UA&P study shows positive multiplier benefits from local auto industry

UA&P study shows positive multiplier benefits from local auto industry

by UA&P News Desk on October 26, 2010 - 10:20 am

from the Philippine Information Agency, by Ritchelle Alburo

Cagayan de Oro City (22 October) — A study undertaken by the University of Asia and the Pacific (UA&P) shows strong production linkages and extensive output, household income and employment multiplier effects of the Philippine automotive manufacturing industry.

This UA&P study titled Economic Impact of the Philippine Automotive Manufacturing Industry: Production Linkages and Multiplier Effects found the strength of the backward linkage of Philippine automotive industry to be relatively strong, yielding a backward linkage index of 1.2.

The backward linkage index of the sector is higher than tourism, business process outsourcing, information technology, electronics, mining, housing and agribusiness.

Production linkages are vital for developing an economy’s capacity to produce high value goods and create new jobs. In the case of the automotive sector, these linkages are established with sectors such as plastics, rubber, chemicals, metals and composite materials and the electrical and electronics industries, among others.

As a consequence, the output multiplier of the automotive industry as estimated by UA&P is 3.67, the fourth highest among the 24 industries in the Philippine economy. This means that the one-peso increase in consumption spending or investment spending for motor vehicles will yield 3.67 pesos worth of additional output to the economy. Read more >

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