News | 01 Nov 2016
Oxford Economists Develop a New Global Impact Model
Economic impact assessments provide a clear insight into how a firms operations and interactions with suppliers generates economic activity. They capture how supply chains spread through an economy, enabling us to quantify a firm’s footprint.
Yet typically they only consider a firm’s operations and spending in one country. For some companies this may be ideal: for instance if they have a single location and spend little with suppliers in other economies. But for globally integrated businesses, such analysis does not capture the impact on a local economy in its entirety.
Traditionally a firm’s operations and suppliers outside of the main country of analysis, as well as trade impact they have on an economy, have been beyond the capacity of standard impact models. Such activities are known as ‘leakage’ from the analysis. These limitations have meant conventional impact studies inevitably understate a global company’s national economic contribution, although they still quantify important effects.
I used experience gained from conducting impact assessments over seven years for numerous corporations in a range of countries, together with knowledge of global trade data, to address this shortcoming. The result is a unique, fully integrated global impact model, mapping how industries in the 65 largest economies interact.
With this model we are able explore how a firm’s global supply chain creates economic activity throughout the world and how its impact criss-crosses the globe. This means Oxford Economics can comprehensively measure a globally integrated firm’s economic impact for the first time.
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