Estimating Net Economic Impact Of Industrial Expansion

Abstract

While industrial development is often a major function of the community development specialist, it is not necessarily the best approach to economic progress for the community. This paper addresses the issue of how to evaluate the economic impact of industrial expansion in the community. Twelve industrial plants in five Eastern Oklahoma communities are the subject of the study. The model developed measures the net economic impact of industry on three sectors of the community: private, municipal government and school district. Results from these three sectors are summed to estimate the impact on the total community. The model measures the additional income and tax revenues generated by the industries along with the costs incurred by the community as a result of industrial development. Results confirm that industrialization has a substantial income effect in the community. However, industrial expansion may also result in only minor or even negative effects on municipal government and school district finances. This suggests that pursuit of industrial development to relieve the tax burden and strengthen financing of the public sector may be misguided.

Additional information

Notes on contributors

Ron Shaffer

Dr. Shaffer is a Community Development Economist, Department of Agricultural Economics, University of Wisconsin-Extension.

Luther Tweeten

Dr. Tweeten is Regents Professor, Department of Agricultural Economics, Oklahoma State University.