### 5. Economic Ripple Effects of the ICT Industry

## (1) ICT industry’s added-value induction effects

The added value induced by the ICT industry in 2005 increased 4.2% from the previous year to about 42 trillion yen. During the 10-year period from 1995 to 2005, the added value induced by many industries decreased or remained flat, but the added value induced by the ICT industry kept increasing except for 2002, indicating that the share of the ICT industry in the whole economy has increased (Graph 1-15).

The number of jobs induced by the ICT industry during the same 10-year period remained almost unchanged. Furthermore, the number of jobs induced by each sector of the ICT industry shows that the number of jobs induced by the ICT-related manufacturing sector, which had accounted for the largest share, decreased sharply, indicating that this is a major factor behind the sluggish increase in the number of jobs induced by the ICT industry as a whole (Graph 1-16).

### 6. Analysis of Regional ICT Industries

We have investigated the share of the regional real domestic output by the ICT-related manufacturing sector and ICT-related service sector in the national real domestic output by the same industries. With regard to the manufacturing sector, the study shows that although the share of the Kanto area was the largest both in 1990 and 2000, its share has been shrinking. On the other hand, the shares of the

Graph 1-15 Changes in the Added Value Induced by Major Industries

Chubu, Kyushu and Tohoku areas have increased, indicating that the manufacturing sector has been shifting production from Kanto to other areas. With regard to the service sector, the study shows that the share of Kanto area was the largest both in 1990 and 2000 and that the share has been increasing. On the other hand, the shares of other areas have decreased or remained flat, indicating that the accumulation of the service sector in the Kanto area has been increasing.

Furthermore, a study of the relationship between the ICT service sector in Kanto and the ICT-related manufacturing sector in 8 areas other than Kanto shows that the output of the ICT-related manufacturing sector in the 8 areas other than Kanto that was induced by final demand for the ICT service sector in Kanto increased consistently from 1990 to 2000. The growth rate of the output induced by such final demand had been 45.7% in 5 years from 1990 to 1995 and jumped 102.4% in the next 5 years from 1995 to 2000. The output of the ICT service sector in Kanto that was induced by final demand for the ICT manufacturing sector in the 8 areas other than Kanto also increased consistently from 1990 to 2000. The growth rate of the output induced by such final demand had been 1.5% in 5 years from 1990 to 1995 and surged 97.2% in the next 5 years from 1995 to 2000. This suggests that in the ICT industry, a large mechanism may be at work to bring about production inducement effects to the whole of Japan through interregional economic ripple effects. It can be said that the growth of the ICT industry in Japan is contributing to an integrated development of regional economies.

Graph 1-16 Changes in the Number of Jobs of Each Sector Induced by ICT Industry

(Source for graphs 1-15 and 1-16) “Survey on Economic Growth by ICT”