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Analyzing the Benefits and Costsof Economic Development Projects automated modeling system that uses built-in multipliers to estimate economic impacts. The IMPLAN software generates regional purchase coefficients in order to estimate the portion of demand for a good or service that is met locally.' IMPLAN is a static model and does not cap- ture the dynamics of how a regional economy might change over time. It assumes, as most stan- dard.input-output models do, that wage levels, prices, property values, input costs, labor supply, productivity, and other key variables will remain constant.$ As such, IMPLAN is not readily suitable for forecasting the effects of public policy changes. The N.C. Department of Commerce uses the IMPLAN model in conducting many of its economic impact studies; some universities within the state have access to it as well. It is sold and supported by MIG Inc. (Minnesota IMPLAN Group). The IMPLAN software is available by license. The data files for geographic areas are sold separately. For conducting a standard economic impact study of a new firm locating in a particular region, the IMPLAN model is a reasonable choice. For more information, visit www.implan.com. REMI REMI (Regional Economic Models Inc.) Policy Insight is a sophisticated forecasting and simula- tion model that combines a robust input-output component to capture relationships between industries with three additional modeling approaches: (1) general equilibrium, (2) econometrics, and (3) New Economic Geograph}: The general equilibrium feature allows REMI to account for dynamic changes in the economy over time, such as fluctuations in prices, wage Levels, migra- tion, productivity, and the like. In this way, REMI takes into consideration the tendency of an economy to reach an equilibrium point where supply and demand are in balance. REMI uses econometric equations and advanced statistical techniques to quantify relationships between the variables in its model. The New Economic Geography aspects of REMI are reflected in equa- tions that incorporate the spatial dimensions of a regional economy, such as the costs savings and other benefits that arise when firms and industries locate in proximity to one another. By integrating multiple modeling approaches, REMI goes well beyond standard input-output mod- els such as RIMS II and IMPLAN to allow multi-year forecasting and advanced policy analysis. As a result, a license for REMI is significantly more expensive than for most other models. Visit www.remi.com for more information. Summary Assessment and Limitations of Economic Impact Analysis Economic impact analysis can provide valuable information about how a proposed develop- ment project will benefit a local or regional economy, as a whole, in terms of additional gains in employment, income, and business output. Such information about the economic benefits of growth and development is essential in helping public officials decide whether to invest public dollars in a project and in what amount. The results of any economic impact model will be only as accurate and realistic as the assumptions and data used to produce them. While the underlying logic of economic impact 7. IMPLAN Version 3.0, released in late 2009, uses a new gravity model-based method for estimating regional trade flows that allows for more sophisticated, multi-region modeling. 8. Glen Weisbrod and Burton Weisbrod, "Measuring Economic Impacts of Projects and Programs," Economic Development Research Group, 1997. Also available at http://edrgroup.com/pdf/econ-impact- primer.pdf. 20 © 2010 School of Government.'Ihe University of North Carolina at Chapel Hill