The Investment Impact Model (I3M) is an input/output model extending multiplier analysis to a social accounting matrix framework.
It estimates the socioeconomic impact of an investment in a given sector on a national economy and can be adapted to represent different countries. As a multiplier-based model, the I3M tracks the propagation of demand shocks throughout the economy’s sectors in the short-to-medium term and can disaggregate a national economy into 57 sectors. It is embedded in a web-based interface, allowing users to calculate an investment’s direct, indirect and induced impact on value-added, employment, domestic and imported raw materials use, and intermediate consumption. The most advanced version of the I3M can also provide estimates of product complexity, use of key infrastructure including ports and utilities, and the demand for different types of labour, including skilled and unskilled, by incorporating data beyond country social accounting matrices.
The I3M is used worldwide in appraising the economic and social impacts of prospective and supported investments, both private and public.
Vivid Economics has licensed the model suite to a Free Zone Authority in the Middle East for appraisal of the economic benefits of prospective investments and to benchmark their impacts. The I3M was also used to build an impact assessment of a potential free zone in Tees Valley (UK) under several post-Brexit trade scenarios, and provided input to a White Paper prepared for the Treasury. For the Foreign & Commonwealth Office, the model estimated the secondary benefits to UK exporters from a boost in the Turkish financial sector. It has also assisted the government of Peru in a programme funded by the Inter-American Development Bank that idenfitied the economic sectors with the largest multiplier effects, driving fund allocation for the Peruvian National Infrastructure Plan.