Advanced Economics - Input-Output Analysis - Essay Example

Advanced Economics- Input Output Analysis Name: Tutor: Course: Date: Introduction There is an implementation of a construction project at the Northern Territory. This great investment will create economic development and employment opportunities for the citizens. It will select people to undertake the projects as staff members, contractors, and consultants. The project will generate revenues for the government in the form of taxes and other charges. The project is implemented in manners that will minimize the impact on the environment while doing the constructions. Input/output analysis The input/outputs analysis method characterizes economic activities of the Darwin Central Development Impact. These development activities will generate stimulation to the economy during and after the development phase. Matrices determine the manner in which productive systems satisfy final demands of the project. These demands consist of investments, exports, and consumptions. The input/output matrixes determine the links between the resources of an economy and the consumption levels. This divides the productive structure of an economy. In this case, the input/output matrices are used for simulation and scenario analysis to verify the policy scenarios based on the structure of the economy. The policies in this case have been set favorably while projects are set to meet the set policies. The technical coefficients of the matrices can be calculated from values obtained from the implementation of the project. They provide indications of existing technical structures in the modeled economy thus showing the sectors than have high value addition abilities and higher productivity. In this case, inverted matrixes are used to determine the indirect effects of the project such as economic thrive due to taxes charged on the employees. The next step is to determine the impact of the program by having a quantitative estimation. These analyses contribute on the impacts of trade and sectorial distribution. However, it depends of estimating the effects of demand rather than the effects on its supply. Hence, they ignore the long-term benefits of productive potential (Duncan, 2008). Industrial and consumption effects and address the differences between multipliers. The activities have the ability of generating additional revenue in the form of taxes for the area. These activities can create job opportunities for the community because of the establishment of these industries. The tax generated form these activities have a multiplier effect on other industries that are related to this particular one. Therefore, the total benefits realized form this have quantifiable impacts on the activities that are being undertaken. When there is a permanent change in the aggregate demand, there is a multiplier effect. This can occur when a private sector or the government finance a project that has a larger impact than expected. There is a successive increase in the output until the change in incremental output becomes zero. The general multiplier effect is achieved when individuals and businesses increase their production activities. This enables them to take advantage of the profit opportunities that may occur. This multiplier effect achieves a greater impact when there is an existence of idle resources. The construction phase benefits are ongoing. Some benefits are the potential to have an economic spill over to the nearby countries that benefit indirectly from the activities(Duncan, 2008). Operational phase economic benefits Once the construction of the retail, entertainment, and office complex is complete, it is estimated that economic benefits will be realized. During the economic life of the project, the benefits of the operating phase are usually greater than those of the construction level. The operating phase contributes to the overall growth and the economic stability of the County. This will contribute to economic benefits of the staff that are paid while undertaking the project. These will benefit different sectors such as the arts and recreation, food services and retail traders. Pre-construction impacts. This phase involves identification of a site and establishing a possible location for the construction. Some impacts here include traffic disruptions, increased presence, and movement of the construction laborers, elevated noise levels, and general disturbances of the peace and quiet in the area. Mitigation measures can be taken to reduce the impact of these constructions. The phase noise levels need to be monitored to ensure that they do not exceed the legal limits. The area that has been selected for accommodation of the site needs to be fenced off and properly screened by use of green shade netting. To have a proper sight distance, there is a requirement for proper signage that will demarcate the haulage route. The access points need to be well set to achieve a proper sight distance. The work site should be removed from the sensitive receptors since they may be impacted by the disturbances from the noise (Gillespie, 2001). Construction impacts. The construction activities could result in localized environmental pollution. In order to mitigate this impact the potential sources of pollution need to be avoided. These sources could be sediments, solid wastes such as refuse, plastic wrapping, cement bags, and refuse. Lighter material such as papers and plastic bags at the site could become airborne. Other disturbances such as minor traffic congestions, dust, and noise could result. The mitigation factors could be to restrict the noise generating activities into the normal working hours. The equipment need to be well maintained to ensure that they do not act as a source of noise. The contractors and labourers should also be educated on how to control the activities that could become disturbances (Vohra, 2005). Another impact would be the exposure of surfaces to erosion due to earthworks. The mitigation factors here could be to do excavations according to the set rules and procedures. Silt screens can be employed on the exposed areas to prevent such outcomes. During the construction phase, it is possible to unearth heritage resources. The mitigation factor in this case would be to stop any earth moving activities that lead to the discovery of archaeological material (Simon & Blume, 1994). These impacts extend to have an overestimation of the benefits of the project since it is assumed that they can cause a negative impact to the environment. An environmental management plan is then developed to ensure that these impacts are contained. Assumptions that underpin an input & output approach Research by Richards (2012) states that the input-output analysis method is distinguishable since they are logically independent. One assumption in this method is that it has constant returns to scale. This assumption is contested because complex functions describe the production process in a realistic manner especially in large-scale industries that involve huge installations. There is also an assumption that there is no possibility of substituting the inputs while producing the goods and services. It is assumed that only one process produces a particular output. The level of output can uniquely determine the levels of inputs required (Mankiw, 2008). According to Morton (2003), the other assumption is that no process has the ability of producing more than one input. This means that there are no joint productions. In case a process has the ability to produce two or more outputs, a single output of the particular process can be consistent of the original outputs. In this case, joint products have no negative impact on linear programming since every input can be regarded as some negative output. The categorical inputs usually have some impact on the model outputs thus causing problems since the inputs are usually subjective. The variables are used with an attempt to display the effects of the industrial processes that were not quantified in a scientific manner. There is a possibility of replacing the problematic variable with some complex inputs or data that are currently unavailable to everyone. The other assumption is that, in static models, problems brought about by capital and capacity can be ignored. In this case, the input-output model can provide for capital requirements that are associated with a particular time pattern of a final demand. Improvement of impact analysis The proposed project has the ability to provide a great boost to the economy in the region. The project will also crate training opportunities and jobs for the people in the region. This project meets the standards that have been set by the Northern Territory Government such as high environmental standards that are subject to approvals and clearances. This project will ensure that the local industry will be fully involved in the participation process by engaging the local businesses, securing an open access to the infrastructure which is shared and developed in a package that will benefit the community(Park & Bette, 1990). This project will realize some benefits such as involvement of the local authorities in creating preservation of the cultural heritage and ensuring proper management of the environment. This will also bring long-term benefits to the community by realizing better participation strategies for the indigenous community. It will also result in increased opportunities for economic growth. This will also benefit the Northern Territory economy by bringing important results like social enterprises, employment, service and business opportunities. References Duncan, R (2008). The New Depression: The Breakdown of the Paper Money Economy. USA: Wiley Publishers. Gillespie, A (2001). Advanced Economics Through Diagrams (Oxford Revision Guides). UK: Oxford Children’s. Mankiw, G (2008). Principles of Macroeconomics. USA: South-Western College Publishers. Morton, J (2003). Advanced Placement Economics: Microeconomics: Student Activities. USA: National Council on Economic Education. Park C & Bette, G (1990). Advanced Engineering Economics. USA: Wiley Publishers. Richards, J (2012). Currency Wars: The Making of the Next Global Crisis. USA: Portfolio Trade. Simon, C & Blume, L (1994). Mathematics for Economists. USA: Norton & Company. Vohra, R (2005). Advanced Mathematical Economics (Routledge Advanced Texts in Economics and Finance). USA: Routledge Publishers. Read More