Difference between revisions of "Economic impact"
| Line 3: | Line 3: | ||
Economic impacts depend on the functionality of the planned [[urban object]]/[[urban environment|environment]], and are usually generated by capital costs for the construction and maintenance part, and on the other hand by the [[return on investment]] generated by sales income, real estate value, local spending by tourists, et cetera. |
Economic impacts depend on the functionality of the planned [[urban object]]/[[urban environment|environment]], and are usually generated by capital costs for the construction and maintenance part, and on the other hand by the [[return on investment]] generated by sales income, real estate value, local spending by tourists, et cetera. |
||
| − | The above mentioned examples suggest that a lot of different economic impacts can be defined, even within the spectrum of urban planning. With respect to security, however, the economic impacts of security threats due to [[crime]] and [[terrorism]] is also of paramount importance for the [[urban planner]], just like the economic impacts of security [[measure|measures]], which in turn, is closely linked to the economics of criminal & terrorist behaviour<ref>The economic impact of an act of crime or terrorism is mostly negative due to the damage on buildings, infrastructure, human beings, and so on. Security measures, however, not only have a positive impact on the economy, but can also have a negative impact. Think for example of the security measures on airports which have lead to a decrease in travel time. Criminals and terrorist, finally, will alter their behaviour in reply to security measures to reach their goal (as much as possible gain against as least as possible costs).</ref>. |
+ | The above mentioned examples suggest that a lot of different economic impacts can be defined, even within the spectrum of urban planning. With respect to security, however, the economic impacts of security threats due to [[crime]] and [[terrorism]] is also of paramount importance for the [[urban planner]], just like the economic impacts of security [[measure|measures]], which in turn, is closely linked to [[the economics of criminal and terrorist behaviour|the economics of criminal & terrorist behaviour]]<ref>The economic impact of an act of crime or terrorism is mostly negative due to the damage on buildings, infrastructure, human beings, and so on. Security measures, however, not only have a positive impact on the economy, but can also have a negative impact. Think for example of the security measures on airports which have lead to a decrease in travel time. Criminals and terrorist, finally, will alter their behaviour in reply to security measures to reach their goal (as much as possible gain against as least as possible costs).</ref>. |
| + | |||
| + | =Definitions= |
||
| + | ==Impact== |
||
| + | An impact implies a clear and unilateral causality between two notions<ref>Source: Dutch department of Infrastructure (2000) ‘Fundamenteel voorwaarts’. Infrastructure Effects Overview (IEO).</ref>. |
||
| + | |||
| + | ==Economic impact== |
||
| + | Economic impacts are unilateral causalities between economic notions on the one hand and outcomes of private and/or public project, decision, event or policy on the other hand. They may be viewed (or measured) in terms of output, value added, wealth, personal income (wages), public income and expenditures or employment levels ([[economic output]])<ref>Source: B. and G. Weisbrod (1997). Measuring economic impacts of projects and programs. Economic Development Research Group.</ref>. |
||
| + | |||
| + | =Categories of economic impact= |
||
| + | Economists use various definitions and terminology for categorizing economic impacts. The two main categories of economic impacts are '''primary''' and '''secondary''' economic impacts, also referred to as direct and indirect economic impacts. |
||
| + | |||
| + | '''Primary''' economic impacts (or direct effects) are generally defined as the initial, immediate economic output generated by a specific urban project development. For example, the construction company in charge of building the urban object will pay its employees and will pay its suppliers. The user of the urban object will gain utility from the use of the particular urban object. |
||
| + | |||
| + | '''Secondary''' economic impacts (or indirect effects) are generated each time a subsequent transaction is made. The suppliers of the construction company responsible for the construction of the urban project, for example, will also pay its employees and will buy supplies from subsequent suppliers. Furthermore, the employees will spend their wages on housing and other consumption goods and services. These are all examples of secondary economic impacts. |
||
| + | Below an example how € 1 spent on construction generates € 1 of primary economic output and € 1.19 of secondary economic output in another sector: |
||
| + | |||
{{references}} |
{{references}} |
||
Revision as of 10:12, 1 March 2012
Investments in urban development plans cost time and money, so a primary question for most urban planners, politicians and investors is what the economic impact will be. A good example of this question is the potential economic impact of hosting the Olympics. This question not only receives a lot of attention in the local and national media, but also more and more on an international level.
Economic impacts depend on the functionality of the planned urban object/environment, and are usually generated by capital costs for the construction and maintenance part, and on the other hand by the return on investment generated by sales income, real estate value, local spending by tourists, et cetera.
The above mentioned examples suggest that a lot of different economic impacts can be defined, even within the spectrum of urban planning. With respect to security, however, the economic impacts of security threats due to crime and terrorism is also of paramount importance for the urban planner, just like the economic impacts of security measures, which in turn, is closely linked to the economics of criminal & terrorist behaviour[1].
Contents
Definitions
Impact
An impact implies a clear and unilateral causality between two notions[2].
Economic impact
Economic impacts are unilateral causalities between economic notions on the one hand and outcomes of private and/or public project, decision, event or policy on the other hand. They may be viewed (or measured) in terms of output, value added, wealth, personal income (wages), public income and expenditures or employment levels (economic output)[3].
Categories of economic impact
Economists use various definitions and terminology for categorizing economic impacts. The two main categories of economic impacts are primary and secondary economic impacts, also referred to as direct and indirect economic impacts.
Primary economic impacts (or direct effects) are generally defined as the initial, immediate economic output generated by a specific urban project development. For example, the construction company in charge of building the urban object will pay its employees and will pay its suppliers. The user of the urban object will gain utility from the use of the particular urban object.
Secondary economic impacts (or indirect effects) are generated each time a subsequent transaction is made. The suppliers of the construction company responsible for the construction of the urban project, for example, will also pay its employees and will buy supplies from subsequent suppliers. Furthermore, the employees will spend their wages on housing and other consumption goods and services. These are all examples of secondary economic impacts. Below an example how € 1 spent on construction generates € 1 of primary economic output and € 1.19 of secondary economic output in another sector:
Footnotes and references
- ↑ The economic impact of an act of crime or terrorism is mostly negative due to the damage on buildings, infrastructure, human beings, and so on. Security measures, however, not only have a positive impact on the economy, but can also have a negative impact. Think for example of the security measures on airports which have lead to a decrease in travel time. Criminals and terrorist, finally, will alter their behaviour in reply to security measures to reach their goal (as much as possible gain against as least as possible costs).
- ↑ Source: Dutch department of Infrastructure (2000) ‘Fundamenteel voorwaarts’. Infrastructure Effects Overview (IEO).
- ↑ Source: B. and G. Weisbrod (1997). Measuring economic impacts of projects and programs. Economic Development Research Group.
