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The return of the closed input-output model
Conferences
habitation in space. To date, few people have been in orbit at the same time, and these matters have received little attention. However, when space operations involve hundreds of people in orbit-eg constructing satellite power stations-control of social and other factors will be essential to ensure the extremely high levels of reliability required for space operations. One notable feature of the conference was that all but three papers were given by Americans. I hope that this number will increase at the next conference. Although space manufacturing may seem futuristic, technical developments have a habit of happening faster than we expect. There was a conference this September at Houston on the electrochemical processing of lunar soils, and Western Europe cannot afford to be left behind the USA. Some would hold that within 50 years refined metals and alloys (parti-
cularly of the energy-intensive materials such as aluminium, titanium, magnesium and silicon but also including iron, calcium, nickel and other elements) will be being delivered to the Earth’s surface from space. In view of the exponential growth of scientific and technical R and D, and the growing readilyshortages of energy and available raw materials on Earth, it would be a foolhardy person who argued that this could not happen. Patrick Collins Imperial College, London Note 1. The full proceedings of this conference will be available in book form by the end of 1979 from the American Institute of Astronautics and Aeronautics, 1290 Avenue of the Americas, New York: it can also supply the proceedings of the previous conferences on the same subject.
The return of the closed input-output Seventh international conference on techniques, input-output “Changes in the structure of the world economy”, 9-13 April 1979, Innsbruck, Austria This conference, sponsored by the Austrian government and the United Nations Industrial Development Organization (UNIDO), dealt with the following topics : global and multinational models; patterns of economic growth in developing countries; l income distribution and social welfare ; l Europe in 1985 and after; 0 input-output in large economic models; l planning and optimisation; and l
l
FUTURES
October
1978
441
l
estimation, parison.
model adjustment,
and
com-
About 400 economists, econometricians, and statisticians from all continents attended the meeting and presented over 100 papers. The morning plenary sessions were therefore kept short: only two or three papers were actually read out, and issues raised by the other papers were summarised by the chairman of the session. The ‘unread’ papers received more thorough treatment in several parallel small workshops held in the afternoons. The method is now a mature tool of applied economic research, and inputoutput tables are an integral part of the System of National Accounts, adopted in 1968 by the UN. It is therefore not surprising that no important new methodological development was reported.
442
Conferences
One tendency apparent at Innsbruck, however, deserves attention : the growing interest in the closed input-output model (a form which depicts the link between value-added and final-demand components). The very first version of the input-output framework, as proposed by Leontief more than forty years ago, was of the closed variety. It was soon replaced by the open static model, which is easier to handle and still prevails in practical applications. But the closed model is now being used again, eg for the investigation of interrelations between the distribution of household income by size and the pattern and level of output and employment, or for the simultaneous treatment of volume and price changes. In the vast field of input-output applications, two general trends couId be observed. The first is the growing internationalisation of the method, based on the compilation of internationally comparable or even ex ante standardised input-output tables. The pioneering work was done more than 15 years ago by the Statistical Oflice of the European Communities at Luxemburg. Standardised inputoutput tables for the EEC-member countries are now regularly compiled using a common method. The UN Economic Commission for Europe has expost standardised two sets of tables for countries of the ECE region (for 1959 and 1965). Some university and research institutes engaged in international economic comparisons also prepare comparable input-output tables for two or more countries. Demand for comparable input-output tables describing the developing countries is growing, but has not yet been met. This comparability provides the statistical basis for intercountry comparisons of industrial structures. When such studies are carried out for the market and centrally planned economies, indicators of economic structure can be influenced by differences in price formation. Tables are then ad-
justed to a common value basis, which is created by various methods, depending on the principles of price formation. Regional models for South-east Asia were presented (most countries in that region have good input-output statistics) and world input-output models appeared at the Innsbruck conference for the first time. The latter are being constructed mainly by international organisations (eg the UN or the World Bank) and their elements are inputoutput tables for world regions (not for individual countries). Many methodological problems have yet to be solved and the lack of comparable inputtables for the developing output countries is also an obstacle to progress, Another aspect of internationalisation is the construction of advanced dynamic models; first tested in one country and later offered, together with computer to other countries. These software, models can even be linked to an international network. Years ago, the Battelle Institute in Geneva created a famiIy of such models under the generic name EXPLOR: there was, however, little sign of these at Innsbruck. A more recent model network is being built up based on the University of Maryland INFORUM model. The IDIOM model, produced by Cambridge University is also available to users in other countries. Accumulated
data
The second general trend noticeable at the conference was the growing use of accumulated input~utput data. Countries with a long time series of input-output tables realise that they provide a better basis than any other data for the investigation of the nature of structural change in economic growth. In the USA (which has an inputoutput table for 1929) an analysis of labour productivity was carried out with the help of full labour-input coefficients. This made it possible to depict the transmission of productivity
FUTURES
October 1879
Conferences
increases through the network of intermediate deliveries. The pattern of structural change is also being studied intensively in Japan. The most recent investigation, presented at the conference, dealt with the impact of technical progress on the structure of the economy. The World Bank too has carried out a comparative study of the interrelation between the level of development and economic structure in a few countries. Statistics Canada, which in the early 1960s implemented an original and complex system of input-output statistics, presented at Innsbruck a voluminous study of structural changes in the Canadian economy between 1960 and 1970. Time series of input-output tables provide a data base for the investigation of stability and variability of input coefficients. This topic, already discussed at three previous international input-output conferences (in 1968, 1971, and 1974), is important. The results of input-coefficient analysis are used in input-output forecasting and projection models. Variability of the input-output coefficients evidently increased in the 1970s because of turbulent price developments. Several of the papers presented dealt with the
The ubiquitous
The organisers had decided to mix two science-fiction writers (A. E. van Vogt and Harry Harrison), one historian (Professor I. F. Clarke), and a handful of scientists and researchers to tackle their theme. At the end of the day it was the scientists who came out with the more extraordinary ideas, despite the assertion at the beginning of the
October 1979
impact of changes in relative prices on the input coefficients, with their influence on the substitution between domestically produced and imported inputs, with price elasticities of demand on primary inputs and energy, and also with the transmission of inflation from one industry to another. In spite of intensive research on the variability of input coefficients, it is still difficult to make reliable forecasts of their values. The RAS method, developed by Stone and Brown, has been used intensively for that purpose during the last 15 years. Recent tests, mainly in the UK, projected old inputoutput tables with the RAS procedure and compared projections with the actual tables. The results were disappointing. Attempts to use linear programming for the same purpose gave even worse results. The Conference proceedings will be published by UNIDO: papers given in the session on Europe in 1985 and after will be published by the European Association for Applied Economic Research (ASEPELT), the joint organisers of that session.
Austrian Institute for
Ji?i V. Skolka Economic Research Vienna
chip
Sperry Univac Symposium, Ykience fact and science fiction”, Saint-Paul-de-Vence, France, 2427 July 1979
FUTURES
443
symposium that science-fiction writers had a better forecasting record. As Earl Joseph said, none of the science-fiction literature has yet caught up with the likely applications of electronic chips in the next few decades. Earl Joseph has been a futurist since the early 196Os, and that is his job at Sperry Univac. He predicted the office on a chip in the 1990s along with the school on a chip and the university library on a chip. The portable global library, 1015-17 bits, would have to wait until 2000.
habitation in space. To date, few people have been in orbit at the same time, and these matters have received little attention. However, when space operations involve hundreds of people in orbit-eg constructing satellite power stations-control of social and other factors will be essential to ensure the extremely high levels of reliability required for space operations. One notable feature of the conference was that all but three papers were given by Americans. I hope that this number will increase at the next conference. Although space manufacturing may seem futuristic, technical developments have a habit of happening faster than we expect. There was a conference this September at Houston on the electrochemical processing of lunar soils, and Western Europe cannot afford to be left behind the USA. Some would hold that within 50 years refined metals and alloys (parti-
cularly of the energy-intensive materials such as aluminium, titanium, magnesium and silicon but also including iron, calcium, nickel and other elements) will be being delivered to the Earth’s surface from space. In view of the exponential growth of scientific and technical R and D, and the growing readilyshortages of energy and available raw materials on Earth, it would be a foolhardy person who argued that this could not happen. Patrick Collins Imperial College, London Note 1. The full proceedings of this conference will be available in book form by the end of 1979 from the American Institute of Astronautics and Aeronautics, 1290 Avenue of the Americas, New York: it can also supply the proceedings of the previous conferences on the same subject.
The return of the closed input-output Seventh international conference on techniques, input-output “Changes in the structure of the world economy”, 9-13 April 1979, Innsbruck, Austria This conference, sponsored by the Austrian government and the United Nations Industrial Development Organization (UNIDO), dealt with the following topics : global and multinational models; patterns of economic growth in developing countries; l income distribution and social welfare ; l Europe in 1985 and after; 0 input-output in large economic models; l planning and optimisation; and l
l
FUTURES
October
1978
441
l
estimation, parison.
model adjustment,
and
com-
About 400 economists, econometricians, and statisticians from all continents attended the meeting and presented over 100 papers. The morning plenary sessions were therefore kept short: only two or three papers were actually read out, and issues raised by the other papers were summarised by the chairman of the session. The ‘unread’ papers received more thorough treatment in several parallel small workshops held in the afternoons. The method is now a mature tool of applied economic research, and inputoutput tables are an integral part of the System of National Accounts, adopted in 1968 by the UN. It is therefore not surprising that no important new methodological development was reported.
442
Conferences
One tendency apparent at Innsbruck, however, deserves attention : the growing interest in the closed input-output model (a form which depicts the link between value-added and final-demand components). The very first version of the input-output framework, as proposed by Leontief more than forty years ago, was of the closed variety. It was soon replaced by the open static model, which is easier to handle and still prevails in practical applications. But the closed model is now being used again, eg for the investigation of interrelations between the distribution of household income by size and the pattern and level of output and employment, or for the simultaneous treatment of volume and price changes. In the vast field of input-output applications, two general trends couId be observed. The first is the growing internationalisation of the method, based on the compilation of internationally comparable or even ex ante standardised input-output tables. The pioneering work was done more than 15 years ago by the Statistical Oflice of the European Communities at Luxemburg. Standardised inputoutput tables for the EEC-member countries are now regularly compiled using a common method. The UN Economic Commission for Europe has expost standardised two sets of tables for countries of the ECE region (for 1959 and 1965). Some university and research institutes engaged in international economic comparisons also prepare comparable input-output tables for two or more countries. Demand for comparable input-output tables describing the developing countries is growing, but has not yet been met. This comparability provides the statistical basis for intercountry comparisons of industrial structures. When such studies are carried out for the market and centrally planned economies, indicators of economic structure can be influenced by differences in price formation. Tables are then ad-
justed to a common value basis, which is created by various methods, depending on the principles of price formation. Regional models for South-east Asia were presented (most countries in that region have good input-output statistics) and world input-output models appeared at the Innsbruck conference for the first time. The latter are being constructed mainly by international organisations (eg the UN or the World Bank) and their elements are inputoutput tables for world regions (not for individual countries). Many methodological problems have yet to be solved and the lack of comparable inputtables for the developing output countries is also an obstacle to progress, Another aspect of internationalisation is the construction of advanced dynamic models; first tested in one country and later offered, together with computer to other countries. These software, models can even be linked to an international network. Years ago, the Battelle Institute in Geneva created a famiIy of such models under the generic name EXPLOR: there was, however, little sign of these at Innsbruck. A more recent model network is being built up based on the University of Maryland INFORUM model. The IDIOM model, produced by Cambridge University is also available to users in other countries. Accumulated
data
The second general trend noticeable at the conference was the growing use of accumulated input~utput data. Countries with a long time series of input-output tables realise that they provide a better basis than any other data for the investigation of the nature of structural change in economic growth. In the USA (which has an inputoutput table for 1929) an analysis of labour productivity was carried out with the help of full labour-input coefficients. This made it possible to depict the transmission of productivity
FUTURES
October 1879
Conferences
increases through the network of intermediate deliveries. The pattern of structural change is also being studied intensively in Japan. The most recent investigation, presented at the conference, dealt with the impact of technical progress on the structure of the economy. The World Bank too has carried out a comparative study of the interrelation between the level of development and economic structure in a few countries. Statistics Canada, which in the early 1960s implemented an original and complex system of input-output statistics, presented at Innsbruck a voluminous study of structural changes in the Canadian economy between 1960 and 1970. Time series of input-output tables provide a data base for the investigation of stability and variability of input coefficients. This topic, already discussed at three previous international input-output conferences (in 1968, 1971, and 1974), is important. The results of input-coefficient analysis are used in input-output forecasting and projection models. Variability of the input-output coefficients evidently increased in the 1970s because of turbulent price developments. Several of the papers presented dealt with the
The ubiquitous
The organisers had decided to mix two science-fiction writers (A. E. van Vogt and Harry Harrison), one historian (Professor I. F. Clarke), and a handful of scientists and researchers to tackle their theme. At the end of the day it was the scientists who came out with the more extraordinary ideas, despite the assertion at the beginning of the
October 1979
impact of changes in relative prices on the input coefficients, with their influence on the substitution between domestically produced and imported inputs, with price elasticities of demand on primary inputs and energy, and also with the transmission of inflation from one industry to another. In spite of intensive research on the variability of input coefficients, it is still difficult to make reliable forecasts of their values. The RAS method, developed by Stone and Brown, has been used intensively for that purpose during the last 15 years. Recent tests, mainly in the UK, projected old inputoutput tables with the RAS procedure and compared projections with the actual tables. The results were disappointing. Attempts to use linear programming for the same purpose gave even worse results. The Conference proceedings will be published by UNIDO: papers given in the session on Europe in 1985 and after will be published by the European Association for Applied Economic Research (ASEPELT), the joint organisers of that session.
Austrian Institute for
Ji?i V. Skolka Economic Research Vienna
chip
Sperry Univac Symposium, Ykience fact and science fiction”, Saint-Paul-de-Vence, France, 2427 July 1979
FUTURES
443
symposium that science-fiction writers had a better forecasting record. As Earl Joseph said, none of the science-fiction literature has yet caught up with the likely applications of electronic chips in the next few decades. Earl Joseph has been a futurist since the early 196Os, and that is his job at Sperry Univac. He predicted the office on a chip in the 1990s along with the school on a chip and the university library on a chip. The portable global library, 1015-17 bits, would have to wait until 2000.