About the Economic Impact Study

Project Consultants

The Rolls-Royce Economic Impact Study was conducted by Blackbox Research, an independent Singapore based research consultancy that focuses on consumer insight and business foresight.

Blackbox Research was supported by Professor Michael Li, a tenured associate professor at the Nanyang Business School at Nanyang Technological University (NTU), Singapore. Professor Li has served as the founding director of Nanyang EMBA Programme and is the founding deputy director of NTU's M.Sc. (Managerial Economics) Programme. He has a wealth of experience in conducting detailed econometric studies and forecasting. 

Data Sources

Data for the study was sourced from a combination of Rolls-Royce and its JV partners; the Singapore Department of Statistics; Rolls-Royce suppliers’ financial information from earnings reports, research interviews and surveys. In-depth interviews were conducted with key stakeholders ranging from JV partners, customers, suppliers, Singapore government agencies, and related trade associations. 

Data Collection

To capture the full value-added contributions Rolls-Royce is making across the entire Singapore economy, Rolls-Royce utilised the standard input-output (IO) model methodology. In this study, Blackbox Research utilised the most recent Year 2000 National Input-Output Table of Singapore, released in 2006, which contains 152 industries and 152 commodities. Countries often generate their National Input-Output Tables once every five to ten years. In the Singapore case, the most recent table is the 2000 table, released in 2006.

Future growth projections were calculated using internal data provided by Rolls-Royce, including planned new investment, and government published industry growth forecasts.

This approach required financial and headcount data from Rolls-Royce, its JV partners and their corresponding suppliers in Singapore. Following is the list of data collated and used in the IO model:

  • Operation revenue or total sales
  • Operation expenditure (ideally breakdown into key sectors)
  • Capital investment
  • GST payment
  • Corporate tax
  • Other indirect taxes
  • Remuneration
  • Number of full time employees
  • Number of part time employees

Technical Explanations & Definitions

An input-output model is a representation of the flows of economic activity. It captures what each business or sector must purchase from every other sector in order to produce a dollar’s worth of goods or services. By tracing these linkages between sectors, input-output models can estimate both the direct effect and the secondary effects of spending. 

The direct effect measures the immediate contribution of Rolls-Royce operations and its immediate suppliers to the Singapore economy. Most of the direct effects stem from Rolls-Royce operations.

Secondary effects of corporate spending are of two types: indirect and induced.

Indirect effects are the changes in sales, income or jobs in sectors that supply goods and services to Rolls-Royce suppliers. These are the benefits that accrue “up-stream” in the Rolls-Royce supply chain.

Induced effects are the additional contribution to the Singapore economy resulting from increased expenditure by the workforce employed by Rolls-Royce and its supply chain partners. The income earned by these employees is spent on various goods and services, leading to further economic activity and employment.

Multipliers capture the size of the secondary effects, usually expressed as a ratio of total effects to direct effects. Total effects are direct effects plus the secondary (indirect plus induced) effects. The most common multipliers used are output, value-added (VA), employment, import and income multipliers.

Value-added (VA) is a widely accepted metric used in economic impact studies because it is a part of Gross Domestic Production [GDP]. By definition, VA is the amount by which the value of a product/service is increased at each stage of its production, exclusive of the cost of materials and bought-in parts and services, known as intermediate products and services.

An induced value added contribution is the additional value-added contribution to the economy as a result of household spending from their earned income from Rolls-Royce and its supply chain partners. For example, a Rolls-Royce employee spends $25 for a meal, which costs $15 to make. Then the remaining $10 is an induced value-added contribution. 

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