4.4. The role of Supply and Use Tables/Input-output Table in
the perspective analysis of economic development
4.4.1. Estimating the quality
of life with input-output table
The concept of the «Quality of Urban life» is
decomposed into specific measurable indicators of urban quality. Those
indicators are expressed in two kinds of quality of life estimates that can be
made with I-O data given a level and mix of economic activity in the area:
1. How much of the by-product is produced, and by whom?
2. What expenditures are being made, and by whom, to produce
the by-product or, in the case of negative valued by-product, to abate their
production or reduce their current levels?
And they are three different ways in which I-O can be used to
make these estimates:
4.4.1.1. The Linkage Technique
The linkage technique is addressed to the question of how much
of the by-product is being produced, and by whom. It can estimate the quantity
of by-product being produced in their physical or value terms.
In Rwanda, the linkage method for indicators of water, air,
and land, that can incorporate nonlinearities when they are joined with the
usual industry, can be developed.
4.4.1.2. The Activity Specification Technique
The activity specification technique to estimate input-output
sector expenditures directed toward influencing the quality of urban life. Such
expenditures are often used directly as indicators of quality of life, or as
quantitative approximations to the efforts of specific sectors to improve
quality (Brody A. & Carter A.P., 1971: 52).
For example: indicators related to health, recreation,
pollution and accident and crime prevention are the main fields where I-O Table
can be used in Rwanda.
4.4.1.3. The Dummy Sector Technique
In contrast to linkage and activity specification, a dummy
sector analysis allows explicit calculation of expenditures required to achieve
a predetermined «target» level of indicators.
The potential application of these techniques to planning for
regulation, control, abatement, and incidence of indicator production and some
of its short-comings may be stated as follow:
The techniques are relevant to indicators in the natural,
community services, and infrastructural environments. The community services
tend to measure input quality rather than output quality; linearity assumptions
seriously weaken indicators measurements in the infrastructure and natural
environment; many externalities are not included in natural environment
indicators, relative price assumptions weaken the economic environment
indicator measurements; and finally difficulties rise because while many
indicators involve stock concepts, input-output analysis estimates many changes
rather than indicator level (Brody A. & Carter A.P., 1971: 46).
I-O Table is designed primarily to describe the important
relationships among markets and to measure their consequences. When we are
interested in the quality of life in a given area, the regional model is
probably more appropriate (Brody A. & Carter A.P., 1971: 46). Also, there
are issues concerning the type of activities that should be included in the
«structural» part of I-O. At the national level, identifying
household, government, and investment in final demand in Rwanda has generally
proved effective for example.
For urban analyses, however, strong arguments can be made for
including local government, household and investment as part of the endogenous
structure. Additionally, there are questions regarding the kind of sectoring
that are most appropriate for urban input-output tables. A number of sectors in
the usual I-O tables are directly related to the quality of life in the sense
that their «output» measures correspond to specific quality of life
indicators (Brody A. & Carter A.P., 1971: 47). For example, household
incomes and welfare expenditures can readily be translated into indicators of
quality of life in the context of sustained economic development in Rwanda.
Quality of life indicators can be viewed as outcomes or
by-products associated with the production and consumption activities
represented by the inter-industry transactions. Some of these outcomes
represent a social cost, as in the case of pollution. Other outcomes such as
sector-provided or healthcare represent positive contribution to the welfare of
urban residents.
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