The Importance of Import Substitution in Regional Economic Impact Analysis: Empirical Estimates from Two Cincinnati Area Events

Abstract

The purpose of this article is to estimate the size of what the authors term the "import substitution effect" that may occur as part of the incremental economic impact (or economic growth) of a community-based economic event. This import substitution effect is simply the spending by local residents that is redirected from imports into the local economy because of the event. Estimates, which are survey based, are for two very different kinds of Cincinnati area events: the 1988 Tall Stacks Celebration and the 1990 Travel, Sports, and Boat Show. For both events, the size of the import substitution effect is comparable to that produced from exports, that is, spending by nonlocals in the local economy. As such, the authors believe that ignoring this import substitution effect may significantly understate the true incremental impact of local events.