Abstract
The traditional literature to identify key sectors, based on an input–output demand-side approach, evaluates the impact on sectoral production of the exogenous inflows to activities. This approach has been the centre of an important debate, based on the lack of robustness of the results provided, that questions their usefulness for planning decisions. In this paper, we propose a novel method to analyse the key sectors of an economy that differs from the traditional approach in two aspects. First, we use a supply-side approach comprising exogenous increases in sectoral productivity. Second, we use a computable general equilibrium model that captures the complete relations between the economic agents and their optimisation behaviour. The computable general equilibrium model, which assumes perfect competition and cleared markets of goods and factors, allows to identify those sectors with the greatest impact on consumer’s welfare, which will be considered the key sectors of the economy. In particular, we apply our method to detect key sectors in two regional Spanish economies (Catalonia and Extremadura).
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Notes
See Pyatt and Round (1979) for the conventional SAM multiplier analysis and Cardenete and Sancho (2006), for the extraction method in the SAM framework. Additionally, Los (2004) used the hypothetical extraction approach in a dynamic multisectoral model to analyse the impact caused by the disappearance of a sector of the economy.
The first study analyses the productivity gains of 85 sectors in the US economy during the period 1960–2005. The second quantifies the productivity gains of 27 sectors in Spain, Germany, France, Italy, the United Kingdom, the European Union and the US between 1995 and 2007.
In particular, the communications technology sector and those other that have bought into this technological sector have made a large contribution to total productivity gains during the last decade.
The analysis showed a sectoral ranking in terms of the impacts caused by each sector on the consumption price index of the regional economy. No other variables were considered in the study.
These authors used a multisectoral computable general equilibrium model that was adapted to the characteristics of the towns under study. For each sector of production, they simulated increases in factor productivity, capital and labour.
Catalonia is located in the north-east of Spain and is a highly industrialised region. It represents around 7 % of the national territory, 16 % of population (7,500,000 inhabitants) and 20 % of Spanish GDP. Extremadura is located in the south-west of Spain and has an important agricultural sector. It represents around 8 % of the national territory, 2.4 % of population (1,108,000 inhabitants) and 2 % of Spanish GDP.
Llop et al. (2002) compared the regions of Catalonia and Extremadura by means of a linear and demand-driven model of SAM multipliers.
Shoven and Whalley (1972).
A complete description of the model, with a list of the equations and the variables involved, can be found in De Miguel-Vélez et al. (2009).
The model distinguishes between production goods and consumption goods. Consumption goods are obtained through a conversion matrix of fixed coefficients that defines a direct (and linear) relationship between production prices and consumption prices.
Acemoglu (2009) contains a formal analysis of these possibilities.
The SAMEXT is for 2000 and the SAMCAT is for 2001. Given that the statistical availabilities in each region concern different years, the same temporal reference could not be used. However, the results can be directly compared given that there is only one year’s difference between the two SAMs, and the patterns of revenues and expenditures have practically no variation over short periods of time.
This analysis is a simplification of the complex relationship between unemployment and productivity gains, which certainly deserves greater attention than it is possible to give within the scope of this paper. Nevertheless, we have also used a labour supply as in Oswald (1982) to analyse a situation with rigidities in a labour market with endogenous unemployment. The fact that the results obtained in this way do not differ substantially from the ones showed here is proof of the robustness of the conclusions.
According to the Banco de España (2006), in the year 2000 a typical Spanish home set aside 32 % of its disposable income to purchase a house.
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Acknowledgments
The authors acknowledge the financial support of the Spanish Ministry of Culture (grant ECO2013-41917, ECO2012-34046 and SGR2014-299) and of the Catalan Government (grant SGR2009-322). Useful comments and suggestions by Erik Dietzenbacher and Ferran Sancho have substantially improved an earlier draft. The paper has also benefited from the suggestions by an anonymous referee and by the editor of the journal.
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De Miguel, F.J., Llop, M. & Manresa, A. Sectoral productivity gains in two regional economies: key sectors from a supply-side perspective. Ann Reg Sci 53, 731–744 (2014). https://doi.org/10.1007/s00168-014-0641-1
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DOI: https://doi.org/10.1007/s00168-014-0641-1