Input-Output Models and Derived Indicators: A Critical Review

Abstract

Input-Output literature can be characterized as complicated and chaotic. The complications concern the nomenclature of concepts for the derived indices from the multipliers’ models, their mathematical expressions and computable applications. The terminologies’ inconsistencies often end up to a deviation between the description for these indices and their actual computation, or/and to a misunderstanding as for their usefulness and outcomes. The aim of the paper is to help the readers to face the weaknesses in the literature. In this way, the paper provide an overview with a critical look to the constructed multipliers’ matrices and their derived indicators from the I-O models, and elaborate the causes for the scrutinized confusions. The paper proposes both terminological and computational adjustments and differentiated approaches for the models and their indices, in order to ameliorate their capabilities and to exploit their peculiarities for the developmental patterns. Alternative interpretative ways and applicable expansions are suggested.

Reposition of Forward-to-Backward Input-Output Analysis

“…Such conclusions are met in the literature and are owed to the postulated markets' restrictions that are connected with the models (F. Giarratani, 1980;Cronin, 1984;Deman, 1988;Briassoulis, 1991;Zhong and Tadayuki, 2013;Aroche Reyes and Marquez Mendoza, 2015;Kolokontes et al, 2019). Of course, the productive sectors cannot produce infinite products and the consumers (in or/and out from the borders, individuals or/and governments) cannot consume infinite quantities, but these factors must not impugn the estimated potential sectoral capabilities for multiplicative impacts dispersions.…”

“…H. Bekhet, 2011;Belegri-Roboli et al, 2011a;Trinh et al, 2012;Hristu-Varsakelis et al, 2012;Mastronardi et al, 2012;Humavindu and Stage, 2013;Pnevmatikos et al, 2013;Ramos and Moreno, 2013;Zhong and productive sectors in an economy. The problem had been highlighted from Yamada (1961); Augusztinovics (1970); Bayers (1976); Jones (1976); Cai and Leung (2004); Kolokontes et al (2019), but it has not really faced yet. Bayers (1976) had pointed out the problem of fallible derivation of forward linkages indicators (FLs'), but without to turn the interest of researchers from the conventional backward-to-forward (=quantitative Leontief's demand-driven) approach to a suitable "quantitative forward-to-backward approach".…”

“…These potential non-weighted effects can be either backward or forward, and must be the base for the policy-makers decisions, together with their weighted expressions that transfer the "potential" to the "indeed feasible" for the various indices taking into consideration the sectoral sizes. The essence of the matter is the measurements to be compatible and comparable (Cronin, 1984;Deman, 1988;Kolokontes et al, 2019). Compatible and comparable backward and forward sectoral multiplicative effects can be contrasted, compared or/and divided, pointing out the sectors that are, either more, or the same strength, as regards their backloading and frontloading multiplicative spillovers, providing simultaneously estimations for the sectoral potential influences (Yamada, 1961;Cronin, 1984;Deman, 1988;Adamou, 2007;Kolokontes et al, 2019).…”

“…The essence of the matter is the measurements to be compatible and comparable (Cronin, 1984;Deman, 1988;Kolokontes et al, 2019). Compatible and comparable backward and forward sectoral multiplicative effects can be contrasted, compared or/and divided, pointing out the sectors that are, either more, or the same strength, as regards their backloading and frontloading multiplicative spillovers, providing simultaneously estimations for the sectoral potential influences (Yamada, 1961;Cronin, 1984;Deman, 1988;Adamou, 2007;Kolokontes et al, 2019). Aroche Reyes and Marquez Mendoza (2015) have also advocated the view that the Ghosh's model has interesting perspectives and it must not be rejected.…”

“…Contemporaneously, quite a few studies are consumed with unnecessary impressive graphics and mathematics, gaining publications, but losing the essence and the logic of simplicity, generating illusions to the readers, the scholars and the policy-makers. Kolokontes et al (2019), without to scope to concentrate their interest on this topic, had entered the idea for the "adjusted" forward analysis in an unprocessed initiatory level, "aiming to tease the curiosity of readers, scholars and researchers", as they had said. Moreover, they had clarified their beliefs that the ideas are put on the table and evolved until to end up to a distinct and correct enunciation.…”