Basic Import Substitution Effect question

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    IMPLAN Forum
    Hi Bill To show a shift in the usage of one commodity to another, when both are produced within the local economy, you would model the loss of production of one industry/commodity that is experiencing a decrease in production, and then the increase or new production occurring in the new industry. You can model the loss as an Industry Change activity in the appropriate Sector, based on the amount of production you believe will be transferred to your new facility. If you run these in separate Scenarios, you will be able to see the positive effects of the new production and the negative effects of the substituted production. If you run these in the same Scenario then you will see the net effect on the region. However, in your case, the decrease in production occurs outside your study area since the good was being imported; thus, there is no negative local impact to the producing sector, though there will be some loss to local transportation and possibly local wholesalers if the commodity was being purchased through a local wholesaler. In this case, you would still set up the negative impact to the producing sector and apply margins, then edit margins to set the producer and retailer values to 0 and set LPP to SAM Model Value. These links may alos prove to be helpful: http://implan.com/V4/index.php?option=com_kunena&func=view&catid=84&id=14288&Itemid=35#14293 http://implan.com/V4/index.php?option=com_kunena&func=view&catid=84&id=13959&limit=6&limitstart=6&Itemid=35#14143 If the change is a shift in the input structure of a specific industry, please let us know and we can provide additional information.
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    Thomas Lester
    Hi This is very helpful. And along the line of what I thought. My project does involve a change in the input structure of a given industry. From by inported intermediate commodities and using replacement inputs that are produced locally. Thanks. Bill
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    IMPLAN Forum
    Hello, If you are modeling the entire industry (i.e., all firms in the industry), you can build a second model of the region and edit the industry's production function to reflect the new input mix: 1. Go to Customize > Industry Production, highlight the Industry of interest, then change any coefficients for which you have known information. These coefficients are expenditures per dollar of Output (not budget). 2. After making your changes, you will want to click Balance so that the Total Absorption Value remains unchanged. Then click Save. 3. If you are also changing the local purchase rate for some of these commodities, you will want to go to Customize > Trade Flows > Industry/Institution RPC tab, select the industry from the drop-down menu, then change the Regional Purchase Coefficient for whichever commodities are now being purchased locally to 1. 4. You will now need to re-construct your multipliers (Options > Construct > Multipliers) 5. You can now run the same direct impact on both models, with the difference in results being the impact of the change in input structure. If you are modeling only part of the industry (i.e., a specific firm or project), then you will not want to edit the Study Area Data but will instead use Analysis-By-Parts on your original model. ABP allows you to change the production function for your firm/project only, without changing the input structure of the rest of the firms in the industry. Let us know if you have more questions.
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