The AREC Economic Impact Analysis (EIA) program conducts applied research that addresses economic development issues in Arizona by examining the structure and linkages between economic sectors.
Research and outreach activities in this Extension program area include the following:
Economic Base Analysis
This type of analysis provides an overview of the economic situation in a county, metropolitan statistical area, or state economy. Using labor data from the Bureau of Labor Statistics, we estimate the economic base of an economy by identifying industries that employ more people (as a percentage of total employment) than the nation. This technique can be used to identify national centers of certain types of production. For example, a recent AREC analysis determined that “in terms of jobs, Yuma, Arizona is to agriculture as Napa, California is to wine, Detroit, Michigan is to cars, and Silicon Valley, California is to computer technology.”
Economic Contribution Analysis
This type of analysis estimates how much economic activity in a given area (congressional district, county, region, or state) can be attributed to an existing industry, policy or program. By examining current spending and the linkages between industries, this analysis can help measure the economic activity in other industries that is supported by the industry, policy, or program. This includes the sales, wages, and jobs that are part of the supply chain (the indirect multiplier effect) and the sales, wages, and jobs in sectors that are supported by affected households spending their earnings on consumer goods and services (the induced multiplier effect). The most common application of this analysis is to study a particular industry and, in essence, determine the importance of that industry to the economy.
Economic Impact Analysis
This type of analysis examines the effects of a new event, policy, program, or activity on the economy of a given area. By examining the linkages between industries, this analysis allows us to track how a change in economic activity in one or more sectors will affect the economic activity in other sectors. Measured in the same way as the Economic Contribution Analysis, this type of analysis can help measure the economic activity in other industries that is generated by the new event, policy, program, or activity. Economic impacts are generally measured by changes in economic growth (gross sales or valued added) and the associated changes in jobs (employment) and income (salaries and wages).