How to Use Exports and Multipliers to Find High-Impact Industries

When we look at how to develop an economy, it’s important to consider the basics: What industries will bring high paying jobs to my region? How large is a certain sector? Are my driver industries growing or shrinking?

Beyond the basics there are other elements we can view: What industries are stimulating the economy by bringing in outside money? Which industries should we grow for maximum impact on the economy? Using the I-O model we can start to identify industries that go beyond size and salary, and create positive ripples in the economy.

In a nutshell here are the two elements we’ll look at:

• Exports –  Exports are measured at the regional level, not the national. For example, if we select the Edmonton, Alberta metropolitan area for our region, we’ll see the amount of money entering the region as a result of exports from every industry in the area. The region selected defines what counts as an export. Exports are important to count because they measure money coming into the region from outside, as opposed to money circulating within the economy. Every economy experiences leakage through having to import, so bringing new money in through exports is a good practice.
• Multipliers – Multipliers help us understand which industries would impact the economy most by their growth or decline. If your target industry has a job multiplier of 2.0, that means that for every 1 job added to the industry, another job is created elsewhere in the economy. The higher the multiplier, the higher the impact. When deciding where to allocate resources for growth, or attempts to retain businesses, it’s important to understand which industries will rock the boat most.

Let’s look at an example. We’re going to find industries with a high impact on the Edmonton economy using Exports and Multipliers. The workflow is simple, we just rank industries based on these metrics and look for those that rank highly for both. To do this we’ll go to the Input-Output Model section of Analyst.

1. Click The Input-Output Model from the home page
2. Click Exports Table
3. Under “Select a Region” enter the region you’d like to view exports for (the Edmonton CMA in this case)
4. Click Run

Here are the industries that are bringing the most money into the region through exports:

Now let’s look for the industries with the highest jobs multipliers. These are the industries that, when grown, create the most overall jobs in the economy.

1. Within “The Input-Output Model” click Regional Multipliers
2. Under “Select a Region” enter your region, and click Run
3. In the table that loads scroll to the far right and click the Total Jobs column header

Here are the top 10 industries in Edmonton, ranked by the highest jobs multipliers.

We can see that petroleum and coal product manufacturing shows up strongly in both tables. This industry has a jobs multiplier of 8.1, meaning that for every one job added there, 7 more jobs are added elsewhere in the economy. Together with high exports ($9.7B), this industry appears to be a major contributor to the Edmonton economy, something we might not have known had we only looked at job counts and wages.