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External dependency, value added generation and structural change: an inter-industry approach

Author

Listed:
  • João Ferreira do Amaral

    (ISEG, Universidade Técnica de Lisboa / UECE)

  • João Carlos Lopes

    (ISEG, Universidade Técnica de Lisboa / UECE)

  • João Dias

    (ISEG, Universidade Técnica de Lisboa / UECE)

Abstract

The external dependency of many industries and the corresponding low value added generated in production, combined with a relatively weak export potential, create high external deficits and growing debt to GDP ratios in several open economies. In this paper we propose an empirical method to assess the evolution of these vulnerabilities, based on a new treatment of interindustry production multipliers. The (gross)output growth potential given by the column sums of the Leontief inverse matrix (backward linkage indicators) results from three terms: interindustry consumptions, value added and imported inputs. After a convenient arrangement of these terms, the evolution of backward linkage indicators can be used to detect structural changes, particularly quantifying a (net) growth effect (more value-added generation) and an external dependency effect (more imported inputs), and to classify the productive sectors accordingly. An application to the Portuguese Economy is made, using input-output tables for the years 1980, 1995 and 2005. This method can also be useful as a simple, but suggestive, device to compare the evolution of two or more economies, along their development processes in time.

Suggested Citation

  • João Ferreira do Amaral & João Carlos Lopes & João Dias, 2011. "External dependency, value added generation and structural change: an inter-industry approach," Notas Económicas, Faculty of Economics, University of Coimbra, issue 33, pages 06-19, June.
    • Handle: RePEc:gmf:journl:y:2011:i:33:p:06-19
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    References listed on IDEAS

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    1. Chokri Dridi & Geoffrey Hewings, 2002. "An Investigation of Industry Associations, Association Loops and Economic Complexity: Application to Canada and the United States," Economic Systems Research, Taylor & Francis Journals, vol. 14(3), pages 275-296.
    2. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521517133.
    3. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521739023.
    4. Jan Oosterhaven & Dirk Stelder, 2002. "Net Multipliers Avoid Exaggerating Impacts: With A Bi–Regional Illustration for the Dutch Transportation Sector," Journal of Regional Science, Wiley Blackwell, vol. 42(3), pages 533-543, August.
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    Cited by:

    1. João Carlos Lopes & João Ferreira do Amaral, 2013. "The Structure and Evolution of Production, Employment and Human Capital in Portugal: an Input-Output Approach," Notas Económicas, Faculty of Economics, University of Coimbra, issue 38, pages 9-28, December.
    2. Tiago Domingues, 2018. "Global Value Chains and Vertical Specialization: The case of Portuguese Textiles and Shoes exports," GEE Papers 00117, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jan 2019.
    3. Ezzahid, Elhadj & Chatri, Abdellatif, 2015. "Imports contents, value added generation and structural change in morocco: input output analysis," MPRA Paper 63512, University Library of Munich, Germany.
    4. João Ferreira do Amaral & João Carlos Lopes, 2015. "The Trade-off Unemployment Rate/External Deficit: Assessing the Economic Adjustment Program of the Troika (European Commission, ECB and IMF) for Portugal using an Input-Output Approach," Working Papers Department of Economics 2015/04, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    5. Joao Carlos Lopes, 2012. "High Employment Generating Sectors in Portugal: an Interindustry Approach," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 2(2), pages 125-125.
    6. Rossana Lott Rodrigues & João Carlos Lopes & João Dias & Antonio Carlos Moretto, 2013. "Structural changes and external vulnerabilities in the Brazilian economy: 1995-2009," Working Papers Department of Economics 2013/13, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    7. Tiago Domingues & João Ferreira do Amaral & João Carlos Lopes, 2021. "Global value chains, value-added generation and structural change in EU core and periphery economies: An Input-Output approach," Working Papers REM 2021/0157, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    8. Rossana Rodrigues & João Carlos Lopes & João Dias & Antonio Carlos Moretto, 2013. "Structural changes and external vulnerabilities in the Brazilian economy in the period 1995-2009," ERSA conference papers ersa13p1184, European Regional Science Association.
    9. João Carlos Lopes & Paula Cristina Albuquerque, 2012. "The characteristics and regional distribution of older workers in Portugal," Working Papers Department of Economics 2012/22, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    10. Gustavo Adolfo HERNANDEZ DIAZ, 2014. "Especialización Vertical de las Exportaciones Colombianas," Archivos de Economía 11805, Departamento Nacional de Planeación.
    11. Tiago Domingues, 2018. "Global Value Chains and Vertical Specialization: The case of Portuguese Textiles and Shoes exports," GEE Papers 00117, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jan 2019.
    12. João Carlos Lopes, 2011. "High Employment Generating Industries in Portugal. An Input-Output Approach," Working Papers Department of Economics 2011/24, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.

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    More about this item

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis

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