The Application of the Leontief Input–Output Matrix in the Transition Process

Abstract

Though input–output analysis has been widely applied, it faces serious problems in those socialist countries currently undergoing economic reform. This study focuses on exploring the limitation of the Leontief input–output matrix in the transition process from a centrally planned economy to a market economy and discussing the possible errors of using the traditional input–output coefficients in the dual price system. This article presents a new method to calculate the input–output coefficient which is applicable in the transition process. Based on Chinese statistical data of 1983, a comparison between the new input–output matrix and the traditional one was made through a computable general equilibrium model, and the differences between the two are presented in this paper.