INPUT-OUTPUT (ECONOMIC IMPACT) ANALYSIS

(Data Analysis) An analytical technique used to assess economic, fiscal, resource, and environmental impacts to an economic system from a change to one or more economic sectors. The concept of input-output analysis, or economic impact modeling techniques is based on a mapping, or detailed delineation, of the economic linkages and financial flows and transactions between and among the various industry sectors of an economy (also see Standard Industrial Classification (SIC) Codes). The fundamental premise is that changes in production levels of an economy's basic, or export-oriented, industries, derived from either changes in output or changes in demand, will, through various and extensive inter-industry linkages, result in and iterative process of spending, income creation, and re-spending, thereby changing the production levels of other, directly and indirectly related industries. The input-output process results in a set of multipliers which prescribe the total economic, fiscal, resource, or environmental effects for a unit change to a given industry sector. Multipliers may be developed for any factor input which may be measured in terms of a unit of output. Typical economic impacts include total economic output, employment, incomes, population, housing units. Typical fiscal impacts include tax revenues generated, tax revenue expenditures, and anticipated economic infrastructure requirements. Typical resource impacts may include commercial and residential water use, electrical power use, and land use. Typical environmental impacts would include water and air pollution effects, and the like. Limitations to the input-output impact analysis technique include its extensive and detailed Primary Data requirements (versus Secondary Data), the fact that multipliers are derived only for a single point in time, and the assumption of a linear (constant) relationship between inputs and outputs. Even so, this technique represents a robust analytical methodology for assessing near-term impacts on a comprehensive basis.