MRIO: Multi-Regional Input-Output Analysis When More Than One Region Includes Direct Impacts

Candi Clouse, PhD

July 15, 2019 20:45

*NOTE* IMPLAN applied a code modification to the Multi-Regional Input-Output (MRIO) Analysis feature on December 14, 2022. Beginning on October 20, 2022, the MRIO feature was undercounting the first-round of Intermediate Input purchases - or supply chain purchases - from any of the linked Regions in the analysis. This may have resulted in smaller Indirect and Induced Effects on projects run during that time period. The code modification resolved this issue. If you believe this may have impacted your Project Results, re-running the analysis will produce the correct results. We apologize for the inconvenience to any impacted users.

INTRODUCTION

Sometimes you may have more complicated analyses that you want to run. Let’s say the bank opening up in Mecklenburg County, NC from the Introduction to MRIO article will also be opening up a smaller office in York County, SC. This can be modeled with Multi-Regional Input-Output (MRIO) analysis to see what the effect of each project will have on the two counties together and separately.

THE PROCESS

STEP 1 – SETTING UP THE EVENT

In our example, the new bank HQ will be opening in Mecklenburg County, NC with $500M in projected Output. Taking this one step further, the bank plans to open a smaller back office facility in York County, SC with a projected $10M in Output. As with the HQ example, this office will closely resemble a financial institution and not support services, so Industry 441 - Monetary authorities and depository credit intermediation was chosen as the Industry.

First, on the Regions screen, select both Mecklenburg County, NC and York County, SC. Click Create Impact.

Create an Industry Output event in Industry 441 - Monetary authorities and depository credit intermediation for $500M. Save the Event and drag it into the Mecklenburg County group on the right side of the screen.

Create a second Industry Output event in Industry 441 - Monetary authorities and depository credit intermediation for $10M. Save the Event with a different name than the first so that it can be identified later. Drag it into the York County group on the right side of the screen. Each Region has its own Event associated with it.

Ensure that the MRIO checkbox at the top of the screen is checked.

Click Run. When using MRIO, the software will take a little longer than a standard analysis. Grab a cup of coffee and when the analysis is complete, click View Results.

STEP 2 – VIEWING THE RESULTS

When you look at the Results screen, you see the Total Direct Output of $510M; $500M in Mecklenburg for the HQ and $10M in York for the back office. Together, they have an indirect effect of $149M and an induced effect of $87M, for a total economic impact of $746M. These results include the impacts of the HQ and back office locations on both Mecklenburg County, NC and York County, SC.

Mecklenburg County & York County Impact - HQ and Back Office

Unlike when there is only one region with an Event, now there are two options for Filtering the results. We can see how the new back office operations (located in York County, SC) will spur economic activity in Mecklenburg County, NC. In the Region box, choose Mecklenburg and in the Event Name box choose “Bank Back Office.” Hit the run button on the right.

Notice that there is no Direct impact. You do see a total Output impact of almost $5M. This is money that will flow into Mecklenburg County because of the $10M in bank back office operations in neighboring York County.

Mecklenburg County Impact - Back Office

By only filtering the Region for Mecklenburg, we will see the effect of the HQ and the back office on the county. This shows us the Direct Output of $500M for the HQ, but not the $10M in Direct Output for the back office.

Mecklenburg County Impact - HQ and Back Office

If the Region is filtered by York County, you will see the effect of the HQ and the back office on the county. This shows us the Direct Output of $10M for the back office, but not the $500M in Direct Output for the HQ.

York County Impact - HQ and Back Office

If you add the Economic Indicators from Mecklenburg and York counties, you will get the total Output impact of $746M seen before the Filter was applied.