Strength of economic impact analysis: its impact on growth and prosperity

Posted on Jul 18, 2023 at 10:07 PM

Economic impact analysis is one of the various assessments and analyses applied to enterprises, industries, or policies that have monetary implications for a particular space, industry, or group. It is a critical tool for providing a clear view of those impacts on revenue, profits, and jobs so that it can be a criterion in determining the extent of economic growth and project success.

The following guide explains the most crucial ideas everyone is looking for about economic impact analysis; follow with us.

What is Economic Impact Analysis?

Economic Impact Analysis (EIA) is an economic strategy many institutions use to measure the impact of any event, program, project, or policy on an economy. It can be an essential indicator of decision-making and a measure of achieving goals and financial feasibility.

An example of economic impact is, for example, the global decline in the value of fuel price has a positive impact on who often travels by car or the opening of a new branch of a prominent brand in an area that will have a positive impact on the region's population for job opportunities but will harm small developing brands.

The economic analysis study includes consideration of all direct and indirect economic impacts and the social impacts of any activity at both negative and positive levels to determine the extent to which jobs, income, operating costs, potential expenditure rates, competitiveness, and other matters related to those external and internal impacts over time to achieve development.

The Economic Impact Assessment and Analysis reflect the understanding of current domestic economic activity prevailing in society and help clarify some of the questions that many people have, ranging from:

• Is this industry or tourism important to our local economy?

• What investments to divide into our local economy?

• Will the changing economy affect jobs, and at what level will it affect them?

• Has the change led to inflation?

• Why analyse a project's economic impact?

Whatever the size of the enterprise or industry, analysis of the macroeconomic impact from the outset is very important to ensure informed decisions that ensure more profitable and productive outcomes, as well as some other reasons such as:

• Determine how to manage and divide resources.

• An excellent understanding of the different financial implications of change.

• Develop long-term financial plans.

• Explain the project's benefits to people affected by its negative and positive results.

• A broader understanding of the advantages and disadvantages of expansion.

• Supporting management's ideas in numbers and reports.
  
  

What are the steps to apply economic impact analysis?

Now that we have seen the definition of economic impact analysis and its benefits, it is time to take a look at the steps of a comprehensive and robust analysis:

• Identification of relevant stakeholders:

The first step is to learn from relevant stakeholders, who are of each relationship or to influence in one way or another by the project and its results, including executives, staff, the workforce, customers, suppliers, government agencies, and other stakeholders.

• Project Scope Determination:

In this step, the economic impact of all the fiscal components collected and the basic comparisons to conceive, such as when knowing the nature of a project and its impact on a specific region of the increase or decrease of average income, many questions, such as:

• What is the size of the affected area, and how to assess and analyse it?

• What are the project's regional capabilities?

• What is the standard of measurement, statistics of household income in the region over a year?

• What is the average wage from the industries in the region's sector?

After understanding those fundamentals, analysis parameters, timelines, budgets, etc., start with a framework to ensure a clear understanding of all the information the analysis model should contain.

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• A pool of resources:

The next step is to pool all the resources needed for economic impact assessment and analysis, including the task team, plans, evaluation model, and all documents and reports, in collaboration with the experts required to complete the financial analysis.

• Analytical procedure:

After collecting all the data and information associated with the impact on your project's economy, you should introduce them into the economic impact analysis model to keep the process organised and to ease the preparation of the analyses contributing to the final report.

The size of the impact of advanced technology on the specialisation of accounting to determine by adopting an automated model that allows those processes to be ready.

• Reporting:

In the last step, the final reports must be presented to key stakeholders for consultation and discussion, including graphs and charts that help show figures and results more clearly and comprehensively.

Some studies contain recommendations and guidance at the end of the study based on available data, which may not contain them and leave them to stakeholders to determine the way forward.

What is the best model for economic impact analysis?

No model can be the best model because each project is a particular case, and the method of analysing its economic impact differs from the other according to international and local variables. it is better to use a model that analyses numbers and includes analysis and automated calculations based on data.

In conclusion, 

The economic impact analysis method aims to help decision-makers understand the feasibility of their projects and inform relevant stakeholders about the nature and type of effects of their economic projects expected of them, all of which to support by accurate figures and reports, all of which aim to ensure recovery in the event of a crisis.