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The role of supply and use/input output tables in the perspective analysis of economic development of Rwanda

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par Jean Baptiste HABYARIMANA
National University of Rwanda - Bachelor's degree 2010
  

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2.1.2. Supply and Use Tables (SUT)

The SNA93 recommended that national accounts estimates should be compiled in a supply and use framework. Such framework enables estimates of supply to be confronted with the estimates of use. The SUT serves for statistical and analytical purposes .They provide a framework for checking the consistency of statistics on flows of goods and services obtained from quite different kinds of statistical sources, industrial survey, household expenditure inquiries, investment surveys, foreign trade statistics and other statistics compiled in so called Input-Output Table(KAREN Wilson 2004, 2).

2.1.3. SUT concept, linear model, and GDP derivation

The SUT proper, include two matrices, that are, an Output matrix and an Intermediate consumption or Input matrix (O-I) (Hand book of NA 2002; 65).These two matrix derived directly from differences in detail and structure of ISIC and CPC and also from the definition of establishment unit used in classifying industries, as defined in SNA may be linearly modelled for being merely used in different flied (mathematics, economics, statistics etc)

SUPPLY=USE

P+M+CM+TM+TP-SP = IC + FC + FCFG + ?inv + EX

Because trade and transport margins may be used to estimate value of output of the trade industry, the identity becomes;

P+M+TP-SP = IC+FC+FCFG+?inv + EX

CM and TM disappear because P now represents the value of the production of all branches included trade and transport.

Because, a part of resources was absorbed as intermediate consumption, and for the efficacy of this identity we have to subtract IC from each part.

P-IC+M+TP-SP = IC- IC + FC + FCFG + ?inv + EX

And is known that;

P-IC = Value Added (VA), therefore;

VA+M+TP-SP =FC+FCFG+?inv + EX

The VA is measured on basic price because it is for P .The summation of VA with TP nets of SP implies that VA at acquisition price equal to Gross Domestic Product (GDP).

GDP+M = FC + FCFG + ?inv + EX

For the international trade indicator purposes analysis the identity becomes;

GDP = FC +FCFG + ?inv + EX-M

This final identity is very synthetic identity which describes operations of goods and services of an economy.

GDP is an important indicator for economic development ,first is used in (GDP per capital ,Gross National Income (GNI), Gross National Disposable Income (GNDI) , GDP Deflator (an index for average price level of an economy's production related to a base year , etc...).Second ,is very used in combination with other socio-economic indicators to identify economic development and economic development projection (Human Development Index , Headcount Index , Human Poverty Index , Poverty Weighted Index , etc...).

2.1.4. The role of SUT in decision making, projection and planning

In order to make SUT information useful, it is better to learn how to present the right information in the right way at the right time. SUT is expected to have this quality. Therefore the objectivity of decision making depends on how in selecting at least one of the alternative actions the degree of uncertainty surrounding this decision is reduced, and the outcome of this decision is improved.

While the tradition application of SUT was to provide historical growth or decries of GDP of an economy, today the trends have been moving toward emphasizing the economic decision making function because of the utilization of SUT data for planning and projecting future economic activities (Brody A. & Carter A.P., 1971, pp 44-60).

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