Return on Investment

Hi Shameem, Thank you for your post. Unfortunately, IMPLAN does not have a way to calculate the incentives offered to a business to relocate. However if you know the Industry Sales, Employment, Employee Compensation or Proprietor Income of that new company coming to the area; IMPLAN can provide you the tax impact of that new company, along with the Direct/Indirect and Induced impacts of Value Added, Output, etc. When it comes to what factors to consider that really is up to the audience and/or commissioner of the study – what is most important to them? If it is a government entity giving $$ incentives then they are likely most interested in the additional tax revenue generated…i.e., did we gain more than we spent? But they may also be able to justify the incentive program by the number of jobs created. That said, we typically recommend GDP as a better indicator of ROI than Output. For example, assembling computers with expensive imported parts will generate less income for a region than production of the expensive parts, even though output of the parts can be far less than the assemble output value of the computers. The hard part is determining how many operational jobs are created by an investment. It is also important to be clear about the study’s assumptions, especially in terms of whether the impact is entirely attributable to the incentive and what opportunity costs, if any, there are. One important thing that sticks out for me is that the company would be relocating – so does that mean they would bring all their own employees with them? And they likely will not change their input suppliers (i.e., not buy anything locally) so no indirect jobs either. The impact may just be the induced effects (i.e., Labor Income change) if they are not really creating any Employment from the local labor pool. Thanks!