INDUSTRIAL CLASSIFICATION AND ECONOMIC-IMPACT ANALYSIS.
RESEARCH ANALYSIS CORP MCLEAN VA
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The Standard Industrial Classification SIC and related product and enterprise classifications are evaluated for measurement and analysis of the impact of defense expenditures. Based primarily on experience with the use of the SIC in the RAC Economic-Impact Project this is primarily a by-product rather than an analysis directed solely toward evaluation of classification systems. The SIC establishment codes and related product classification are found to have the major advantage of almost exclusive use in government data collection. A major effort would be required to establish an alternative special-purpose classification system comprehensive enough for use in analysis of the structural impact of defense spending, and the system established would have the serious disadvantage of being divorced from the coding structure used in the main body of related economic data collected by the government. The answer to whether establishment or product classification is preferable for impact analysis is found to depend on considerations of both the purpose of the analysis e.g., alternative policy projections as opposed to market forecasts and feasibility of implementation. Establishment classification is found preferable for policy analysis. Product classification has an advantage for market analysis. Definitional problems, however, limit the actual amount of product delineation attainable and increase considerably the data requirements and coding effort.
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