ABSTRACT
This chapter utilizes an Excel-based economic impact optimization (EIO) model to assess commercial and public policy implications of different regulations and strategies for local content and supplier development. The four modules and core assumptions of the model are as follows: Economic environment module, Costs and procurement module, Local content scenario module and Results module. In many emerging economies rich in mineral resources, local content is becoming a strategic consideration in investment decisions and project delivery. The eight hulls are being built in Rio Grande Naval Pole dry dock shipyard in state of Rio Grande do Sul, with local content required to reach 70%. The yard is a wholly new facility. The EIO model is applied to the hypothetical case of a new sub-surface natural resource development, located onshore in a remote coastal region of an emerging economy. The EIO model was then used to spread the gross local content target of 40% across the different expenditure categories.
