Economic impact of potential new industries in a four-state area

Abstract

This note applies an input-output multiplier technique developed by Burford and Katz to analyzing the impact of potential "high technology" industries in a rural, four-state, thirteen county Midwestern region. By using the 1972 national input-output table coefficients and the Burford-Katz multiplier estimation formula, the estimated output impacts for fifty-one individual industries were calculated. The results indicate that within the four-state region, "conventional" industries would produce greater economic impacts than designated "high-tech" ones. This analysis could be performed rather easily for any other region in the U.S.

Shortcut formulas for output, income and employment multipliers

“…In fact any reasonable approach to the estimation of the average and household effects such as using input-output tables for comparable regions or even "educated guesses" for certain parameters can be used without incurring serious error. A good example of the application of the shortcut formulas, using only secondary data to derive estimates that approximate impacts of new industry locations on a small region, is provided by Jelavieh [7]. All shortcut formula derivations, using the "random matrix approach" actually follow the same generalized procedure.…”

Shortcut Multiplier Formulas for Interregional Input-Output Models

“…Shortcut formulas provide a low cost reliable alternative to the measurement of output, income and employment impacts over a particular economic region, which constitutes its main application. Often, to compare the economic effect of different scenarios, planners and analysts need dependable estimates of gross multiplier impacts and generally are unconcerned with breaking down these impacts by specific industry categories (see Jelavich (1984), Katz and Burford (1985), Billings and Katz (1986)). Rarely is a reliable input-output model even available for the particular region under study, and there is strong resistance against devoting an extreme amount of time and money to build one.…”