Industries earn money within a county by selling products and services to industries outside the county, which are called exports. Industries, as well as households, also earn money by re-spending on products and services that are produced within that county. That is, industries and households keep money within the county by purchasing goods and services that are produced within that county. A situation which The Otsego County Chamber often advocates. Economic multipliers are designed to capture the direct, indirect, and induced economic impacts of spending by a particular industry.
Direct effects are the expenditures and jobs created by an industry within a county.
Indirect effects are the jobs and expenditures made within a county needed to produce the goods and services to support the direct effects. Induced effects are the jobs and expenditures required to fulfill demands for goods and services of households in a county. Consider first the nature of an expenditure or spending multiplier. An industry spends money on labor, capital, and land as well as on purchases of goods and services from a variety of other industries. That industry has a direct impact on these industries.