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

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par Jean Baptiste HABYARIMANA
National University of Rwanda - Bachelors degree in Applied Statistics  2010
  

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4.6.2. Use of output function to measure the impact of increasing or decreasing intensity of Input Coefficients

X = B* * (I-A)-1y

B is a row vector matrix from Matrix A for Agriculture, Industry, and Services, and B* Matrix is equal to Matrix A (Input Coefficients Matrix) (Eurostat, 2002: 17-23).

X = Output from Sectors which contribute in production within an economy.

Basing on the equation system for input-output analysis, Output from each sector can be computed, and the above equation provide total production in the three sectors, and the solution is the same as the figures in Supply and Use Tables.

Through this study the focus was made only on the policy of increasing Input Coefficients from product (i) to industry (j). The policy used in this study was to test the impact of fixing input coefficients on 0.30 for each coefficient other things held constant, in order to see how this policy may or will influence the production basing on the production of 2007.

The results of this policy are stated in the following table, and the highlighted column contain the higher production; therefore this policy will be efficient when the Coefficient from Services (product) to Industry (industry) (S-I) is increased and at this stage the production will be maximized basing on the Input and Production Matrices of 2007. This means that the increase of services Inputs in Industrial sector has a positive effect to increase economic capacity of Rwanda.

Table 4.7. Changes in Input Coefficients

 

Period 1

The Impact of Increasing Input Coefficients to 0.3 on Sectoral Production

P (2007)

A-A

I-A

S-A

A-I

I-I

S-I

A-S

I-S

S-S

Agriculture S.

1574

2174

1754

2187

1877

1706

1927

1676

1609

1704

Industry S.

551

606

567

607

1513

970

1673

587

563

596

Services S.

1810

1990

1864

1994

2158

1962

2216

2218

1950

2327

Total Product.

3934

4770

4186

4788

5548

4637

5816

4481

4122

4627

Assuming that the Input-Output Coefficients as derived from Input-Output Table remain more or less constant for a certain period of time (say a couple of years), they may in a meaningful way be used in so called Input-Output Models or Inter-Sectoral Models, which describe the relationship between the output of various branches on the one hand and their different input requirements on the other hand as used in the above analysis. Such kind of models may play a role in different types of analysis related to policy preparation and planning in Rwanda as shown in this research, and input out put approach would be a powerful too in analyzing and planning process of economic development and industrial growth in Rwanda.

Figure 4.4. Change in Production due to Changes in Input Coefficients (2007 Basic Years)

Due to the lack of information in SUT and IO-T this analysis is not easy to apply on the economy of Rwanda, the results from the analysis of economy basing on STU and IO-T stipulates that is the increase in production which determine the quantity to Export and/ or the quantity to import, the evolution of industry sector and its contribution to development, and the improvement of the increasing in production of Services Sector has an important impact when analysing satellite accounts such heath, environmental, and Tourism satellite accounts.

Table 4.8. Used Abbreviations

P(2007)

Basic Production base Year 2007

A-A

Agriculture Inputs in Agriculture Sector

I-A

Industry Inputs in Agriculture Sector

S-A

Services Inputs in Agriculture sector

A-I

Agriculture Inputs in Industry Sector

I-I

Industry Inputs in Industry Sector

S-I

Services Inputs in Industry Sector

A-S

Agriculture Inputs in Services Sector

I-S

Industry Inputs in Services Sector

S-S

Services Inputs in Services Sector

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