Purchase to same industry
I am trying to understand better why such a large portion of some industry's spending pattern in spent to the same industry (I am looking at insurance brokers, as my example). Can you explain what this means in more detail? When I create custom spending function, I never have a line item for payments within the same sector. Thanks!
Hi Carsten! Thank you for your forum post. When you import an Industry Spending Pattern, for example (Sector 438- Insurance agencies, brokerages, and related activities) you will be importing the entirety of the production function or spending pattern for that sector. When you create your own custom spending pattern, you specify the spending pattern of that industry. Sector 438 buys it's own services for the operation of the business. The operations needs products that itself produces. I hope this answers your question. Thanks IMPLAN Staff!
A couple clarifying questions: 1) Is there a difference between sector and industry, as you described in your response? 2) When you say "operations needs products that itself produces," does that generally mean, for example, insurance agencies purchase products that other insurance agencies produce, or agencies buying products from within their own company? Thanks in advance!
Hello Carsten, 1) As sectors refer to rollups of NAICS industry descriptions, we often use both sector and industry to mean the same thing (i.e., "impacting the wholesale sector" and "impacting the wholesale industry"). 2) Spending patterns represent the purchase of commodities, some of which may also be commodities produced by the purchasing sector. In the case of sector 438, the commodities produced include insurance agencies, brokerages, and related services. If you look at the other NAICS description industries included in industry code 438, you will find descriptions such as Loss Control consultants and Pension fund third party administrative services (both of which are listed under different NAICS codes). As sector 438's production of commodity 3438 includes all of these different services, an insurance broker may well purchase those other products (Loss Control Consultants for example). In addition, insurance companies do need to insure themselves. http://agents.insurancequotes.com/general/reinsurance-who-insures-the-insurance-companies Regards, IMPLAN Staff
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