Understanding economic impact in local communities

Who conducted the economic impact analysis behind the infographics and economic impact figures?

Ernst & Young (EY) conducted multiple economic impact analyses using models based on input-output economics, a widely accepted methodology, with Microsoft providing data inputs on datacenter construction, operations, taxes, and headcount.

This work was carried out by EY’s Quantitative Economics and Statistics Team (QUEST), which specializes in independent economic impact assessments for companies, infrastructure developers, and governments around the world. These teams routinely evaluate how large investments contribute to jobs, labor income, economic output, and public revenues at the national and sub-national level.

EY’s QUEST team works alongside regional economists with deep expertise in local labor markets, supply chains, and public finance systems. For European locations, QUEST collaborates closely with EY teams across the region, using the SPECTRUM model, which is purpose-built to assess local and regional economic impacts based on official national and EU statistical data and established economic accounting frameworks.

EY’s role in this work is to provide an independent, third-party assessment using standard economic methods. While Microsoft supplies factual data on its investments and operations, EY applies its own models, assumptions, and economic relationships to estimate the resulting direct, indirect, and induced effects. These estimates are intended to explain scale and context, rather than predict outcomes or provide exact counts.

How is economic impact calculated in the U.S.?

The analysis uses an input-output model to estimate the economic contributions of Microsoft datacenter capital investment and operations in the region. This methodology was first proposed by Wassily Leontief, a Nobel prize laureate in economics. It allows for the estimation of the demand impacts based on the data reflecting the activity of the analyzed sectors. It incorporates historical information on regional supply chains using input-output tables created by US statistical agencies using surveys of businesses. These tables summarize the spending relationships between different sectors of the regional economy, identifying the industries from which a given sector purchases intermediate goods and services required to generate its own production, as well as showing how the products generated by a given sector are used by other industries in their production process. This analysis uses the industry standard input-output model software from IMPLAN. IMPLAN’s software is used by government agencies and researchers at over 200 institutions as well as private businesses.

The input-output model allows distinguishing the following types of effects:

• Direct effects. For capital investments, these effects include the spending by Microsoft on contractors, estimates of the on-site construction labor and associated labor income, and estimates of value added (GDP) generated. For operations, these effects include operational spending, Microsoft employees and their labor income, and value added generated.
• Indirect effects arising from the demand for goods and services provided by other firms within the region of analysis along the supply chain. These effects are estimated using industry supply chain information specific to the region.
• Induced effects arising from consumer spending of persons employed directly by Microsoft as well as those working in firms along the supply chain, which leads to yet additional production, value added, and employment. These effects are estimated using household expenditure information specific to the region.

How is economic impact calculated in Europe?

The analysis uses the EY SPECTRUM input-output model to estimate the economic contributions of Microsoft datacenter capital investment and operations in the region. The SPECTRUM model is based on a methodology first proposed by Wassily Leontief, a Nobel prize laureate in economics. It allows for the estimation of the demand impacts based on the data reflecting the activity of the analyzed sectors. It incorporates historical information on regional supply chains using input-output tables created by national, EU, and other official statistical agencies using surveys of businesses. These tables summarize the spending relationships between different sectors of the regional economy, identifying the industries from which a given sector purchases intermediate goods and services required to generate its own production, as well as showing how the products generated by a given sector are used by other industries in their production process.

The input-output model allows distinguishing the following types of effects:

• Direct effects. For capital investments, these effects include the spending by Microsoft on contractors, estimates of the on-site construction labor and associated labor income, and estimates of value added (GDP) generated. For operations, these effects include operational spending, Microsoft employees and their labor income, and value added generated.
• Indirect effects arising from the demand for goods and services provided by other firms within the region of analysis along the supply chain. These effects are estimated using industry supply chain information specific to the region.
• Induced effects arising from consumer spending of persons employed directly by Microsoft as well as those working in firms along the supply chain, which leads to yet additional production, value added, and employment. These effects are estimated using household expenditure information specific to the region.

How is economic impact calculated in Malaysia?

The analysis uses an input-output model of Malaysia to estimate the economic contributions of Microsoft datacenter capital investment and operations in the region. The model is based on a methodology first proposed by Wassily Leontief, a Nobel prize laureate in economics. It allows for the estimation of the demand impacts based on the data reflecting the activity of the analyzed sectors. It incorporates historical information on industry sector supply chains in Malaysia using 2021 input-output tables published by the Malaysia Department of Statistics. These tables summarize the spending relationships between different sectors of the Malaysian economy, identifying the industries from which a given sector purchases intermediate goods and services required to generate its own production, as well as showing how the products generated by a given sector are used by other industries in their production process.

The input-output model allows distinguishing the following types of effects:

• Direct effects. For capital investments, these effects include the spending by Microsoft on contractors, estimates of the on-site construction labor and associated labor income, and estimates of value added (GDP) generated. For operations, these effects include operational spending, Microsoft employees and their labor income, and value added generated.
• Indirect effects arising from the demand for goods and services provided by other firms within the region of analysis along the supply chain. These effects are estimated using industry supply chain information specific to the region.
• Induced effects arising from consumer spending of persons employed directly by Microsoft as well as those working in firms along the supply chain, which leads to yet additional production, value added, and employment. These effects are estimated using household expenditure information specific to the region.

Why are some job figures presented as precise numbers rather than rounded totals?

Job estimates are model outputs based on regional economic data and are presented as calculated to maintain accuracy. Rounded figures may be used in narrative contexts where appropriate, but exact values are retained to avoid overstating impacts.

Are these exact job counts?

No. Most of the job figures shown are model-based economic estimates intended to illustrate overall scale and regional impact rather than exact headcounts. This is true for indirect and induced jobs, which are calculated using standard economic models to estimate supply chain and household spending effects. Some figures, such as certain direct and contractor job counts, are based on Microsoft-provided data where available.

Why are construction and operations impacts separated in your infographics?

Construction and operations have different spending patterns, timelines, and job durations. Showing them separately helps distinguish between construction impacts and ongoing operations impacts.

What does economic activity mean?

Economic activity is how people earn and spend money, helping communities grow through jobs, shopping, and local services.

What do local jobs mean?

Local jobs include direct jobs, which are the people hired for a datacenter, indirect jobs which help by providing services like truck drivers and security services, and induced jobs which are created when those workers spend money in the community, like workers at a local restaurant.

What is labor income, and how is it calculated?

Labor income is the total earnings paid to workers, including wages, salaries, and benefits. It typically includes:

• Pay for employees working directly on a project
• Earnings of workers in supporting industries and local businesses
• Benefits such as health insurance and retirement contributions

Labor income is calculated by estimating the number of jobs supported and applying average compensation levels for those roles in the region.

How are direct economic effects defined?

Direct effects reflect Microsoft’s own economic activity. For capital investments, this includes spending on contractors, on-site construction labor and associated labor income, and the value added (GDP) generated. For operations, direct effects include operational spending, Microsoft employees and their labor income, and the value added generated.

What are indirect economic effects, and how are they calculated?

Indirect effects arise from the purchase of goods and services provided by other firms within the region through the supply chain. These effects are estimated using industry-specific supply chain information that reflects regional economic relationships between sectors based on surveys by government economic statistics agencies.

What are induced economic effects, and what do they represent?

Induced effects result from consumer spending by individuals employed directly by Microsoft and by firms within the supply chain. This household spending supports additional production, value added, and employment in the regional economy and is estimated using regional household expenditure data.

What types of local industries and sectors can benefit through regional supply chains?

Datacenter construction and operations support a wide range of local industries through regional supply chains. Depending on the phase of the project and local market conditions, these may include sectors such as:

• Construction trades and building materials
• Electrical, mechanical, and infrastructure services
• Logistics, transportation, and warehousing
• Equipment manufacturing and maintenance services
• Professional and technical services (engineering, design, consulting)
• Utilities and energy-related services
• Administrative and business support services including security contractors
• Restaurants, grocery stores, and other retail supported through household spending

These supply chain and household spending effects help embed datacenter projects within the broader local economy and support activity across multiple sectors beyond on-site construction and operations.

Are tax figures in the infographic the same as “new revenue kept by the municipality”?

Tax-related figures in an economic impact analysis are generally modeled estimates of tax activity associated with economic output and labor income in the region, including indirect and induced effects. Tax systems differ by country, and some revenues are redistributed across jurisdictions, so these figures should not be interpreted as a promise of specific municipal budget outcomes.