Abstract
This paper deals with the challenges associated with the generation of a social accounting matrix (SAM) in conditions where up-to-date measured data are particularly scarce and provides future researchers of economic systems with the first SAM for Iraq. It delivers a unique and updated countrywide database for use in modeling and policy analysis and applies this database to the empirical investigation into the expected effects of economic diversification in Iraq as stated in the recent Iraq National Development Plan 2013–2017.
Highlights
Iraq is an oil-exporting economy with a GDP per capita of around 6500 USD and a low inflation rate, which attracts more than 1 billion dollars a year in foreign direct investment
While the injection in the oil extraction sector is the one that achieves the maximum increase in the economy’s value added (19.7 trillion of Iraq Dinars), due to the weak backward linkage of this sector with unconstrainedsupply sectors in the domestic economy, it ends up significantly reducing the share of the non-oil sector in the economy, against the diversification goal of the Plan
In dealing with the challenges associated with the generation of the social accounting matrix (SAM) in a context where up-to-date measured data are scarce, the validity of the resulting matrix is assessed in light of stylized characteristics of the Iraqi economy, the analysis of the levels of shifts in the elements of the transactions matrix at the time of balancing the accounts of the SAM, and sensitivity analysis regarding the influence of the uncertainty in the underlying data on the resulting transactions matrix
Summary
Iraq is an oil-exporting economy with a GDP per capita of around 6500 USD and a low inflation rate (below 2 % in 2014), which attracts more than 1 billion dollars a year in foreign direct investment. To assess the expected quantitative effects of such a diversification effort on its economy, we need a social accounting matrix (SAM) for the country. After the seminal work conducted by Pyatt and Thorbecke (1976) at the ILO, a large number of SAM-based multiplier studies followed, some of the earliest being for Sri Lanka (Pyatt and Round 1979), Botswana (Hayden and Round 1982), Korea (Defourny and Thorbecke 1984), Indonesia (Thorbecke et al 1992) and, more recently, Ghana (Powell and Round 2000) and Vietnam (Tarp et al 2002) In all of these studies, the aim has been to examine the nature of the multiplier effects of an income injection in one part of an economic system on the economic structure and the functional and institutional distribution in general and on the incomes of socioeconomic groups of households in particular.
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