REAL-IO: Analytical Toolbox of Interregional Input-Output Analysis

Norihiko Yamano, Chun-Hua Wu and Geoffrey Hewings

Outline
Goal of REAL-IO (originally designated as PyIO) Functions of REAL-IO
Single region/country analysis Multi region/country analysis

Future additions

Evolution of IO software in REAL, University of Illinois

PyIO 1.0 the first version (Nazara, Guo, Hewings and Dridi; 2003) PyIO 2.0 Windows based interface is created (Wu, 2009) REAL-IO 2011
Analysis modules are transferred to R language environment. Capable of flexible additions of new functions Multi country/region time series comparable indicators Improved graphics output

Goal of REAL IO
It is a package of user-interface software and function modules for inputoutput analysis. It provides simple and more complex methods of analysis based on inputoutput, social accounting and computable general equilibrium models. REAL-IO is a tool enhancing use of IOrelated systems for policy analysis

Potential Role of REAL IO for WIOD

Data being generated by WIOD needs to be complemented by provision of analytical tools to quickly process and interpret findings REAL-IO has been self-financed hence development has been slow Exploring alternative funding options The preliminary (Feb 2011) intercountry I-O tables are loaded as example

Python/R-based Hybrid model

Python is retained as the basis of user interface for several reasons
Python has great computational capability The codes are trans-platform (Windows/ Mac/ Linux) Python is free

R is chosen as the function operations

The codes for analytical functions can be written in intuitive way R is free

Functions of REAL IO
I-O Table Operations Basic I-O Analysis Advanced I-O analysis (Single region / Interregional I-O) Trade indicators Cross-country/Regional comparisons of indicators

Loading datasheet and quick browsing of industrial structure

Database name

Basic I-O Analysis

Calculate Leontief Inverse Calculate Ghoshian Inverse Do an Impact Analysis Calculate Output Multiplier Calculate Income Multiplier Calculate Employment Multiplier Calculate Input (or Supply) Multiplier

Basic I-O Analysis Multipliers

The output multiplier is calculated as the column sum of the Leontief inverse. The computation of income multiplier requires the use of wage vector (in the primary input table) to calculate the household input coefficient. The employment multiplier would require the use of sectoral employment to calculate the labor input coefficient. The input (or supply) multiplier is computed from the Ghoshian inverse.

More Advanced single country I-O analysis

Import contents of exports Key Sector Analysis Output Decomposition Multiplier Product Matrix (MPM) Analysis Extracting Method Pull Analysis Push Analysis Field of Influence

Field of Influence
The underlying idea of the field of influence is to assess the changes in the Leontief inverse matrix resulting from the changes in one or more direct input coefficients in the inverse Leontieof matrix. Used to identify inverse important entries and to identify subset of coefficients or flows for updating

Example (Field of influence)

Focus on Trade and Global Production Network

International and interregional trade growing faster than respective gross products Nations and regions hollowing out as a result of increased fragmentation (Kierzkowski and Jones) in production As WIOD generates increased supply of intercountry and interrgional databases, PyIO will provide capability to explore different facets of trade structure

Vertical specialization
Demand side: Induced intermediate imports by unit export (Hummels et
al.,2001) Supply side: Imported intermediates end-up in exports (Meng et al., 2011)

Example (demand-side VS)

Production chain: Average propagation length (APL)

Ideas of Dietzenbacker and Romero building on earlier work by Robinson and Markandya How complex is an economy how many rounds of spending to generate supply chain to meet final demand? Complement this idea with issues of Sectoral and spatial propagation paths of dependence and interdependence Ideas of criticial supply chains and critical linkages (re-work ideas of field of influence) How have changes in firm organization affected length and location of propagation process (Romero et al. revealed complex analysis of changes for Chicago over last 3 decades)

Example (APL)

Interregional analysis
Inter-regional feedback decomposition Inter-regional production chain decomposition (APL) Regional aggregation (e.g. EU15, Asia, North America)

Inter-regional domestic feedback

Inter-country APL

Trade indicators
Glubel Loyd Intra industry trade RCA Trade by industry and end-use (intermediate, capital and household consumption)

Bilateral trade by industry and end-use (BTDIxE)

Intermediate for assembly Other intermediate Capital Household consumption PC & Passenger Cars Unspecified

Future Additions
Address demographic challenges
Consumption, aging etc.

Links between trade in goods and services and migration Handle integrated models
Econometric-IO CGE multiregional and multinational Economy-environment interactions