# Input – Output Analysis

Document Sample

```					Input – Output Analysis

MK Geografi Ekonomi
Dept. Geografi FMIPA UI
Next …………

Exports

Internal Goods
and Services

Imports
The Economic Base Model
ET = Total Employment
EX = Export Employment
EL = Local Employment

ET = EX + EL        (1)

Define a = EL/ET
Multiply by ET and substitute into (1):
ET = EX + aET
Solve for ET:

ET = ( 1/1-a)EX
Example, Economic Base
Model
If a = .67

Then:( 1/1-.67) =( 1/.33) = 3

If EX = 500, then ET = 3 x 500 or 1500.

If EX rises to 750, ET becomes 3 x 750 or 2250

and if EX falls back to 400, ET declines to 1200
Measurement of the Economic
Base Multiplier
Direct Surveys
“Short-cut” Approaches:
Assumption or Assignment
Minimum Requirements
Location Quotients
Industry Specific Models:
Input-output
Regional econometric
Example of Minimum
Requirements
Minimum Requirements Manufacturing

0.12
0.1
0.08
mfg85
0.06
mfg95
0.04
0.02
0
10           100            1000
Total Employment (Thousands)

If total employment was 100,000, then minimum requirements
is 6%, or 6,000. If actual employment were 10,000, 4,000 would
be assigned to exports.
Repeat for all industries, sum local shares to obtain “a”
Example of Location Quotient
Approach to Economic Base

Industry    Jobs      LQ     Export          Local
Agriculture 500       0.8    0               500
Mining      300       5.0    240             60
Manufacturing1000     2.0    500             500
Retail      1500      1.0    0               1500
Services    3000      1.2    500             2500

Total         6300           1240            5060

a = 5060/6300 = .803, so (1/1-.803) = 5.08
Size of Region and Size of
Multiplier

1.0

.67

Wn.State
Mult. = 3
World - Mult = 
Individual      Log Population
Sells all labor
a = 0, multiplier = 1.0
Regional Input-Output Models
Final Demand
Industry   Industry   Consump-   Invest-   Govt.   Exports   Total
1          2          tion       ment                        Sales
Industry 1
Industry 2
Labor
Income
Other
Value
Imports
Total
Purchases

Total Sales = Total Purchases
Total Sales = Intermediate Sales + Final Sales
Total Purchases = Intermediate Purchases + Value Added
+ Imports
Washington State
Input-Output Model
Handouts: Transactions Table
Direct Requirements Matrix
Direct & Indirect Requirements Matrix
Direct, Indirect, & Induced Requirements
Matrix
Input-Output Notation
Impact Analysis Using I/O
Models

Final Demand
Direct, Indirect
& Induced
Output

=                      X
Requirements
Matrix

Employment Impacts calculated from Output Impacts
Impact Analysis with I/O
Models
Key Inputs: Final Demand values for
output, income, and jobs

Key modeling requirements: I/o model
relevant to the problem

Results: usually reported for jobs,
income, output, and taxes
Direct & Indirect Output
Multipliers
1   1.2   1.4   1.6   1.8   2

Natural Resources
Food Products
Forest Products
Machinery
Aerospace
Other Mfg
Construction
T.C.U.
Services
Direct & Indirect Labor Income
Per Dollar of Final Demand
0   0.1   0.2   0.3   0.4   0.5   0.6

Natural Resources

Food Products

Forest Products

Machinery

Aerospace

Other Mfg

Construction

T.C.U.

Services
Direct & Indirect Jobs Per \$
Million Final Demand
0   5   10   15   20   25

Natural Resources

Food Products

Forest Products

Machinery

Aerospace

Other Mfg

Construction

T.C.U.

Services
Output Multipliers
1.00   1.50   2.00   2.50   3.00

Natural Resources

Food Products

Forest Products

Machinery
Direct & Indirect
Aerospace

Other Mfg                                   Direct, Indirect &
Induced
Construction

T.C.U.

Services
Labor Income Multipliers
0   0.2   0.4   0.6   0.8   1

Natural Resources

Food Products

Forest Products

Machinery
Direct & Indirect
Aerospace

Other Mfg                                      Direct, Indirect, &
Induced
Construction

T.C.U.                                   Labor Income
Per \$ Final Demand

Services
Employment Multipliers
0   5   10   15   20   25   30

Natural Resources

Food Products

Forest Products

Machinery
Direct & Indirect
Aerospace

Other Mfg                                     Direct, Indirect &
Induced
Construction

T.C.U.

Services
Regional Models, continued
• Regional Econometric Models

• Interregional Input-output
models

• Structural Change
Regional Econometric Models
The Washington Projection & Simulation
Model
Coefficient
Change               Consumption

Imports       Output              Exports           National
(I/O Relations)                          Econometric
Model
State & Local
Employment      Government
Income        and
Investment
Population

Productivity Rates
Wage rates, tax rates, nonearnings income
WPSM Simulation of Change in
Aerospace Exports
Aerospace Exports
160

120                      Consumption
100
State & Local
80                      Expenditures
60                      Fixed Investment

40                      Disposable Income
20
Persons Employed
0                      (hundreds)
1975    1980    1985   Population
(hundreds)
Multiregional Models

Region B
Region A

Region D

Region C
Multiregional Input-Output Model
(intermediate & final transactions
payments)

AA       AB          AC        AD
BA       BB          BC        BD
CA       CB          CC        CD
DA       DB          DC        DD
Feedback Loops
Simulation of Columbia Basin
Irrigation Project Development
United States (AK & HI Inset)

Project Region

Other Washington
Estimate of Employment
Impacts from Multiregional
Model
4000
Local Agriculture
3500
3000                           Local Food
2500                           Products
Jobs

Other Local Jobs
2000
1500                           Project Construction
1000
500                           Other Washington
Jobs
0
0       10         20
Project Year
Gross Output Levels
Required to Deliver 1961
Final Demand
General 37.6%         39.8%
Industries                      40.8%

Materials 18.5%      17.0%       14.7%
Metalworking
& Chemicals          14.5%      16.0%
13.6%
28.8%
All Other 30.3%
28.5%
Total Gross
Output         677    689        686
1939   1947       1961
Employment Required to Deliver 1961
Final Demand with earlier Technologies
101       86      58      Millions of man-years
100%

80%                                 All Other
Chemicals
60%
Metalworking
40%
Materials
20%                                 General Industries

0%
1939    1947     1961

Source: A. Carter, Structural Change in the American Economy
Capital Stock Required to Deliver 1961
Final Demand
\$ 1961 F.D.
662     617     523
100%
All Other
80%
Chemicals
60%
Metalworking
40%
Materials
20%
General Industries
0%
1939   1947    1958
U.S. Structural Change -
Output, GNP, Intermediate
Production
Gross
50.7%
National 51.2%                   51.2%
Product

Intermediate
Sales                49.3%    48.8%
48.8%

Total Gross
Output         270     435        688
1939    1947       1961
Input-Output Model Basics

Tom Harris
University Center for Economic Development
MS 204
Reno, NV 89557-0105

and

Gerald A. Doeksen
Oklahoma State University
Oklahoma Cooperative Extension Service
515 Ag Hall
Stillwater, OK 74078
Examples of Interrelationships
Between Sectors:

•   Sectors purchase from other sectors
•   Sectors sell to other sectors
•   Sectors sell outside the local economy
•   Sectors buy outside the local economy
Inputs                                 \$

\$         Basic                   Products
Industry
Overview of
Community
\$       \$
Economic              Labor                Inputs
System                    Goods &
Services

Households       \$        Services

\$                                         \$
Input-Output analysis creates a
picture of a regional economy
describing flows to and from
industries and institutions
What Input-Output Analysis Can Do:
• Input-Output Analysis is an accounting
framework
• Input-Output analysis can be used to
predict changes in overall economic
activity as a result of some change in the
local economy
Uses of Input-Output Analysis

• Provides a description of a local
economy
• Predictive model to estimate impacts
3 Basic Components of
Input-Output Models

• Transactions Table
• Direct Requirements Table
• Total Requirements Table
Transactions Table
• A transactions table shows the monetary
flows of goods and services in a local
economy
• Represents monetary flows for a given
time period, usually one year
Transactions Table Flows
• Total outlays = Total output
• Intermediate purchases are goods and services
purchased and used in the local production
process
• Final demands are purchases for final
consumption
• Final payments are payments for factors or
inputs outside intermediate production process
Example Transactions Table

Agriculture Health    Services    Final   Total
Demands Output
Selling Sectors
(\$ million)

Agriculture       10        6           2         18     36
Health             4        4           3         26     37
Services           6        2           1         35     44
Final             16       25          38          0     79
Payments

Total Input       36       37          44        79     196
Predictive Use
of Input-Output Analysis
• Impacts are tracked throughout the
economy
• The multipliers are derived from regional
economic accounts
• Only local transactions are used to create
the multiplier effect
Direct Requirements Table
• Direct requirements are the purchases of
resources (inputs) by a sector from all
sectors to produce one dollar of output
• Creates a production recipe
Direct Requirements Table

Agriculture      Health   Services
Selling Sectors

Agriculture         0.278         0.162     0.045
Health              0.111         0.108     0.068
Services            0.167         0.054     0.023
Final Payments      0.444         0.676     0.864

Total               1.000         1.000     1.000
What are Multipliers?

Multipliers measure total change
throughout the economy
from one unit change
for a given sector.
Three Types of Multipliers
are calculated from Model
1. Output
2. Employment
3. Income
Three levels of Multipliers

Type I Multipliers
Type II Multipliers
Type III Multipliers
Type I Multipliers
• Include direct or initial spending
• Include indirect spending or businesses
buying and selling to each other
• The multiplier is direct plus indirect effect
divided by direct effect
Type II Multipliers
• Includes Type I Multiplier effects
• Plus household spending based on the
income earned from the direct and indirect
effects – the induced effects
TYPE III MULTIPLIERS
• Type III Multipliers are modified Type II
multipliers.
• Therefore, Type III Multipliers also include
the direct, indirect, and induced effects.
• Type III Multipliers adjust Type II
Multipliers based on spending patterns
amongst different income groups.
Type I Multipliers include:
 Direct
Type I Multipliers are derived from the
Total Requirements Table

In math, this is:    X = (1-A)-1 Y
Total Requirements Table

Agriculture        Health          Services
Selling Sectors
(\$ million)

Agriculture       1.446            0.268           0.085

Health            0.199            1.163           0.090

Services          0.258            0.110           1.043

Total             1.903            1.541           1.218
Explaining the Health Sector
Type I Multiplier
• For a \$1.00 change in final demand sales
in the local economy, the total direct and
indirect impacts are \$1.541
Type II Multipliers include:
 Direct
 Induced (Households)

Type II Multipliers are derived from
the Total Requirements Table with
Households
Transactions Table with Households

Ag   Health   Services House-         Final Total
holds      Demands Output
Selling Sectors
(\$ million)

Ag            10      6          2          2         16     36
Health         4      4          3         10         16     37
Services       6      2          1          7         28     44
Households     3      6         10          0          0     19
Final         13     19         28          0          0     60
Payments

Total Input   36     37         44         19         60    196
Total Requirements Table
with Households

Agriculture   Health     Services Households
Selling Sectors

Agriculture     1.536       0.369      0.197      0.429
Health          0.386       1.370      0.318      0.879
Services        0.388       0.256      1.203      0.619
Households      0.279       0.311      0.341      1.319

Total           2.589       2.307      2.059      3.245
Explaining the Health Sector
Type II Multiplier

For a \$1.00 change in final
demand sales in the local
economy, the total direct, indirect
and induced impacts are \$2.307
Multipliers
• Direct requirements represent direct or initial
spending
• Direct and indirect effects include the direct
spending plus the indirect spending or
• Direct, indirect and induced effects include direct
and indirect plus household spending earned
from direct and indirect effects
Other Multipliers
• Employment Multipliers
Type I
Type II
Type III
• Income Multipliers
Type I
Type II
Type III
Example -
Type I Employment Multiplier

• Agricultural Sector Type I Employment
Multiplier = 1.43

When the Agricultural Sector realizes a 1
employee change, total employment in the
study area changes by 1.43 jobs from direct
Example –
Type II Employment Multiplier

• Agricultural Sector Type II Employment
Multiplier = 2.25

When the Agricultural Sector realizes a 1
employee change, total employment in the
study area changes by 2.25 jobs from direct,
Breakdown of
Type II Employment Multiplier -
Agricultural Sector

Direct Effects     =   1.00
Indirect Effects   =   0.43
Induced Effects    =   0.82

Total     =   2.25
Example –
Type I Income Multiplier

• Agricultural Sector Type I Income
Multiplier = 1.96

When the Agricultural Sector realizes a \$1.00
change in income, total income in the study
area changes by \$1.96 from direct and
Example -
Type II Income Multiplier

• Agricultural Sector Type II Income
Multiplier = 2.50

When the Agricultural Sector realizes a \$1.00
change in income, total income in the study
area changes by \$2.50 from direct, indirect
Breakdown of
Type II Income Multiplier -
Agricultural Sector

Direct Effects   =   \$1.00
Indirect Effects =   \$0.96
Induced Effects =    \$0.54

Total           =    \$2.50
Caution When Using Multipliers

• Multiplier values include direct
effects
• Do not aggregate sector multipliers
to derive an aggregate multiplier
• Be cautious of large multipliers
• Be cautious in using a multiplier
from another study area
Procedures Used
For This Analysis

• IMPLAN (IMPact analysis for PLANning)

*   Geographical database
*   Software and data for model
construction and impact analysis
*   History of IMPLAN
IMPLAN USE FOR HEALTH
SECTOR ANALYSIS

• Develop county-wide input-output model
• From State Employment Security Offices
derived health sector employment
• Use IMPLAN to derive county-wide output,
employment, income and sales tax
impacts from the local health sector
Database of IMPLAN

•   528 Industrial Sectors
•   Most 3 or 4 digit SIC
•   All standard counties in the U.S.
•   Now available at zip code level
Any Questions?
Econ Base vs Input-Output Models
• Leontief developed an “input-output” method for estimating
economic impacts and tracing the flows of dollars. Leontief
later won the Nobel Prize in 1973, largely related to this
work.
• Input-Output expands heavily upon the economic base
model of the economy.
Economic Base Techniques               Input-Output Analysis
1)   Basic and Non-basic sectors    1)   Many different
industries/sectors
2)   Ripple (multiplier) effects    2)   Ripple (multiplier) effects
analyzed at the B/NB level          contained in the interindustry
3)   Analyzes changes and impacts        transactions
at a gross B/NB level          3)   Analyzes changes and impacts
4)   Very general, but…                  at a sector by sector level,
tracing flows of dollars
between industries
4)   Much more precise, but…
The Economic Base Theoretical Model
• The EB model assumes that the basic sector is the
primary cause of local economic growth; that is, it is the
economic base of the local economy.
Non-Local
\$\$\$’s

Local
\$\$\$’s
Basic Sector               Non-Basic Sector
Employment                  Employment

The Local Economy
Input-Output Model

• The IO model is centered on the idea of inter-industry
transactions:
– Industries use the products of other industries to
produce their own products.
– For example - automobile producers use steel,
glass, rubber, and plastic products to produce
automobiles.
– Outputs from one industry become inputs to
another.
– When you buy a car, you affect the demand for
Taken from a Power Point presentation prepared by
glass, plastic, steel, etc.the University of Utah.
Pam Perlich at
Basic Input-Output Logic
Tires
Glass                  Plastic     Other
Steel
Components

Automobile Factory
From the Tire   Individual
Producer’s     Consumers

Perspective                     FINAL
School
Districts    DEMAND
FOR TIRES
Tire Factory     Trucking
Companies

INTER-
Automobile
MEDIATE
Factory     DEMAND
FOR
TIRES
Input-Output Analysis: The BIG Point
• The implicit assumption in economic base techniques is that each
basic sector job has a multiplier (or ripple) effect on the wider
economy because of purchases of non-basic goods and services to
support the basic production activity. (the Basic Sector drives the
Non-basic Sector)
• However, we know that Non-basic sector businesses purchase Non-
basic goods and services and Basic sector businesses purchase
Basic sector goods and services. There are inter-industry linkages
not contained within the Economic Base model. The economy is
much more complex than the economic base techniques allow or
attempt to model.
• The central advantage of Input-Output analysis is that it tries to
estimate these inter-industry transactions and use those figures to
estimate the economic impacts of any changes to the economy.
• Instead of assuming a change in a basic sector industry having a
generalized multiplier effect, the IO approach estimates how many
goods and services from other sectors are needed (inputs) to
produce each dollar of output for the sector in question. Therefore it
is possible to do a much more precise calculation of the economic
IO Conceptualization of the Economy
• The major conceptual step is to divide the economy into
“purchasers” and “suppliers”.
--Primary Suppliers: They sell primary inputs (labor, raw materials)
to other industries. Payments to these suppliers are “primary
inputs” because they generate no further sales. (example:
Households)
--Intermediate Suppliers: They purchase inputs for processing into
outputs they supply to other firms or to final purchasers.
(example: Automaker)
--Intermediate Purchasers: They purchase outputs of suppliers for
use as inputs for further processing. (example: Automaker)
--Final Purchasers: Purchase the outputs of suppliers in their final
form and for final use. (example: Households)
• Intermediate Suppliers and Intermediate Purchasers are the
same thing!
• Primary Suppliers and Final Purchasers may or may not be the
same entities. When they are the same (households), these
Simplified Circular Flow View of The
Economy
\$\$ Consumption Spending (Yi)

Goods & Services

Labor

\$\$ Wages & Salaries           Businesses purchase from
their own goods / services.
the output of                     labor & other
demand or Yi                        as inputs to          demand or xij (output of
production          industry i sold to industry j)

Taken from a Power Point presentation
prepared by Pam Perlich at the University of Utah.
The Structure of IO Analysis
• The ultimate goal of the Input-Output Analysis technique is to
generate a Total Requirements Table that shows the flows of
dollars between industries in the production of output for a
given sector.
• To arrive at this final result, IO Analysis requires two earlier
steps:
1) Transactions table: Contains basic data on the flows of
goods and services among suppliers and purchasers during a
study year.
2) Direct requirements table: Derived from the transactions
table, this shows the inputs required directly from different
suppliers by each intermediate purchaser for each unit of
output that purchaser produces.
• “Input output analysis can be thought of as documenting and
exploring the precise systems of interindustry exchange
through which different components of regional product
become different components of regional income.” (Bendavid-
The Transaction Table and Direct Reqs
The Transactions Table
Tables
(in thousands of units)
Intermediate Purchasers         Final Purchasers    Total
--Agriculture --Manufacturing   --Households        Sales (outputs)
Intermediate Suppliers
--Agriculture                       10                30                  60              100
--Manufacturing                      5                10                  35               50
Primary Suppliers
--Households                        85                10                  15              110

Total Purchases (inputs)           100                50                 110              260

Direct Requirements Table
(in thousands of units)
Purchasers
--Agriculture --Manufacturing
Intermediate Suppliers                                     Every unit of output
--Agriculture                     0.10              0.60   requires inputs of a certain
--Manufacturing                   0.05              0.20   amount from other areas
Primary Suppliers                                          of the economy.
--Households                      0.85              0.20

Total Purchases (inputs)          1.00              1.00
The First Round of Economic Impacts
Direct Requirements Table
(in thousands of units)
Intermediate Purchasers
--Agriculture    --Manu
Intermediate Suppliers
--Agriculture                0.10      0.60
--Manufacturing              0.05      0.20
Primary Suppliers
--Households                 0.85      0.20

Total Purchases (inputs)   1.00       1.00

Total Requirements Calculation (First Round)
(in thousands of units)
Sales to         Sales as Direct Inputs
Final Purch.     To Agr           To Manu Total
By Agriculture                      200             20         60       80    To
By Manufacturing                    100             10         20       30   Rd. 2
By Households                         0            170         20      190

Total indirect rounds

By All Supliers                     300                               300
The Second-Fourth Rounds of Econ.
Impacts
Total Requirements Calculation (Second Round)
(in thousands of units)
Sales to     Sales as Direct Inputs
Final Purch. To Agr           To Manu Total
By Agriculture                   80              8.0        18.0    26.0
By Manufacturing                 30              4.0         6.0    10.0
By Households                     0            68.0          6.0    74.0

Total indirect rounds                                             110.0

Total Requirements Calculation (Third Round)
(in thousands of units)
Sales to     Sales as Direct Inputs
Final Purch. To Agr           To Manu Total
By Agriculture                  26              2.6        6.0      8.6
By Manufacturing                10              1.3        2.0      3.3
By Households                    0            22.1         2.0     24.1

Total indirect rounds                                              36.0

Total Requirements Calculation (Fourth Round)
(in thousands of units)
Sales to     Sales as Direct Inputs
Final Purch. To Agr           To Manu Total
By Agriculture                  8.6             0.9        2.0     2.8       and so on
By Manufacturing                3.3             0.4        0.7     1.1     until the mult.
By Households                     0             7.3        0.7     8.0      effect ends

Total indirect rounds                                              11.9
The Total Requirements Results
Total Direct and Indirect Requirements Calculation
(in thousands of units)
Sales to Final     Total         Total        Total
Purchasers   Direct Sales Indirect Sales    Sales
Agriculture                  200.0           80.0          38.7     318.7
Manufacturing                100.0           30.0          14.9     144.9
Households                --                190.0         109.6     299.6

Total                       300.0           300.0         163.1      763.1
When:
1) there are “Final Sales” of Agriculture = 200 and “Final Sales” of
Manufacturing = 100
2) we see a Total Economic Impact = 763.1, with that impact broken
down as:
1) 300.0 in Initial Sales to Final Purchasers
2) 300.0 in Total Direct Sales
3) 163.1 in Total Indirect Sales
The 300 units in Final Sales generate an additional 463.1 units of
economic activity. This illustrates the multiplier effect captured by
IO models.
The Total Requirements Table
Total Requirements Table
Every Unit in Final Demand of…
Requires Total Sales by        Agriculture     Manufacturing
Agriculture                     1.15           0.86
Manufacturing                   0.07           1.29
Households                      1.00           1.00

Total                           2.22             3.15

For Agriculture                   1.00 Sales to Final Purchasers
1.00 Sales by Primary Suppliers
0.22 Interindustry transactions
Similar to our Base Multiplier in Econ Base Theory
A 1.0 unit increase in demand for agriculture leads to
a total of 2.22 of sales.

For Manufacturing                 1.00 Sales to Final Purchasers
1.00 Sales by Primary Suppliers
1.15 Interindustry transactions
Similar to our Base Multiplier in Econ Base Theory
A 1.0 unit increase in demand for manufacturing leads to
a total of 3.15 of sales.
RIMS Multipliers
• The Bureau of Economic Analysis (BEA) produces State Level
Regional Input-Output Multipliers by industrial sector which are
often used as the basis for constructing an IO model.
• Originally developed in the 1970s, RIMS (Regional Industrial
Multiplier System) multipliers are used for “impact analysis” for a
given economy.
• RIMS II data were developed in the 1980’s (latest version is
1998)
• Users can purchase data from BEA for \$275 per region. BEA
provides handbooks for the use of this data.
• County or multi-county regional RIMS data come in two series
Series I: for 490 detailed industries
Series II: for 38 industry aggregations
• Empirical analysis shows that RIMS II data is accurate within 5%
of locally developed industry multipliers.
• Advantages of the RIMS Multipliers:
1) Cheap                2) Can be compared across regions
3) Detailed industries 4) Updated regularly to reflect new
data
Example RIMS Multipliers

1Totaldollar impact due to \$1 in output in the industry. 2Change in earnings due to \$1 change in
industry. 3Change in employment resulting from \$1 million increase in output delivered to final demand.
• The Bureau of Economic Analysis (BEA) has several web
resources on RIMS Multipliers and how they are
prepared:
http://www.bea.doc.gov/bea/regional/rims/

Brief Description of RIMS II
http://www.bea.doc.gov/bea/regional/rims/brfdesc.cfm

RIMSII User’s Handbook
http://www.bea.doc.gov/bea/ARTICLES/REGIONAL/PERSI
NC/Meth/rims2.pdf
The Problems with IO Analysis
Practical Issues
• Data needs and complexity: IO models are tremendously complex
and very data hungry. This typically places these models in the
hands of experts.
Theoretical Issues
• Time/Data issues: Usually a single year’s data are used to develop
the Total Requirements Table. But 1) purchases may actually reflect
a longer term investment and 2) short term trends may impact the
data.
• Stability of the technical coefficients over time: Technology changes,
prices change, and demand changes, all affecting the coefficients in
the Tot Reqs Table. This can impact the results if the coefficients are
“out of date”.
• IO assumes a linear relationship between increasing demand for
inputs and outputs: This assumes away 1) externalities and 2)
increasing/ decreasing returns to scale.
• Industrial categorization: IO models still assume that each industry
1) has a single, homogeneous production function and 2) each
produces one product. These assumptions do not reflect the real
The Power of IO Models
• Despite these problems IO analysis is a tremendously popular
and powerful analytical tool.
• “The chief value of regional input-output analysis is in its
descriptive analytical power.” (Bendavid-Val, p.113)
• “As a descriptive tool, input-output tables:
-present an enormous quantity of information in a concise,
orderly, and easily understood fashion;
-provide a comprehensive picture of the interindustry structure
of the regional economy;
-point up the strategic importance of various industries and
sectors;
-highlight possible opportunities for strengthening regional
income and employment multiplication.” (Bendavid-Val, p.113)
• Urban Planners should be capable of understanding the
structure, assumptions, and data requirements of Input-Output
Analysis. While you may not be performing this analysis in your
jobs, you almost certainly will come across this type of work