Economic Impact Assessment

Economic impact assessment (EIA) conducted by EY EAT is a formalised analysis of the overall economic impact of a single firm, investment project or sector on the national and/or local economy.

What EY can do for you

Economic impact assessment (EIA) conducted by EY EAT is a formalised analysis of the overall economic impact of a single firm, investment project or sector on the national and/or local economy.

This impact consists not only of the goods or services produced, jobs generated or taxes paid by the company/investment/sector itself. In fact, it is much wider and includes the generation of additional production in the economy: by the suppliers, via spending of all employees in the supply chain and the analysed company/investment/sector itself, and sometimes also via effects on distribution or sales chains.

What distinguishes EY EAT from the competition is the development of the unique EY Spectrum model that allows EY EAT to conduct economic impact assessment analyses not only at the national but also at the local level (for example at the NUTS-3 level for any EU country, at counties level in the US).

Quantitative assessment of how the company/investment/sector contributes – through direct, indirect and induced effects – to:

Gross value added
Number of persons employed
Households’ disposable income
Government revenues:

By sources: PIT, CIT, VAT, excise duties, social insurance contributions and other taxes
By subsectors: central government, local governments and social security funds

Usually, EIA analyses present the impact on the national economies. EY EAT offers its Clients the possibility to extend this perspective by taking a look on the local economy. This is important since:

The impact of many enterprises/investments on the country level may appear relatively limited, while some of them still play a critical role for their own regions
The economic impact of a given company/investment is concentrated in certain regions – usually (but not necessarily) in its neighbourhood

Company’s annual contribution to government revenues (example)

Number of jobs in different sectors, supported annually as a result of the company’s activity (example)

Company’s direct contribution to the number of jobs (example)

Company’s total (direct, indirect and induced) contribution to the number of jobs (example)
Results of EIA analysis grabs media’s attention. In this way it can enhance the communication process related to the Client’s business activity.
It can help to communicate to internal and external stakeholders about the Client’s actual contribution to the national and local economy.
It supports the Client in communication with central and local authorities (e.g. on how the Client’s planned investment translates into job creation, GDP growth and improvement in the public finance).
It can supplement CSR reports – providing the stakeholders with additional insights into the value that the Client delivers.

In most cases, EIA distinguishes three types of effects:

Direct effects

A contribution of the analysed company, investment project or sector itself to the economy (e.g. in terms of the firm/project/sector’s value added or the number of employees hired by the firm/sector).

Indirect effects
In order to operate and “produce” direct effects, the analysed company/project/sector needs to cooperate with other firms/sectors from which it acquires goods and services. But those firms/sectors also have their suppliers. Those suppliers in turn cooperate with yet additional companies. Consequently, indirect effects are measured all along the whole supply chain.

Induced effects
Each entity involved in the supply chain pays compensation to their employees. Those employees spend part of their salaries on goods and services. This contributes to additional demand in the economy which in turn generates yet additional production and – in effect – additional profits, value added, employment, taxes, etc.
At EY, EIA analyses are conducted with the EY Spectrum model. It is a unique, extended version of the popular input-output model. Contrary to the standard input-output model, it allows us to analyse regional distribution of effects.

All in all, the results are delivered in the following breakdown:


Measures

Economic Impact Assessment

Our Economic Impact Assessment by Economic Analysis Team can show your business how it contributes through direct, indirect and induced effects to for example: gross value added, number of persons employed, households’ disposable income.
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Team

EY Global

Ernst & Young Global Ltd.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

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Economic Impact Assessment

What EY can do for you

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Trending topics

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Case studies

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About us

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Economic Impact Assessment

What EY can do for you

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EY Global