In other words, all the money your community spends on energy purchases can be thought of as energy dollars. The magnitude of energy dollar drain from a local economy can represent a significant leakage of financial resources. The economic multiplier, also known as the multiplier effect, is a measure of how much economic activity can be generated in a community by different combinations of purchasing and investment. It helps by generating more economic activity, which strengthens the local economy. A higher economic multiplier will lead to greater economic vitality because business activity is encouraged, and jobs are created and sustained.
Economic growth is enhanced when expenditures with a good economic multiplier are implemented.
From the perspective of local government, this policy approach leads to growth in the local tax base and a healthier fiscal picture. How Local Economic Growth Occurs Initial Investments For many communities, the majority of energy dollars leave the local economy as payments for energy bills and escape local influence. When on-site jobs are created, this is a direct effect. Indirect Effects . Additional jobs and economic activity caused by the original event are known as the indirect effect.