles
Data gathered by World Bank
Income more evenly distributed in richer nations

12. Dimensions of the Economy
Private Consumption
Disposable income
after-tax personal income
Discretionary income
income left after paying taxes and making essential purchases

13. Dimensions of the Economy
Unit labor costs
Total direct labor costs divided by units produced
Countries with slower-rising unit labor costs attract management’s attention

14. Dimensions of the Economy
Reasons for relative changes in labor costs
Compensation
Productivity
Exchange rates
International firms must keep close watch on labor rates around the world

15. Dimensions of the Economy
Large international debts of middle- and low-income nations affect multinational firms
When foreign exchange must be used for loan repayment, import of components used in local production is reduced
Local industries must manufacture these components or production must stop

16. Major International Debtors

17. Socioeconomic Dimensions
Total Population
Most general indicator of potential market size
Population size, used alone, is not good indicator of economic strength and market potential

18. Socioeconomic Dimensions
Age Distribution
Developing countries have more youthful populations than do industrial countries
Birthrates decreasing worldwide
Population of developing countries accounts for over three-quarters of world’s population

19. Population Growth

20. Forces Reducing Birthrates
Government supported family planning programs
Improved levels of health, education along with enhanced status for women
More even distribution of income
Greater degree of urbanization

21. Concern: Birthrate Decline
Concern in Developed Nations: Europe
An increasing number of young Europeans not marrying
Marriages are later, with fewer children
By 2025, the present 9 percent unemployment rate in the EU will be replaced by a shortage of workers

22. Concern: Birthrate Decline
Concern in Developed Nations: Japan
By 2025, Japan’s population aged 65 and older will make up 26.8 percent of total population
By 2025, Japan will have twice as many old people as children

23. Socioeconomic Dimensions
Population Density
A measure of the number of inhabitants per area unit
product distribution and communications simpler and cheaper in densely populated countries

24. Socioeconomic Dimensions
Population Distribution
A measure of how the inhabitants are distributed over a nation’s area
Changing population distribution: rural- to-urban shift

25. Socioeconomic Dimensions
Increase in the number of working women
May require marketers to alter promotional mix
Results in larger family incomes
Results in a greater market for convenience goods

26. Important Considerations for Private Sector Impact Measurement
How many workers will be hired, and what is the expected payroll and expected value of production?
Is the new economic activity associated with the operation of the business or the construction?
Which people and businesses will benefit; which will bear the costs?

27. For more info: www.economicanalysis.com (IMPLAN home page)
(REMI home page)
(a LOCI overview page from the Georgia Institute of Technology)

28. QUESTIONS?