Estimating the economic contribution of infrastructure
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In order to estimate the economic contribution of infrastructure investment to gross value added and GDP, input-output multipliers were constructed. The IO multipliers were derived from the latest Canadian input output table, which can be used to assess the effects on the economy of a change in the final demand of an output. These multipliers, which have a provincial/territorial dimension, are applied to the estimates of investment in infrastructure which were established in the first stage, in order to calculate the value added, output and employment created through the investment activities.
The following is an example of the IO multipliers related to the production of the infrastructure asset, Hospitals. These multipliers are then applied to the investment estimate of that asset to determine the economic contribution.
| Producing Industry | Jobs | Wages | Imports | GDP |
|---|---|---|---|---|
| Care services | 0.03 | 0.7 | 0.1 | 1.3 |
| Construction | 2.9 | 271.4 | 156 | 439.6 |
| Distributive trade & transport. | 1 | 63.3 | 8.3 | 103.4 |
| Information, finance & professional | 1.5 | 105.9 | 15.7 | 184.6 |
| Manufacturing | 0.8 | 65.8 | 49.5 | 106.1 |
| Mining & Utilities | 0.1 | 7.5 | 2.2 | 26.5 |
| Non-Profit & Government services | 0.1 | 3.9 | 0.5 | 5.8 |
| Other services | 0.2 | 8.1 | 1.5 | 10.7 |
| Primary industries | 0.3 | 10.3 | 4.4 | 17.4 |
It is important to note that the economic contribution is only calculated for the ‘work put in place’ (the production of that infrastructure asset), it does not include the economic contribution associated with the on-going use and consumption of the infrastructure. For example, the multipliers will estimate the impact on the economy from the construction of a new subway line, including direct and indirect impacts; but it will not estimate the impact on the use, or consumption, of that subway line.
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