Abstract

An Analysis on the National Economic Impacts of the Advertising Industry

Yoo, Seung-hoon
(Associate Professor, Department of International Area Studies, Hoseo University)

Lim, Eung-soon
(Ph.D. Candidate, Department of Economics, Hoseo University)

Ku, Se-ju
(Ph.D. Candidate, Department of Economics, Korea University)

This paper attempts to apply input-output(I-O) analysis to investigate the economic impacts of the advertising industry in the national economy for the year 2003, with specific application to Korea. A static I-O framework is employed, focusing on three topics in its application. First, the impacts of the production or investment in advertising industry on the production, value-added, and employment of other sectors are explored by using demand-driven model. Second, the impacts of the supply shortage in advertising industry on other sectors are looked into by using supply-driven model. Third, the impacts of the rise in advertising rate on prices of other products are discussed by using Leontief price model. This paper pays particular attention to the advertising industry by taking the industry as exogenous and then investigating its economic impacts. In addition, inter-industry linkage analysis is performed to obtain information on the forward and backward linkage effects to quantify the strength of causation among industries. It can be summarized that the advertising industry has a high production-inducing effect, a high supply shortage effect, a low pervasive effect of price change, a low forward linkage effect, and a high backward linkage effect.

Key words : advertising industry, economic impact, input-output analysis, exogenous specification