Friday, July 07, 2006

Economic Impact Basics

We hear about economic impact and benefits frequently. Any time a business or project is mentioned we start hearing terms such as direct effects, indirect effects, induced effects, multiplier effects, opportunity costs, etc..

Before we can really examine the impacts we need to know what these terms and phrases actually mean. We need to know where the numbers come from and what they actually tell us about a businesses prospects. We also need to know the accuracy of these studies in predicting the future.

A good place to start is information from the MRSC of Washington. There are differences between Texas and Washington, but the basics are the same. Their information on this page has good background material on how to analyze the total impact of a project. This particular study on sports impact from the Lincoln Institute is a good starting point because it also details the non-economic impacts of sports facilities and similar businesses.

Once you get the basics down look at reports and articles such as this one, this one, and this one.

I will be presenting my analysis of projects such as the proposed conference hotel in the near future. These are some of the references I will be using.

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