MarAd Study Details 'Multiplier Effect' Of U.S.-Flag Merchant Fleet

An updated, input-output, economic analysis of America's maritime industries just released by the Commerce Department's Maritime Administration indicates that each dollar in sales by the U.S. merchant marine adds another $3.81 to the national economy. The study, "Economic Impact of the Maritime Industries on the U.S. Economy 1971-78 (An I n t e r i n d u s t r y Analysis)," was prepared by H.C. Chung, professor of economics at the University of Bridgeport, Bridgeport, Conn. It reports that the chain of purchases begun by the maritime activities of the U.S.-flag merchant fleet has a cumulative " m u l t i p l i e r e f f e c t " of 4.811 throughout the economy. This means that each dollar in merchant fleet sales ultimately generates a total of $4.81 in sales and other business activity.

It should be noted that the dollar amounts used in the study were expressed in terms of 1972 dollars. In 1979 dollars (adjusted for inflation) the figures would be 50 percent higher.

Applying the 4.811 multiplier to the U.S. shipping industry, Professor Chung found that the $1.5 billion in merchant fleet sales reported in 1972 induced nearly $7.5 billion worth of business activity in the nation's economy. Similar multiplier effects increased the American shipping industry's contribution to the Gross National Product of the same year to $3.5 billion.

The multiplier for the American American shipbuilding industry in 1972 was 4.701, thus the $2.8 billion government and business invested in shipbuilding services in 1972 had a $13.3 billion impact on the entire economy.

Limited copies of the report are available through MarAd's Public Affairs Office, Room 3895, Main Commerce Building, 14th & E Streets, N.W., Washington, D.C. 20230; telephone (202) 377-2746.

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