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The rectangular sector-by-technology model: not every economy produces every product and some products may rely on several technologies simultaneously

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  • Faye Duchin
  • Stephen Levine

Abstract

This paper identifies a fundamental challenge in the development of input-output databases of the world economy intended for analysis of alternative scenarios with a model of the world economy. Primary data sources for individual economies generally do not use the same sectoral classification schemes, in part for lack of coordination and also because not all economies produce all goods. In addition, some economies produce a given good simultaneously using several technologies, sometimes quite distinct in terms of factor requirements and cost structures, information that can and should be retained for scenario analysis. To accommodate the relevant information in a way that is both precise and parsimonious, we introduce rectangular input-output matrices and a modeling framework for analyzing them. This framework extends an existing input-output/linear programming model, the rectangular choice-of-technology (RCOT) model, and integrates it into an existing input-output/linear programming model of the world economy, the World Trade Model (WTM). The desirable properties of the resulting WTM/RCOT model are illustrated through a numerical example. This formulation requires that a criterion be specified to choose among available options, and we discuss some alternative criteria. Square input-output matrices and their inverses are only a special case of this more general formulation, and we show how moving to the rectangular formulation expands the types of questions that input-output analysts are able to address. JEL Classification: C67, C61, F14, O33. Copyright Duchin and Levine; licensee Springer 2012

Suggested Citation

  • Faye Duchin & Stephen Levine, 2012. "The rectangular sector-by-technology model: not every economy produces every product and some products may rely on several technologies simultaneously," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 1(1), pages 1-11, December.
    • Handle: RePEc:spr:jecstr:v:1:y:2012:i:1:p:1-11:10.1186/2193-2409-1-3
    DOI: 10.1186/2193-2409-1-3
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    References listed on IDEAS

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    1. Faye Duchin, 2005. "A world trade model based on comparative advantage with m regions, n goods, and k factors," Economic Systems Research, Taylor & Francis Journals, vol. 17(2), pages 141-162.
    2. Leontief, Wassily, 1977. "The future of the world economy+," Socio-Economic Planning Sciences, Elsevier, vol. 11(3), pages 171-182.
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    Cited by:

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    4. Dilekli, Naci & Cazcarro, Ignacio, 2019. "Testing the SDG targets on water and sanitation using the world trade model with a waste, wastewater, and recycling framework," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    5. Mobolaji B. Shemfe & Siddharth Gadkari & Jhuma Sadhukhan, 2018. "Social Hotspot Analysis and Trade Policy Implications of the Use of Bioelectrochemical Systems for Resource Recovery from Wastewater," Sustainability, MDPI, vol. 10(9), pages 1-12, September.
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    8. Wimmer, Lorenz & Kluge, Jan & Zenz, Hannes & Kimmich, Christian, 2023. "Predicting structural changes of the energy sector in an input–output framework," Energy, Elsevier, vol. 265(C).

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    More about this item

    Keywords

    world input-output database; rectangular input-output matrices; choice of technology model; World Trade Model; linear programming model;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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