Algorithm of Estimating Import-Substitution Based on Costs – Output Tables

Abstract

The article studies problems and prospects of managerial decisions dealing with the process of import-substitution of certain products and puts forward the method of raising its efficiency. This research is based on costs – output tables, as a result of which a special algorithm is designed to estimate the efficiency and accompanying effects for different lines of import-substitution. The authors analyze in what way the process of import-substitution can affect the output of certain industries (both inside the country and for other countries) and how it can change import and export by each industry of each country. By using this algorithm two tests were carried out based on computer modeling, where a proportion of import in a chosen industry of the country was replaced by home production, at first for one type of products and then for another. Results of these tests show a number of predicted values of macro-economic indices as a result of import-substitution of one or another product, whose analysis helps identify the best variant of importing such product, which should be substituted by home produce in order to reach the set criterion of efficiency. The designed algorithm can be used as a support system for decision-making in importsubstitution policy.