Economic impact of SWaM vs non-SWaM businesses

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ffasulo

• November 17, 2017 20:43

Hello there,

I've been tasked with calculating the economic impact of public (discretionary) spending on Small or Women- or Minority-owned businesses (SWaM).
We have data on spending aggregated by NAICS code for both SWaM and non-SWaM businesses, and we have already eliminated any leakage represented by businesses located outside our study area.
We have also administered a survey to SWaM businesses to understand their business model, in terms of suppliers, subcontractors and employees. Our work hypothesis is that they tend to employ and do business locally.
Now, my question:
besides comparing the overall impact of public spending when contracting SWaM vs non-SWaM businesses, could I check my survey results against the RPC of my study area, and if they are different update the RPC for SWaM businesses, then calculate the economic impact of spending in both SWaM (with new RPC) and non-SWaM (default RPC) and make the analysis a little more meaningful?

Thank you!

Fabrizio

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  IMPLAN Support

  • November 21, 2017 17:20
  • Edited

  Hi Fabrizio,

  Thank you for your post. 

  While you certainly could change the RPCs for those commodity-industry pairs in question (via Customize > Trade Flows > Industry/Institution RPC tab), we recommend against it for at least two reasons:

  1. Editing the model in this way assumes that every business within those same industries also purchase those commodities at the new, adjusted local vs. non-local rate.  Unless the SWaM businesses are the only businesses that exist in those industries in this region, this is unadvisable.  Our strong preference would be for the user to use Analysis By Parts (ABP) and adjust the RPCs within the Industry Spending Patterns; that way, only the RPCs of the first-round purchases are affected – and other businesses in those industries in the region can operate as indicated by the original data.  If you don’t use an ISP, you could use a series of Commodity Change Events and set LPP to whatever you need it to be there. However, that will treat those purchases as direct effects so you’ll just have to do a bit of rearranging when reporting the results. If you further have questions on this, we can assist. 
  2. We often hear statements along the lines of “our businesses buys from a local supplier”.  There’s no problem with setting RPC to 100% if that “supplier” is a service industry.  But if the user is referring to a manufactured good (i.e., a raw input) – the user typically means that they purchase that good from a local wholesaler or retailer, which is very different from saying that the good is manufactured locally.  In that case, what we recommend is that the set up the Event from in the manufacturing sector, apply margins, then edit the margins to reflect LPP = 100% for the retailer (or set LPP = 100% for the wholesaler and set the margin = 0 for the retail sector if the item is purchased from a wholesaler rather than a retailer).  In this particular case, you do not need ABP to do this kind of adjustment – so you might end up with a mix of ABP and traditional events, depending on all the data you have and the assumptions you make.

  Hope this helps, let us know if we can be of further assistance.

  Thank you! 

  IMPLAN Staff

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