The economic impact is associated with the effect of a measure or decision on the economy.
With etymological origin in the Latin word impactus , impact is a concept that refers to a blow , whether physical or symbolic. The economic , for its part, is that linked to the economy : the science focused on the analysis of the distribution of resources to satisfy the material needs of human beings.
The idea of economic impact , in this framework, refers to the effect that a measure, an action or an announcement generates on the economy . When something has an economic impact, it causes consequences in the economic situation of a person, a community, a region, a country or the world.
Examples of economic impact
Suppose a government announces a massive increase in taxes and utility rates . This decision has an economic impact on the population since people will have to allocate a greater percentage of their income to comply with their obligations to the State and to cover their basic needs. This, in turn, will mean that they will have less money available for other expenses: that is, they will hire fewer services and buy fewer products. The nation's economic activity will thus suffer a contraction. In short, the economic impact of the government announcement is evident.
On the other hand, if a multinational company reports that it will make a million-dollar investment in a small town to open an industrial plant and generate 3,000 jobs, said decision will have an enormous economic impact on the town. The inhabitants will benefit from the productive activity and the movement of money that will be generated with the inauguration.
With all this we can deduce that any company that achieves its objectives has an economic impact, to a greater or lesser degree. Although this concept is usually associated with great successes or failures, we must not forget that a mere effect on someone's economy is enough to demonstrate its presence.
A government decision that generates a positive economic impact can encourage savings.
Positive and negative effects
To graph what was stated in the previous paragraph, let's think about the following hypothetical situation: a person decides to undertake the development of a computer application on their own with the aim of marketing it; Its launch is a complete success and therefore he decides to move forward with new projects, but this time with the collaboration of another expert. The economic impact of this small project, therefore, reached the other professional's life, as it provided him with the opportunity to get a job.
The opposite case also generates an economic impact, even if it is negative: it is not necessary to think of the bankruptcy of a large company with an international presence to exemplify this phenomenon, since it is enough for an activity or a decision to generate an effect on the economy of a individual.
Economic Impact Assessment
Precisely for this reason it is so important to evaluate the potential economic impact of a project before launching it. This concept is related to that of social impact , which is the consequence that a given action produces in a community. Although the levels on which each of them directly impacts are different, they are closely linked: a layoff causes the absence of economic income and often also the loss of self-confidence.
The domino effect that a movement can have in the business field is really dangerous. During the planning process, therefore, we must ask ourselves questions about the positive and negative consequences that we can cause in each individual, in the community and, depending on the magnitude of the company, at the national or international level. Will we generate new jobs? Will we attack the continuity of another company? Do we have enough capital to face the first stage of the business?