Tools of economic analysis or economic tools are used to encourage economic growth and development of its basic segments in a way that is well-matched with the range of sustainability objectives. The tools can be used by the expertise economists as well as socio-economic planners. In essence, there are basic tools for economic analysis that are utilized in the field.
Social Cost-Benefit Analysis
This tool is applied to survey all possible impacts that originally come from the urban development project. Apart from financial effects, like fees, tax, and investment costs, this method includes a range of social effects, in particular legal aspects, pollution, labor market and so on. The core aim of this analysis is to link the price to each of the effects mentioned above to weigh all of them equally. Thus, these very prices reveal the true value that the society members attach to the caused effects.
In this case, the matter concerns an estimation of various economic activities through the input-output model use. Taking into account that industries make use of various products that come from the other industries in order to manufacture their own, the input-output analysis is applied to capture all these transactions that are performed between the industries. Invented by Wassily Leontief, the method requires an expert to use a variety of large tables of data that describe the transactions that are performed in this or that industry area. Due to these tables, one can easily track the cash flow from one particular industry to the other.
Meet one of the most popular tools for economic analysis – the business case. The latter is widely used by the economic experts in order to smooth the progress of the preparation of the urban plan. Business case includes strong reasoning for the project initiating through estimating the costs and revenues for the public powers and through highlighting the basic demands changes for the government services resulting from the development of the project.
Economic Impact Study
This economic analysis tool is used to trace the total area activity by venue, policy, investment within the pre-defined impact field. The vey impact field can largely improve not only some city or region, but a huge country as well. The studies of economic impact enable the specialists to comprehend the possible economic consequences of all related questions like the following: How many job positions in the region A are provided with a support from the construction segment? How much funds do the businesses and households produce within the area 3? How much tax revenues will be generated by the project 2? The scope of the questions mentioned above provides one with a clear idea that economic impact studies are one of the most commonly used tools for economic analysis in order to smooth the process of preparation of a particular robust urban plan.
In addition to the economic tools that have been discussed above, there are some other methods that are commonly carried in the economic area: financial analysis, demand analysis, feasibility study, etc.