MIG, Inc.

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MIG, Inc.
Type Corporation
Industry 511210 Software Publishers
Founded 1993
Headquarters Hudson, Wisconsin
Products Software and Data for economic impact analysis
Website www.IMPLAN.com


MIG, Inc. (Formerly "Minnesota IMPLAN Group, Inc.") is the corporation that is responsible for the production of IMPLAN (IMpact analysis for PLANning) data and software.
Using classic input-output analysis in combination with regional specific Social Accounting Matrices and Multiplier Models, IMPLAN provides a highly accurate and adaptable model for its users. The IMPLAN database contains county, state, zip code, and federal economic statistics [1] which are specialized by region, not estimated from national averages and can be used to measure the effect on a regional or local economy of a given change or event in the economy's activity.[2] That is useful in examination of questions like these:

  • How does the local economy function?
  • What would the economic consequences of this project be?
  • What would the effect of this company/base closure be?[3]

Why it was created

While the U.S government had developed effective methods of gathering and reporting national economic statistics, there were no methods for turning that information into functional data for local economies to use. Therefore a system was needed to accurately report local economic information in an easily accessible and timely fashion.[4]

The 1976 National Forest Management Act required the USDA Forest Service to create 5-year management plans. These plans required alternative land management options to be presented, each of which have potential resource outputs (timber, range, mining, recreation) as well as socio-economic effects on local communities. The Forest Service, in cooperation with the Federal Emergency Management Agency (FEMA)], contributed considerable resources to the creation of FORPLAN (a linear programming model used to estimate the land management resource outputs) and IMPLAN to estimate the economic effects of these outputs on local communities.[5]

History

IMPLAN Version 3.0
Original author(s) MIG, Inc.
Initial release Nov. 3, 2009
Operating system Windows XP or newer. Not supported for Mac.
Type Economic Information Technology
Website http://www.IMPLAN.com

In 1988, the Agricultural Economics Department of the University of Minnesota decided to offer IMPLAN software, data, and technical support to non-Forest Service users. Soon it became clear there was a need for database development to work in conjunction with the Forest Service software, so in 1993 Minnesota IMPLAN Group was formed with a focus on database development and data compilations that were compatible with the Forest Service’s version of the software. Then in 1995, MIG decided to update and improve the IMPLAN software to make it more functional and accessible to a wider range of users. This new version used a novel modeling system based on the creation of a Social Accounting Matrix (SAM) – an extension of the input-output accounts, and resulting SAM Multipliers. IMPLAN Pro 2.0 became available in May 1999,[5] and IMPLAN Version 3.0 was released on November 3, 2009. IMPLAN V3 makes it possible to include Trade Flows in an economic impact analysis as well as taking advantage of current programming to become more user friendly.[3]

How it works

Social Accounting- IMPLAN's Social Accounting System describes transactions that occur between producers, and intermediate and final consumers using a Social Accounting Matrix. One of the important aspects of Social Accounts is that they also examine non-market transactions, such as transfer payments between institutions. Other examples of these types of transactions would include: government to household transfers in the form of unemployment benefits, or household to government transfers in the form of taxes. Because Social Accounting Systems examine all the aspects of a local economy, they provide a more complete and accurate “snapshot” of the economy and its spending patterns.

Multipliers- "Multipliers are a numeric way of describing the secondary impacts stemming from a change. For example, an employment multiplier of 1.8 would suggest that for every 10 employees hired in the given industry, 8 additional jobs would be created in other industries, such that 18 total jobs would be added to the given economic region."[1]

The Multiplier Model is derived mathematically using the input-output model and Social Accounting formats. The Social Accounting System provides the framework for the predictive Multiplier Model used in economic impact studies. Purchases for final use drive the model. Industries that produce goods and services for consumer consumption must purchase products, raw materials, and services from other companies to create their product. These vendors must also procure goods and services. This cycle continues until all the money is leaked from the region’s economy. There are three types of effects measured with a multiplier: the direct, the indirect, and the induced effects. The direct effect is the known or predicted change in the local economy that is to be studied. The indirect effect is the business to business transactions required to satisfy the direct effect. Finally, the induced effect is derived from local spending on goods and services by people working to satisfy the direct and indirect effects.[6]

  1. Direct effects take place only in the industry immediately affected: if DEMCO lays-off 39 employees, the manufacturing industry loses 39 employees.
  2. Indirect effects concern inter-industry transactions: because DEMCO is closing, they will no longer have a demand for locally produced materials needed to produce their product. This will affect all of their suppliers, possibly resulting in a further loss of a few more jobs. Supplier employment loss as a result of the Direct effects would be the Indirect effects.
  3. Induced effects measure the effects of the changes in household income: employees laid-off by DEMCO and suppliers may reduce their expenditures in restaurants and shops since they are no longer employed. These changes affect the related industries.[1]
  4. Impacts the total changes to the original economy as the result of a defined event. i.e. Direct effects + Indirect effects + Induced effects = Impacts

Once there is a clear picture of the economy through the Social Accounting Matrix (SAM) and Multipliers, its behavior can be predicted for a defined event: if DEMCO spent 20% of its earnings on bananas in 2006, then received an additional $1,000,000 of income from a new project in 2007, the banana industry could expect to make approximately $200,000 more that year. If 5% of the banana grower’s industry is spent on fertilizer, the fertilizer industry could expect $10,000 more; and so on. However, at each of these steps, each company will source some products out of the region of the economy of study. These are the losses that occur and eventually drive the cycle to zero. The total increase in economic activity from that million dollar project is the economic impact of the project; $1,000,000 spent became at least $1,210,000 of economic activity giving the DEMCO a multiplier of 1.21 - Every dollar spent on DEMCO creates 1.21 dollars of economic activity.

References

  1. ↑ 1.0 1.1 1.2 McIntosh, Chris. The Regional Economy. pg 15. 
  2. ↑ Pearce, David (1989). Modern Economics, Third Edition. pg 189: The Mackmillian Press LTD. 
  3. ↑ 3.0 3.1 "IMPLAN Website". Retrieved 2009. 
  4. ↑ Maki, Wilbur; Richard Lichty (2000). Urban Regional Economics. pg 5, 233: Iowa State University Press. 
  5. ↑ 5.0 5.1 "IMPLAN Model". Retrieved 2007-06-20. 
  6. ↑ IMPLAN Pamphlet, 06/04/08

See also

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