Introduction And Defintion Of Economic Impacts Flashcards

1
Q

What is the definition of economic impacts?

A

Economic impacts are effects on the level of economic activity in a given area. They may be viewed in terms of:

(1) business output or sales volume
(2) value added (or gross regional product)
(3) wealth (including property values)
(4) personal income (including wages)
(5) the creation of new jobs or the loss of jobs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is the total sum of economic impacts?

A

Economic impact is the total of direct, indirect and induced impacts of a given project or event within a defined regional area

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the direct economic impacts?

A

These include the expenditure and income generated at the event and within the event.

Can include payments of wages, taxes and dividends as well as expenditure by attendees.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the indirect economic impacts?

A

This includes business-to-business purchases and increased supply-chain activity to meets the needs of the event and their attendees.

Results from businesses being in direct receipt of expenditure due to increased demand.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Why would an event manager want to estimate the economic impacts of their event?

A

(1) event managers who wish to gain funding for new events need to quantify the economic benefits and drawbacks of hosting an event
(2) can be used to estimate benefit/drawback of public investment
(3) can be used to justify their requests for support from private and public sector sponsors
(3) can be combined with other studies to measure the economic impact of tourist activities within the community
(4) helps sell the event to the community particularly where public funds are needed to invest
(5) understand the long-tern impact on a community and help plan for major change
(6) can be used to identify economic development opportunities by evaluating the economic base (I.e. Which industries drive your economy and ‘missing’ industries in your region)
(7) fulfil statutory requirements to award incentives

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the positive impacts of events on the economy?

A

(1) can be used to attract visitors to an area and thus ‘new money’
(2) creates new jobs and volunteering opportunities
(3) new infrastructure is built to cope with the demand which can improve the quality of life for the host community
(4) increase in trade for local business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the negative impacts on the economy by hosting an event?

A

(1) opportunity cost - displacement
(2) inflation
(3) jobs - will it poach staff from other areas of business
(4) conflicts with the community

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What does displacement mean?

A

(1) Economic displacement arises when policy intervention which causes the expansion of one economic activity or activity in one location also has the effect of bringing about some degree of reduction in economic activity elsewhere. If you wish to measure the net gain from the policy or intervention we must take account of displacement effects.
(2) The best way to measure displacement is through survey work.
(3) Even where an intervention increases net tourism spend there may be wider displacement effects in the economy as spending and resources are shifted towards tourism from other sectors. This is why it’s important to distinguish between tourists and residents within the questionnaire.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is a multiplier?

A

Multipliers depend on the ratio between the ‘direct’ and the ‘total’ impact. A ratio of 2:5 for the creation of jobs for instance means that for every one job created as a direct impact of the event an additional 1.5 jobs are created within the region resulting in a total of 2.5 jobs. Some of these jobs may be created outside of the event.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the change in final demand?

A

Exogenous change: means money coming in from somewhere outside of the community that is being measured. This results in a term known as ‘net new’ or ‘new money’.

For the event industry this would occur when visitors from outside that would have not otherwise been spent.

Estimate of gross visitor expenditure: the proportion of local goods in the total value of goods and services purchased by tourists. This provides the most important indicator of economic impact within the study area.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Why is new money important?

A

Crompton argues that only tourists who reside outside the community and whose sole purpose of visiting is to attend the event should be measured this is because all other expenditure would have occurred anyway.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Describe how an event manager would measure the economic impacts of their event?

A

(1) conduct surveys - destination-based and origin-based
(2) conduct traders surveys
(3) local business surveys
(4) visitor origins and volumes
(5) purpose of the trip (sole, main or mixed)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What information needs to be obtained from doing the economic impact study?

A

(1) demographics: age, occupation (social class), geographic location (post code) and gender
(2) spending on various items: accommodation, entertainment, travel, food and drink
(3) behavioural characteristics: taste in activities, choice of accommodation, type of information used in travel and spending patterns

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

List the conceptual issues that need to be considered when managing economic impacts at events.

A

(1) if an event manager does not conduct a thorough economic impact assessment the level of impacts can easily be overestimated if carefully structured working methodologies are not employed
(3) empirical issues relating to survey design, sampling techniques and expenditure estimation
(4) procedures employed may be flawed
(5) economic impact assessments are usually expenditure driven and the main source of controversy has been methodological issues surrounding measurement and interpretations of expenditure
(6) crompton (1999) states the integrity of economic impact studies is measured by the way different expenditure items are treated which fall into three categories: tourists, residents and local authorities
(7) only those who reside outside the community should be measured and whose sole purpose is visiting the region to attend the event

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the range of methodological considerations that need to be considered when managing economic impacts at events?

A

(1) questionnaire design: designed to collect information to be used in the process of estimating local economic impact as well as planning for future tourism management activities and the information is classified into two broad categories: demographic and behavioural characteristics.
(2) data collection: two alternative survey methods are most commonly employed, these include:

> > > ‘the diary approach’ where respondents record their expenditures as they happen (theoretically this is the most accurate method but the required commitment may increase the risk of non-response bias)
‘the recall method’ where respondents are surveyed either by mail at their place of residence (origin-based surveys) or by interviewers onsite during the event (destination-based surveys)

(3) determination of sample size: the advantage of onsite interviews outweigh those of postal surveys completed at home as respondents may not recall all of their expenditure.
(4) sampling methods: crompton states that probability sampling (simple, random or clustered) is usually best but due to the nature of events this is not always straightforward and therefore choosing a sample method usually involves adopting the principles of both probability and non-probability especially when attempting to increase the size of the sample

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are the benefits and drawbacks of origin-based surveys?

A

Respondents don’t need to estimate their expenditure since they complete the questionnaire in their home after the event; however, there is a major concern with regard to the quality of the data as respondents may not recall all items

17
Q

What are the benefits and drawbacks of destination-based surveys?

A

Onsite interviews may have less recall error problems compared to origin-based surveys, however, there are 2 major drawbacks to this method:

(1) respondents may not concentrate and carefully answer the questions because of the ongoing excitement of the event
(2) the expenditures may have to be estimated because the event may not be over and the respondents may be staying a few more days

18
Q

What should be reported as standardised public reporting?

A

Direct Economic Impact
Total Economic Impact

> economic impact is the total of direct, indirect and induced impacts

19
Q

Case study: what was the gross direct impact of Glastonbury 2007?

A

Spending from Glastonbury Festivals Ltd. (on their staff, subcontractors and suppliers)

Spending by visitors to the festival (both on and off site)

20
Q

Case study: how was the deadweight calculated for Glastonbury 2007?

A

To allow for deadweight, expenditure of local residents of an area is normally excluded from the total of the visitors expenditure.

This was taken as a percentage of each region within the geographical range of Glastonbury that was measured.

21
Q

Case study: how was the displacement measured?

A

Displacement is more difficult to assess as there is limited evidence available.

From discussions with tourism businesses they found out that some people are reluctant to visit when the event is occurring due to increased prices in accommodation, however some of these visits occur at different times of the year.

Glastonbury allowed for 10% for mendip and 5% for bath and Bristol and the rest of the southwest.

22
Q

Case study: how was the multiplier effect applied to Glastonbury 2007?

A

Deadweight and displacement apply to the gross economic impacts.

The multiplier takes account of the subsequent rounds of spending following the initial injection into the economy. These arise from the purchase of supplies and services by the businesses (suppliers, subcontractors, traders) in receipt of the first round of expenditure and by spending of wages by employees in the first round of businesses (GFL, suppliers, subcontractors and traders) and in the supply chain.

These indirect and induced effects (combined) are typically 0.2-0.5 and the degree of effect depends essentially on the size and structure of the local economy. City regions usually have higher multipliers.

23
Q

Case study: what was the net impact?

A

Mendip - £35.8 million
Bath and Bristol - £2.4 million
South West region - £10.9 million

Total = £45.2 million

24
Q

Case study: intangible benefits

A

Greening businesses - particularly affects on-site traders who are subject to meeting environmental standards as a condition of their trading pitch

Contributes to a local entrepreneurial spirit - provides trading opportunities during the festival period both as one off and for local established businesses

Contributes to the local community - donates to a village facility service which builds infrastructure and develops enterprises for community cohesion

25
Q

Case study: conclusions and considerations to make for the future.

A

Hosting the festival has a significant economic impact - both locally and across a much wider geographic area

The strong local trading ethos of the festival has resulted in greater economic benefit to the area, with purchasing patterns of the festival reflecting the offer available within the local economy

Local towns benefit during the festival but Glastonbury benefits throughout the year

The contracting with local charitable organisations also offers a major investment back to the community and this should not be underestimated.

26
Q

Case study: future recommendations

A

Consider implementing the ‘greening’ approach to the wider scope of business particularly local purchasing and supply chains.

Consider the feasibility of capitalising further the role of Shepton Mallet as a base nearby offering services to people during set-up and take-down periods of the festival, to support the councils regeneration objectives for the town.