Advances in Input-Output Analysis: Technology, Planning, and Development

By William Peterson | Go to book overview

environmental and social, rather than purely economic, problems. Here the major contribution input-output methodology can make is the incorporation of technical and scientific information in a fashion that is explicit and easily understood by specialists working in the areas concerned. In addition, insofar as the output of pollutants or the demand for skilled labor of various types responds to economic developments, it is plausible to argue that changes in economic structure, defined in terms of variables such as the industrial composition of output, are likely to be more important determinants than macroeconomic growth.

Fumimasa Hamada (Chapter 16) considers the environmental problems likely to arise over the next twenty years as a result of economic development of the island of Hokkaido (the northern island of Japan, of which Sapporo, the location of the Conference, is the capital). Although Hokkaido is currently relatively underpopulated and underindustrialized compared with the rest of Japan, it is expected to grow rapidly over the period of Professor Hamada's study, with an especially large expansion of residential construction. Professor Hamada links a small Keynesian macroeconomic model for Hokkaido (which treats economic developments in the rest of Japan as exogenous) with an input-output model to determine industrial structure and with additional technical relationships to determine local demand for fuel, power, and water and the output of four major pollutants. The rapid expansion of employment and manufacturing industry implies that technical progress in pollution control is needed if environmental standards are not to decline severely.

In Chapter 17 Yoshiko Kido addresses a problem of great importance in Japan and other developed countries--the growing proportion of elderly and inactive members of the population. This has major implications for the allocation of the labor force between health care and industrial activities. Professor Kido uses input-output techniques to analyze the linkages between industrial and "social service" sectors. In practice these linkages are effectively one-way (so that the relevant block of the Leontief inverse is triangular), since social services supply almost all their output directly to households. Although the expansion of demand for social services has been rapid, technical progress (particularly in health care) has in the recent past slowed the increase in numbers employed. It is hard to know whether this will continue in the future: Although much high-technology medicine, particularly the widely publicized forms of it, are extremely labor intensive, other developments, such as the discovery of effective drugs for mental illness, have had labor-saving effects.


REFERENCES

Almon, C., M. B. Buckler, L. M. Horwitz, and T. C. Reimbold. 1974. 1985: Interindustry Forecasts of the American Economy. Lexington, Mass.: Heath.

Arrow, K. J., and M. Hoffenberg. 1959. A Time Series Analysis of Interindustry Demands. Amsterdam: North-Holland.

Bacharach, M. O. L. 1970. Biproportional Matrices and Input-Output Change. Cambridge: Cambridge University Press.

Barker, T. S., and A. W. A. Peterson. 1987. The Cambridge Multisectoral Dynamic Model of the British Economy. Cambridge: Cambridge University Press.

Bils, M. 1987. "The cyclical behaviour of marginal cost and price." American Economic Review 77: 838-855.

Carter, A. P. [A. P. Grosse]. 1953. "The technological structure of the cotton textile industry." In W. W. Leontief et al., Studies in the Structure of the American Economy. New York: Oxford University Press.

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