Estimating the Economic Impact of Smart City Innovation Neighborhoods
Capital investment projects use standard input–output modeling to estimate economic impact and justify decisions to move forward. In this chapter, I begin by breaking down the elements and inputs used in a standard economic impact analysis with some examp
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Estimating the Economic Impact of Smart City Innovation Neighborhoods Patrick McKeehan
Abstract Capital investment projects use standard input–output modeling to estimate economic impact and justify decisions to move forward. In this chapter, I begin by breaking down the elements and inputs used in a standard economic impact analysis with some examples of how the “number” is used and misused. This is followed by an explanation of the traditional model for projecting economic impact. The subsequent chapter provides an introduction to a new Smart City model for determining the economic impact of ultra-high Internet deployment, especially in the innovation neighborhoods discussed in the previous chapter. The conclusion provides recommendations on how to improve this decision-making process and measure long-term economic impact for the Smart economy.
Keywords Economic impact IMPLAN Fifth utility Equilibrium Input–output model Smart economy Smart city Gigabit city
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Introduction
As Smart Cities and ultra-high-speed Internet access proliferate globally, an expanding number of institutions, organizations, governments, businesses, entrepreneurs, and citizens are becoming increasingly reliant upon this invaluable tool for critical operations as well as daily functions. The Internet, and more specifically cloud computing, has moved into the ranks of water, gas, electricity, and the telephone as indispensible infrastructure, or the “fifth utility” [1]. A growing number of communities across the USA are deploying high-speed or gigabit-level Internet systems to meet this demand, including Chattanooga (TN), Kansas City (KS), Austin (TX), Charlotte (NC), Mesa (AZ), and St. Jose (CA) [2]. These communities, for the most part, are beginning to gain positive returns on investment—some intended and many unanticipated—across many sectors of their economies. P. McKeehan (&) PMcK Consulting, 1012 St. Louis Street, Edwardsville, IL 62025, USA e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2017 T.M. Vinod Kumar (ed.), Smart Economy in Smart Cities, Advances in 21st Century Human Settlements, DOI 10.1007/978-981-10-1610-3_39
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Public and private sector leaders use a number of information sets, including an analysis of potential economic impact, to inform their decision for making these Internet investments. While an economic impact (EI) analysis or statement has a place in the deliberations, use of the “number” or total estimated impact regularly extends beyond the initial decision-making process. Once decided, these same leaders tend to use these fiscal estimates to justify the capital investment through its potential economic benefits. Politicians, project stakeholders, economic developers, and representatives of the media use the estimate to explain and/or justify the decision. Put into the context of future jobs, wages, capital investment, and “indirect” economic benefits, it becomes very difficult to argue against the investment. Regrettably, the “number” is almo
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