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Other IO Applications with Complications

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Rethinking Input-Output Analysis

Part of the book series: SpringerBriefs in Regional Science ((BRIEFSREGION))

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Abstract

This chapter deals with two other types of applications of IO analysis that regularly appear in the literature without consideration of their limitations. Regional and interregional, forward and backward linkage analysis, also known as key sector analysis, only looks at the benefits while ignoring the policy cost of stimulating the sector chosen. Structural decomposition analysis of national and interregional economic growth only looks at demand-side explanations of growth, while ignoring the supply side, which is especially a problem when analysing longer-run economic growth. Hence, in both cases, policy makers are presented only half of the truth.

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Notes

  1. 1.

    On 26 August 2019, “forward linkages” and “backward linkages” combined scored about 12,300 hits with Google Scholar, and “key sector analysis” about 520 hits.

  2. 2.

    The own region origin percentages and the Rest of the Country origin percentages in Table 8.2 represent weighted alternatives for the two unweighted direct backward spatial linkages in Miller and Blair (2009, p. 563), whereas the corresponding destination percentages represent weighted alternatives for the two unweighted direct forward spatial linkages in Miller and Blair.

  3. 3.

    Note that this weighing serves to aggregate the individual sector linkages to a weighted total spatial linkage. It should, therefore, not be confused with the rescaling of individual sector’s total linkages to better represent the planner’s preference as advocated by Hazari (1970) and Loviscek (1982).

  4. 4.

    The two intra-regional total linkages and two bi-regional total spillovers in Table 8.3 represent weighted alternatives for the two sets of two unweighted total spatial linkages in Miller and Blair (2009, p. 563).

  5. 5.

    An interesting side-result is the rather strong relation found between the relative size of a regional sector, as measured by means of its location quotient (LQ), and the relative size of its total linkages. A clear specialization bonus seems to be present: regional sectors with large LQs systematically have larger total linkages than the corresponding sector in other regions, as first noted in Oosterhaven (1981).

  6. 6.

    On 26 August 2019 “structural decomposition analysis” and “input–output” combined scored about 3710 hits on Google Scholar.

  7. 7.

    Note that the definition of the share may need to be adapted to the definition of the variable, as in case of labour productivity growth (see Oosterhaven and Broersma 2007). In international economics, when v = export growth, r = some country, n = all of the world and i = products, shift and share analysis is known as constant market share analysis (see Jepma 1986, for an overview and several applications).

  8. 8.

    Elements of SSA may be integrated into an SDA, as suggested by Lahr and Dietzenbacher (2017). They show that in case of a regional SDA—with the added data from two national IOTs—both \(\Delta {\mathbf{y}}\) and \(\Delta {\mathbf{L}}\) may be split up further into changes in the levels and structures of the regional and national y and L. Such a further split up of the decompositions of Table 8.5, however, does not change their demand-driven nature nor their other properties to be discussed next.

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  1. University of Groningen, Groningen, The Netherlands

    Jan Oosterhaven

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  1. Jan Oosterhaven
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Correspondence to Jan Oosterhaven .

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Oosterhaven, J. (2019). Other IO Applications with Complications. In: Rethinking Input-Output Analysis. SpringerBriefs in Regional Science. Springer, Cham. https://doi.org/10.1007/978-3-030-33447-5_8

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