1. What data is required to create an MRIO?
In general, you need to have the data for your Region and the additional Region from which you want to see feedback linkages/impacts. You may have impacts in more than one Region, as well.
2. When should I use MRIO? What if I only want to see the impacts in one county?
Both single-region and MRIO are valid methodologies. MRIO offers the advantage of providing a more robust and accurate picture of a local economy because most economies are not isolated to a single Region. An MRIO analysis allows you to keep the Multiplier identity of the first Region while still being able to see how activity in that Region (where the Direct Effect takes place) touches other Regions within a functional economy. Therefore, even if you were interested in the results in a single county, you could use MRIO if you wanted to capture feedback linkages to a second Region from purchases your Region made to those connected counties. However, in most cases this will not provide significant changes to your results.
3. Does MRIO provide a different multiplier than only analyzing one Region?
The only way to determine the multipliers associated to a MRIO is to calculate them by hand. We recommend exporting or copying/pasting your results to an Excel spreadsheet and summing the results to calculate the multipliers using the base equation Total Effect/ Direct Effect. The reason the multipliers are different from single-region multipliers is that we are capturing leakages to the linked regions that are lost from a single-region analysis. Therefore, there may be feedback from linked regions that will increase the effects in the first Region as well as the additional captured linkages represented in the linked Regions.
The reason that this is a recommend analysis type is that it avoids the aggregation bias of aggregating Regions. The state multipliers will represent an average of all the firms in the state and their relationships for Output per Worker and Labor Income per worker. These can be drastically different from those in a smaller region, a cluster, or an MSA. You may find that the state actually has smaller values than the looking only at the Region where the Direct Effects occur; MRIO avoids this apparent anomaly that occurs when the supply of a Commodity is concentrated in a single geography or a small group of geographies in a state, and thus demand at the state level increases without a substantial increase in supply. This happens in examples like Silicon Valley when considering tech Industries.
4. Does MRIO effectively quantify the ongoing impacts?
MRIO, in effect, extends the supply chain impacts into surrounding linked Regions while still keeping the multipliers for the first Region intact and unique. Thus the rounds of additional impacts are extended to include feedback between all the linked regions until all purchasing dollars are leaked from the Indirect and Induced Effects.
5. How does IMPLAN calculate the inter-regional flows of Commodities?
We have a white paper in that talks about the Gravity Model that lies behind the trade calculations. In addition, commodity flow data from the Bureau of Transportation is used as a Benchmark for the IMPLAN Trade Flows.
6. As an MRIO analysis links multiple study regions, how does IMPLAN determine each Region's share of the Regional Purchasing Coefficient (RPC)?
RPCs are calculated on the basis of the Gravity Trade Flow Model in the standard build (eRPC and Supply-Demand Pooling are also options you can exercise). The Trade Flows are also the basis of the MRIO analysis. This Trade Flow Model takes into account a variety of factors including the gravity of certain economies, impedences to trade, and cross-hauling.
7. Does MRIO take into account Regions that border another country like Mexico or Canada?
Unfortunately, IMPLAN does not have international trade flows at this time. Thus if imports are from outside the U.S., they are recognized as foreign imports/exports and are not tracked after they cross the national border. Therefore, international flows cannot be captured. The Trade Flow data and MRIO are looking at domestic commodity flows.
IMPLAN does have data for the Organization for Economic Co-Operation and Development (OECD) countries, but they cannot be linked to the U.S. at this point.
8. How is MRIO's ability to account for leakages an advantage over traditional single-region analyses?
Knowing where leakages go allows you to account for them. In a single-region analysis, leakages are just lost. Thus, importing 75% of Commodity A means that 75% of the value of Commodity A is lost in the first round of the impact analysis. But in reality, that 75% goes to some economy somewhere. MRIO allows you to see if and how your impact in the first Region is affecting surrounding Regions. Thus if you can buy an additional 5% from Region 2, then you can now account for (in Region 2's results) that 5% and demonstrate both where it goes and that it results from your change to the economy. Likewise, if that 5% in Region 2 is spent on a Commodity that can now be imported from Region 1, you capture that additional round of impact.
Updated February 14, 2020