Reverse Impact Assessment Using a Regional SAM

Abstract

Unlike traditional impact analysis, that measures the influence of a sector, or a set of like sectors, on the overall economy, we present in this note a simple reverse procedure that attempts to quantify the impact of activity changes in the overall regional economy over a specific subset of firms. We apply the procedure to a specific enclave of the chemical and basic industry sectors, which has been and still is of special significance for the development of the region. Because we feel that interdependency effects should be adequately captured, we rely on a 1995 regional social accounting matrix (SAM) of Andalusia, Spain, to establish the empirical structural support for the analysis. We proceed by setting up a linear SAM model to obtain extended multipliers, then we decompose them in three categories of effects (direct, indirect, and induced) under different hypotheses about the classification of endogenous and exogenous sectors. The decomposed multipliers are then apportioned to measure and distinguish the effects on the economic enclave. The results are seen to be quite robust to the exogeneity assumptions.