Seoul, South Korea – A new study by the Korea Institute for Industrial Economics and Trade (KIET) has revealed that the construction industry plays a pivotal role in driving the Korean economy. The industry's production inducement effect is significantly higher than the average for all industries, underscoring its importance as an economic engine.
The report, titled "Analysis of the Ripple Effects of Construction Activities on Manufacturing," found that the construction industry's production inducement coefficient was 2.017 in 2020, which is 10.5% higher than the overall industrial average of 1.875. This indicates that a given increase in output in the construction sector leads to a larger increase in the overall output of the economy.
Furthermore, the construction industry outperforms manufacturing in terms of job creation. For every 1 billion won of output, the construction industry generates 10.8 jobs, compared to 6.5 jobs in the manufacturing sector, representing a 1.7-fold increase.
Based on the 2020 input-output table, the report analyzed the employment inducement effects and found that a 5 trillion won investment in the construction industry would create 31,575 jobs within the construction sector and an additional 22,441 jobs in related industries. In manufacturing, a 5 trillion won investment would generate 6,021 jobs, with the largest contributions coming from metal products (1,451 jobs), cement, concrete, and clay (1,083 jobs), rubber and plastic products (623 jobs), electronic equipment (600 jobs), iron and steel (423 jobs), and general machinery (401 jobs).
In terms of production inducement effects, a 5 trillion won investment in the construction industry would induce 5.58 trillion won of production in related industries, with manufacturing accounting for 2.797 trillion won. "To quickly emerge from the current economic downturn, it is necessary to expand construction investment, which has a high ripple effect on both the industry itself and related industries," the report stated.
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