ON THE PLAUSIBILITY OF THE SUPPLY-DRIVEN INPUT-OUTPUT MODEL: EMPIRICAL EVIDENCE ON JOINT STABILITY*

ABSTRACT. This paper addresses the issue of the plausibility of the supply-driven input-output model from an empirical standpoint. We suggest that requiring production coefficients to remain perfectly fixed during an application of the supply-driven input-output model is unnecessarily restrictive given the extensive use of approximation methods in mathematics, economics and regional science. Simulations with the supply-driven version of an input-output table for a representative region are shown to result in changes in the corresponding production coefficients well within conventional tolerance levels.     

In Vindication of the Ghosh Model: A Reinterpretation as a Price Model

Ghosh's ‘supply-driven’ input-output model is a well-known alternative for Leontief's traditional ‘demand-driven’ input-output model. The Ghosh model calculates changes in gross sectoral outputs for exogenously specified changes in the sectoral inputs of primary factors. Typically, the model is interpreted so as to describe physical output changes as caused by changes in the physical inputs of primary factors. It has been convincingly argued, however, that this interpretation in terms of quantities is implausible. In the present paper it is shown that the supply-driven input-output model becomes plausible, once it is interpreted as a price model. That is, sectoral output values change due to price changes, which are caused by price changes for the primary inputs. Therefore the term Ghosh price model is adopted for the supply-driven model, whereas the demand-driven model is referred to as the Leontief quantity model. Dual to this Leontief quantity model is the standard Leontief price model. It is shown that the results obtained by the two price models are equivalent. Interpreting the supply-driven input-output model as a price model also allows for a meaningful interpretation of the inverse matrix in terms of multipliers. As the dual to the supply-driven (or Ghosh price) model the Ghosh quantity model is derived, which is equivalent to the demand-driven (or Leontief quantity) model.     

ON THE PLAUSIBILITY OF THE SUPPLY—DRIVEN INPUT-OUTPUT MODEL: A THEORETICAL BASIS FOR INPUT-COEFFICIENT CHANGE*

ABSTRACT. Oosterhaven (1988) labels the supply-driven input-output model “theoretically implausible” and criticizes the straightforward use of the model for impact studies. This comment extends and corrects some of the issues addressed by Oosterhaven. We derive the characteristics which industry production relations must possess to be consistent with the implied changes in industry inputs and outputs when supply-side input-output models are employed for impact analysis. First, it is shown that an implicit assumption is the characteristic of perfect substitutability among all inputs in each industry production function. This is the polar opposite of the Leontief assumption of zero elasticity of factor substitution among all inputs, and is very unrealistic for large changes from the initially observed solution since it implies that all inputs are non-essential in the production process and that any input can be substituted for all others simultaneously. Second, it is shown that the model may still be reasonable for approximating the effect of small changes since the implied production relation may be interpreted as a cost minimizing choice for a standard constant-returns-to-scale production function linearized around the initial solution under the assumption that relative prices are unchanged. Under this alternative interpretation, the supply-side model may be expected to provide a reasonable approximation, useful for analyzing changes in the neighborhood of the initial solution, but would appear to be inappropriate for analyzing large changes.     

THIS IS NOT AMERICA: EMBEDDING THE COGNITIVE‐CULTURAL URBAN ECONOMY

The aim of this article is to broaden the epistemological basis for investigating the current shift to cognitive‐cultural economies and the resurgence of cities and its socio‐spatial articulation. The point of departure here is that the drivers of the structural changes are indeed more or less ubiquitous, but are played out in different national institutional and urban contexts resulting in potentially diverging cognitive‐cultural economies. Four main drivers of change after 1980 are distinguished. The first is the rise of a new technological paradigm based on digital technology. The second is the thrust towards deregulation and privatization as planks of the neo‐liberal political programme. The third is the intensification of all kinds of linkages between regions across the globe. The fourth driver constitutes the processes of individualization and increasing reflexivity that have fragmented consumer markets. By identifying distinct filters which might shape and mould the impact of these more general drivers on concrete urban areas, a comprehensive framework is presented that can be used to analyse and compare the trajectories of cities while linking them to a larger narrative of societal change. A central line of reasoning is that agglomeration economies – pivotal in Allen Scott's analysis of the emergence of a cognitive‐cultural economy – are themselves embedded in concrete social and institutional contexts which impact on how they are played out. To make this point, we build upon Richard Whitley's business systems. Given this institutional diversity, we expect that various institutional contexts will generate different cognitive‐cultural economies.     

THE ROLE OF DEFENSE CUTS IN THE CALIFORNIA RECESSION COMPUTABLE GENERAL EQUILIBRIUM MODELS AND INTERSTATE FACTOR MOBILITY*

ABSTRACT. This study develops a computable general equilibrium (CGE) model of California to examine the impact of recent defense cuts on the state's economy. The study demonstrates use of a CGE model to examine the sensitivity of regional economy models to assumptions about factor migration. Model variants include input-output and closed economy models as limiting cases. The results show that the California economy is sensitive to defense cuts. The multiplier relating the impact of defense cuts to state product ranges from one to almost five, depending on the degree of interstate factor mobility.     

HOUSEHOLD INCOME AND EXPENDITURE IN EXTENDED INPUT-OUTPUT MODELS: A COMPARATIVE THEORETICAL AND EMPIRICAL ANALYSIS*

ABSTRACT At the regional level in-migrant and indigenous workers are likely to have different income levels and consumption propensities. The effects that these differences have upon a local economy are explored within an extended input-output modeling framework. Two iterative input-output models, due to Miernyk et al. and Blackwell, are recast as systems of simultaneous equations and are shown to produce identical results. A detailed analysis is made of model structure and a method is outlined for the decomposition of income multipliers. Empirical versions of the two models, for Boulder and Cork, are reconstructed with data from the original studies and are used to make comparisons of the two local economies.     

Forecasting Structural Change With a Regional Econometric Input-Output Model

The sophistication of regional economic models has been demonstrated in numerous ways, most recently in the form of linking several modeling systems or in the expansion in the number of equations that can be manipulated successfully to produce impact analyses or forecasts. In this paper, an alternative perspective is employed. What do regional macro-level forecasts indicate about the process of structural change? A new methodology is illustrated that enables analysts to make forecasts of detailed structural change in the interindustry relations in an economy. Using a regional econometric input-output model developed for the Chicago metropolitan region, derived input-output tables are extracted for the period 1975–2016. These tables are then analyzed to determine the forecasted direction of structural changes for the region. The innovation illustrated here is based on a model that exploits the general equilibrium spirit of computable general equilibrium models through the adjustment of input coefficients to clear markets.     

基于产业群视角的河南省产业配套能力分析

产业配套能力是企业在选择投资区域时最关注的外部条件。吸引投资是促进河南省经济发展的重要途径,利用产业配套能力来评估投资环境显得尤为重要。本文利用《2007年河南省投入产出表》,采用主成分分析法,识别出河南省目前存在18个具有内在经济联系的产业群。通过对各产业群的经济关联和空间分布的分析,发现林木产业群、耐火材料产业群是河南省配套能力最完善的产业群类型,煤电产业群和烟酒制品产业群的配套能力也相对完善,其余各产业群由于存在较低的产业关联度或空间分布过于分散,导致配套水平偏低。     

UPPER BOUNDS ON THE SIZES OF INTERREGIONAL FEEDBACKS IN MULTIREGIONAL INPUT-OUTPUT MODELS*

ABSTRACT. Upper bounds are presented for a measure of the overall percentage error caused in a multiregional input-output model when interregional feedback effects are ignored. This error figure is thus a measure of the magnitude of interregional linkages. The upper bounds are expressed as a function of the levels of self-sufficiency in the regions in the model and of the norms of the regional technical coefficients matrices. Experimental results are presented for a variety of examples that are thought to reflect real-world situations, and it is clear that in many cases the upper bound (and hence the error) is extremely small. The implication is that single-region input-output models may be adequate for a variety of questions.     

Supply-Side Urbanization? A Pooled Time Series Analysis

Tests of Tolley's supply-driven urban growth model for expanding sets of countries for time periods varying from 1831–1980 to 1951–1980 lead to its rejection in most contexts. The exception is for higher-income market economies, where supply-driven and demand-driven determinants of urban growth are shown to alternate with long-wave periodicity: During epochs of structural transformation following stagflation crises, supply-driven determinants dominate; during periods of technological diffusion following deflationary depressions, demand factors come to the fore. But for middle- and low-income nations, whatever the cross-section and timespan, Tolley's hypothesis is not supported: Coefficients have the wrong sign, suggesting that urban growth is greatest when there are the greatest relative gains in rural productivity, but are statistically insignificant. The need is demonstrated for an urban growth theory that is substantially broader than normally has been modeled, with dynamics that are firmly grounded in an understanding of the periodic structure of economic macrohistory.     

FIRST NATURE, SECOND NATURE, AND METROPOLITAN LOCATION

ABSTRACT. Economies of scale, transportation costs, and factor mobility can interact to produce agglomerations even in the absence of any pure external economies. This paper offers a monopolistic competition model of a city that serves an agricultural hinterland; unlike most analyses in location theory, the model is fully general equilibrium, but it has strong links to older concepts in geography, notably the idea of "market potential." The analysis shows that the forward and backward linkages that hold a population concentration together also allow that concentration to occur in a variety of possible sites—that is, there are multiple equilibria (indeed a continuum) for metropolitan location.     

产业集群的识别与选择分析——基于陕西省产业集群的研究

产业集群现已成为发展区域经济和增强区域竞争力最有效的途径之一。然而,如何识别和选择产业集群则是困扰决策者和研究者的主要技术问题。本文在分析国内外产业集群相关研究方法的基础上,以陕西省为例,综合应用LQ法和基于投入产出表的主成分分析法,尝试性地进行了区域产业集群的识别与选择研究,结论显示LQ法和基于投入产出表的主成分分析法可以很好地体现产业集群的"空间联系"和"功能联系"。     

Linked population and economic models: some methodological issues in forecasting,analysis, and policy optimization

Some problems associated with demographic-economic forecasting include finding models appropriate for a declining economy with unemployment, using a multiregional approach in an interregional model, finding a way to show differential consumption while endogenizing unemployment, and avoiding unemployment inconsistencies. The solution to these problems involves the construction of an activity-commodity framework, locating it within a group of forecasting models, and indicating possible ratios towards dynamization of the framework. The authors demonstrate the range of impact multipliers that can be derived from the framework and show how these multipliers relate to Leontief input-output multipliers. It is shown that desired population distribution may be obtained by selecting instruments from the economic sphere to produce, through the constraints vector of an activity-commodity framework, targets selected from demographic activities. The next step in this process, empirical exploitation, was carried out by the authors in the United Kingdom, linking an input-output model with a wide selection of demographic and demographic-economic variables. The generally tenuous control which government has over any variables in systems of this type, especially in market economies, makes application in the policy field of the optimization approach a partly conjectural exercise, although the analytic capacity of the approach can provide clear indications of policy directions.     

Supplier linkages of foreign-owned manufacturing firms in the UK: the influence of entry mode,subsidiary autonomy and nationality

This article tests the hypothesis that the supplier linkages which subsidiaries of foreign-owned companies make with indigenous firms in the UK are influenced by entry mode, the amount of autonomy which is granted to the subsidiary which is established and the nationality of the parent company. Data were collected from foreign-owned firms in the UK and an ordered probit model with the change in supplier linkages as the dependent variable was devised and tested. The results provide support for the hypothesis in terms of entry mode and subsidiary autonomy, but not in terms of parent nationality. This study represents a new approach to the study of supplier linkages and integrates concepts and studies from both regional science and international business. Foreign-owned firms which entered the UK by means of a greenfield entry tend to have a relatively positive effect on the creation and growth of supplier linkages, whereas those which entered by way of a merger or acquisition tended to have a relatively negative effect on the growth of such linkages. This finding has important implications for academics and policy-makers alike. Although the potential impact which the creation of supplier linkages can make upon the host country's economy has long been recognised, little research has been undertaken to identify the key factors which affect such growth. With increased levels of globalisation it is important that governments are able to maximise the impact which foreign direct investment makes upon the economy of their countries.     

Employment growth and regional development: industrial change and contextual differences between Denmark and Sweden

This paper explores the potential drivers behind uneven regional development in the context of employment growth in Denmark and Sweden. In particular, we are interested in the roles of urbanization, industrial change and the rise of the new economy as manifested in the growth of the two economies in 2002–2007. The aim of this paper is, therefore, to analyse the impact of a number of key industrial sectors on regional employment growth in the two countries. The empirical analysis is based on longitudinal matched employer–employee data retrieved from official registers in each economy from 2002 to 2007, a period of strong national growth following the crisis of early 2000. Our findings indicate that the two economies follow a similar pattern in addressing total employment growth; but looking at changes in employment levels across the national borders of these two relatively similar open economies, we find that, although in general these economies react relatively similarly to changes, embarking on a narrower analysis of the individual sectors reveals marked national differences. This indicates that context matters in the analysis of regional economic dynamics in terms of structure, system and policy.     

Spatial distribution of innovation networks,technological competencies and degree of novelty in emerging economy firms

This paper analyses the relationship of the accumulation of technological competencies at the firm level, the spatial distribution of the firm's innovation networks and the degree of novelty of product innovation. Firm-based primary data collected in two innovative regions in emerging economies are used to predict higher degrees of novelty in emerging economy firms. Similarly to advanced economy firms, the results show that international linkages are associated with higher degrees of novelty. However, new-to-the-world innovation in emerging country firms is fundamentally externally driven, suggesting that international linkages seem to be a compensating mechanism for the initially lower technological capabilities rather than a complementary source of knowledge.     

A LONG RUN ECONOMIC EFFECT ANALYSIS OF ALTERNATIVE TRANSPORTATION FACILITY PLANS—REGIONAL AND NATIONAL

Initially we explained the main part of our model which enabled us to estimate and compare the long run and global economic effects of alternative transportation facility plans. Usually the short run effects of this kind of regional economic impact have been analyzed by input-output models, and the long run effects by econometric models. However, in this model, the input-output model and the econometric model were combined so as to enable us to analyze the global and long run economic effects. The interregional trade pattern coefficients and input coefficients change endogenously in each year in this model. It has previously been assumed that the fixedness of interregional trade pattern coefficients and input coefficients are the weakest points in applying the interregional input-output model for long run studies. In our model, on the contrary, variation of these coefficients has central importance. We then showed the results which were obtained from applying this model to a comparison of the long run economic effects of alternative bridge construction plans over the Japan Inland Sea. The results obtained from this demonstrative calculation are reasonable. Thus, we think, this model has sufficient applicability to the comparison of economic effects of alternative plans for nationwide transportation facility improvement. However, the variations of production cost differentials between regions are given exogenously in this model. To make them endogenous, agglomeration economies should be considered more precisely. In that case, the applicability and the precision of this model could be improved.     

Productive Relations in the Northeast and the Rest‐of‐Brazil Regions in 1995: Decomposition and Synergy in Input‐Output Systems

Using a set of interregional input‐output tables built by Guilhoto (1998) for 1995 for two Brazilian regions (Northeast and rest of the economy), the methodology developed by Sonis, Hewings, and Miyazawa (1997) is applied in the construction of a series of linkages such that it is possible to examine, through the nature of the internal and external interdependencies, the structure of trading relationships between the two regions. The methodology uses a partitioned input‐output system and exploits techniques that produce left and right matrix multipliers of the Leontief Inverse. This procedure facilitates the classification of the types of synergetic interactions within a preset pairwise hierarchy of economic linkages subsystems. In general, the results show that the Northeast region has a greater dependence on the rest of the economy region than the rest of the economy has on the Northeast region, and at the same time the rest of the economy region seems to be more developed as it presents a more complex productive structure than the Northeast region.     

GREEN GROWTH OR ECOLOGICAL COMMODIFICATION: DEBATING THE GREEN ECONOMY IN THE GLOBAL SOUTH

This article examines recent institutional thinking on the green economy and the implications of official understandings and structuration of a green economy for the global South. Assertions about the transformative potential of a green economy by many international actors conceals a complexity of problems, including the degree to which the green economy is still based on old fossil economies and technical fixes, and the processes through which the green economy ideation remains subject to Northern economic and technical dominance. The article places the intellectual roots of the green economy within a broader historical context and suggests some ways the strategic economic and ideological interests of the global North remain key drivers of green‐economy thinking. The analysis is substantiated through two illustrative Latin American examples: the Mesoamerican Biological Corridor and green economy initiatives in Brazil. These suggest that, if the green economy is to address global challenges effectively, it must be conceptualized as more than a bolt‐on to existing globalizing capitalism and encompass more critical understandings of the complex socio‐economic processes through which poverty is produced and reproduced and through which the global environment is being transformed, a critique which also applies to mainstream discourses of sustainable development.