REAL-IO: Analytical Toolbox of Inter-regional Input-Output Analysis

Norihiko Yamano, Chun-Hua Wu and Geoffrey Hewings

Outline

Goal of REAL-IO (originally designated as PyIO)

Functions of REAL-IO Single region/country analysis Multi region/country analysis

Future additions

Evolution of IO software in REAL, University of Illinois PyIO 1.0

the first version (Nazara, Guo, Hewings and Dridi; 2003)

PyIO 2.0Windows based interface is created (Wu, 2009)

REAL-IO 2011 Analysis modules are transferred to R

language environment. Capable of flexible additions of new functions Multi country/region time series comparable

indicators Improved graphics output

Goal of REAL IO It is a package of user-interface software

and function modules for input-output analysis.

It provides simple and more complex methods of analysis based on input-output, social accounting and computable general equilibrium models.

REAL-IO is a tool enhancing use of IO-related systems for policy analysis

Potential Role of REAL IO for WIOD

Data being generated by WIOD needs to be complemented by provision of analytical tools to quickly process and interpret findings

REAL-IO has been self-financed – hence development has been slow

Exploring alternative funding options The preliminary (Feb 2011) inter-

country I-O tables are loaded as example

Python/R-based Hybrid model

Python is retained as the basis of user interface for several reasons Python has great computational capability The codes are trans-platform (Windows/

Mac/ Linux) Python is free

R is chosen as the function operations The codes for analytical functions can be

written in intuitive way R is free

Functions of REAL IO

I-O Table Operations Basic I-O Analysis Advanced I-O analysis (Single region / Interregional I-O) Trade indicators Cross-country/Regional comparisons

of indicators

Loading datasheet and quick browsing of industrial structure

Database name

Basic I-O Analysis

Calculate Leontief Inverse Calculate Ghoshian Inverse Do an Impact Analysis Calculate Output Multiplier Calculate Income Multiplier Calculate Employment Multiplier Calculate Input (or Supply) Multiplier

Basic I-O Analysis Multipliers The output multiplier is calculated as the

column sum of the Leontief inverse. The computation of income multiplier requires

the use of wage vector (in the primary input table) to calculate the household input coefficient.

The employment multiplier would require the use of sectoral employment to calculate the labor input coefficient.

The input (or supply) multiplier is computed from the Ghoshian inverse.

More Advanced single country I-O analysis

Import contents of exports Key Sector Analysis Output Decomposition Multiplier Product Matrix (MPM)

Analysis Extracting Method Pull Analysis Push Analysis Field of Influence

Field of Influence

The underlying idea of the field of influence is to assess the changes in the Leontief inverse matrix resulting from the changes in one or more direct input coefficients in the inverse Leontieof matrix.

Used to identify inverse important entries and to identify subset of coefficients or flows for updating

Example (Field of influence)

Focus on Trade and Global Production Network International and interregional trade

growing faster than respective gross products

Nations and regions “hollowing out” as a result of increased fragmentation (Kierzkowski and Jones) in production

As WIOD generates increased supply of intercountry and interrgional databases, PyIO will provide capability to explore different facets of trade structure

Vertical specialization

Demand side: Induced intermediate imports by unit export (Hummels et al.,2001)

Supply side: Imported intermediates end-up in exports (Meng et al., 2011)

Example(demand-side VS)

Production chain: Average propagation length (APL) Ideas of Dietzenbacker and Romero building on earlier

work by Robinson and Markandya How complex is an economy – how many “rounds of

spending” to generate supply chain to meet final demand?

Complement this idea with issues of Sectoral and spatial propagation – paths of

dependence and interdependence Ideas of criticial supply chains and critical linkages

(re-work ideas of field of influence) How have changes in firm organization affected

length and location of propagation process (Romero et al. revealed complex analysis of changes for Chicago over last 3 decades)

Example (APL)

Interregional analysis

Inter-regional feedback decomposition Inter-regional production chain

decomposition (APL) Regional aggregation (e.g. EU15, Asia,

North America)

Inter-regional domestic feedback

Inter-country APL

Trade indicators

Glubel Loyd Intra industry trade RCA Trade by industry and end-use

(intermediate, capital and household consumption)

Bilateral trade by industry and end-use (BTDIxE)

Intermediate for assembly

Other intermediate

Capital

Household consumption

PC & Passenger Cars

Unspecified

Future Additions Address demographic challenges

Consumption, aging etc. Links between trade in goods and services and

migration Handle integrated models

Econometric-IO CGE – multiregional and multinational Economy-environment interactions