Interregional Input-output Model Research Articles

Should developed regions bear more responsibility in addressing environmental issues? Insights from Indonesia's unequal regional development

Addressing environmental issues is inherently complex due to the fundamental question of who should bear the responsibility. While it is more prominent at the global level, this issue is also pertinent at a subnational level, such as in Indonesia, where significant disparities exist in economic development and environmental degradation across the archipelago. Our research intends to fill the gap by measuring environmental footprints in the country by accounting for the interregional trade between provinces. We integrate an Interregional Input-Output (IRIO) model developed by Indonesia's Central Bureau of Statistics with the national sectoral energy input dataset, the blue water consumption vector from EXIOBASE, and the national land use map, creating an Environmentally-Extended Interregional Input-Output (EE IRIO). The study revealed that Indonesia's carbon and water footprints are primarily consumed and produced on Java Island; meanwhile, the agricultural footprint is produced on Sumatra and Kalimantan Island but consumed significantly on Java Island. This result corresponds with Java Island's domination in terms of the economy and population. The study revealed that developed regions produce footprints directly and induce footprint generation in other areas through import demand, emphasizing the relevance of ‘common but differentiated responsibility’ in local development.

Carbon‐trade nexus: The embodied carbon emission transfer network of China's sustainable development demonstration belt

AbstractUncovering energy‐related carbon emission transfer networks and assessing its structure and efficiency can help reshape the regional carbon‐trade nexus. Combining the social network analysis and interregional input–output model, our study estimates the carbon trade patterns from various perspectives and explores the topological characteristics of energy‐related carbon emission transfer networks within China's green development demonstration belt. Furthermore, carbon pressure index is used to identify key area for the regional carbon reduction. Results indicate that the three reaches are in descending order of embodied carbon emissions whether from the production or consumption perspectives when most of provinces are in the status of “carbon overload.” Furthermore, the total embodied carbon transfers with the large amounts occur at the provinces that are adjacent to each other. In terms of degree centrality, Jiangsu, Anhui, and Zhejiang dominate the carbon emission transfer network within the region, whereas Jiangxi, Sichuan, and Zhejiang serve as the main intermediaries and bridges. As a result, the findings should provide policymakers with new insights into how to formulate more targeted strategies for carbon management in different provinces and sectors.

Key Industrial Sectors In The Sulampua Area As A Result Of Nusantara Capital City Development

This study aims to determine the sectors that need to be developed in the non-golden triangle area of the SULAMPUA region as a result of the Nusantara Capital City (NCC) development. Descriptive research is being conducted utilizing secondary data from Statistics Indonesia’s 2016 IRIO (Inter-Regional Input-Output) table. The IRIO model is used in data analysis for 20 secondary sub-sectors. The SULAMPUA region comprises 10 provinces, with the Golden Triangle region comprising South Sulawesi, Central Sulawesi, and West Sulawesi. The study results show that to take advantage of opportunities for the development of NCC, several key industries need to be developed for non-golden triangle areas, namely the food industry (I-13), non-metallic mineral goods industry (I-21); other processing industries, machinery and equipment repair and installation services (I-27); and the wood industry, goods from wood and cork, and woven goods from bamboo, rattan, and the like (I-17). Maluku, Papua, and West Papua provinces have relatively little opportunity to develop the industrial sector and benefit from moving NCC. Because the sectors connected directly or indirectly and the key sectors of these three provinces are capital-intensive industries, MSMEs have more significant barriers to entry. This research can be a reference for local governments in exploring potential industrial sectors to be developed to achieve NCC development opportunities.

The spatial spillover effects and equity of carbon emissions of digital economy in China

The global economy is entering an era of digitalization and green development. While the digital economy has brought sustained growth to the economy, it has also raised concerns, particularly regarding carbon emissions. This study focuses on China's digital industry and utilizes an interregional input-output model to construct a carbon emission spillover-feedback effects model. It analyzes the transfer of carbon emission pressure between regions from the perspective of spatial spillovers and assesses the equity of carbon emissions from the digital industry. The research findings indicate:1. The hidden carbon emissions of the digital industry mainly include internal and external carbon spillover emissions.2. There is significant spatial heterogeneity in the carbon spillover emissions, with eastern and coastal developed regions being the primary areas of carbon emissions spillover, while the northwestern and central regions bear the burden of carbon emissions from other areas.3. The digital industry primarily experiences carbon emission spillovers between industries with resource and material-intensive characteristics.4. The economic efficiency and equity of carbon emissions from the digital industry exhibit a negative correlation with the level of economic development, and an overall declining trend is observed. In summary, recognizing the mechanisms and pathways of interregional carbon emission transfer in the development of the digital economy is crucial for avoiding the exacerbation of interregional environmental pressure, reshaping resource trade relationships, and achieving the goals of carbon peak and carbon neutrality.

Income Leakage Regional Effects: Supply and Demand Shocks during the Pandemic in Brazil and Chile

During the COVID-19 pandemic, regions were affected by a combination of economic crises: weak demand and constrained supply. Several studies have sought to analyse the heterogeneous effects of supply and demand shocks on the labour market, economic growth, and the environment. This study has a different focus, estimating both direct and indirect effects of demand and supply shocks adopted during the pandemic in Brazil and Chile. Afterwards, the paper compares the degree of regional absorption (leakage) of income resulting from each of these shocks, applying an interregional input–output model for each country. The results of this study show that income absorption by the poorest regions is relatively greater in the case of a supply shock. It can be said, therefore, that this type of shock improves the retention of income generated in the poorest regions, favouring the development of these localities and the reduction in regional inequalities. The main reason for this result is that supply policies have restricted essential sectors to a lesser extent, and these sectors are generally less concentrated in large urban centres in both Brazil and Chile. In other words, much of the interregional leakage is driven by the demand for non-essential products, mainly in the richest urban economy centres. Finally, the geographical dimension of regional inequalities leads to the economic benefit of prosperous areas in the country when shocks occur in vulnerable regions, highlighting the centre–periphery pattern in both countries.

A regional input-output model of the COVID-19 crisis in Italy: decomposing demand and supply factors

We propose an empirically estimated inter-regional input-output model of the Italian economy designed for COVID-19 impact assessment, intended as a tool for public authorities facing comparable adverse events and requiring timely estimates of sectoral and regional economic impacts. We evaluate the contributions of demand- and supply-side factors to output losses in Italy during the pandemic, providing insights on the suitability of demand- and supply-side policies. Supply-side shocks, as a consequence of mandated closures, are the primary driver of output losses only during the nationwide lockdown of spring 2020. During the following stages, changes in final demand due to income losses and changes in mobility play a pivotal role at the aggregate, regional, and sectoral levels. While this result supports demand-side policies, the efficacy of such policies may be hampered when final consumption demand is low chiefly due to reduced mobility rather than income losses.

How Central Sulawesi Province's Natural Disasters Affect Economic Growth?

Historically, Indonesia is an area prone to natural disasters. Potential losses caused by natural disasters can be death, injury, illness, threatened life, sense of security, displacement, damage or loss of objects, and disruption of daily activities. The impact of natural disasters will indirectly affect output, income, demand for labor, and economic growth. This study aims to calculate the impact of natural disasters in Central Sulawesi Province (which occurred in 2018) on the regional and national economies. The method used is the Interregional Input-Output model measuring 17 sectors and 34 provinces. The findings show that Central Sulawesi Province's Gross Regional Domestic Product is IDR.114.01 trillion, decreased-12.93 percent to IDR.99.27 trillion due to natural disasters. Labor demand decreased by -9.68 percent, and income decreased by -9.58 percent. Natural disasters in Central Sulawesi Province also impacted the decline in National GDP by -0.16 percent. Disaster mitigation programs are essential for anticipating direct and indirect losses caused by natural disasters. Consequently, the government must consider the impact of inflation and economic growth when implementing disaster mitigation programs on the public agenda.

Центральные места как концептуальный конструкт: построение структуры пространственных рынков в масштабах национальной экономики

The article is devoted to determining the possibilities of building the structure of spatial markets on the scale of the national economy. An overview of the works is given, thanks to which the idea of the interregional input-output model was gradually formed as an objective calculation basis for analyzing the functional base of the regions and building a network model of economic interactions within the framework of the concept of central places. The main attention is paid to instrumental developments that can be useful for creating a universal method for recognizing the structure of economic interactions in space based on interregional balances. Three approaches to the distribution of regions by levels of the functional hierarchy have been identified. The first approach is based on estimates of the nodal structure of space, the second is based on the ordinal function of the network of interregional interactions, and the third is based on feedback loops. It has been established that the number of hierarchy levels allocated using the first approach is minimal, and using the second approach – maximum. It is determined that the central place measure can be used to test the assumptions formed on the basis of alternative approaches regarding the hierarchical structure of economic interactions. With the help of the considered instrumental developments, the hierarchical structure of economic interactions of the regions of Japan is determined based on the interregional input-output tables for 2005. It is shown that the analysis of the functional base of the regions, integrating alternative approaches to the hierarchization of flows of the interregional balance, allows us to determine the structure of spatial markets on the scale of the national economy based on the following aspects of economic interactions: the difference in the masses of the central places entering into interaction; maintaining a balance of centripetal and centrifugal forces; maximizing the «gravity» of the centers of market zones

The Impact of Fiscal Stimulus on Agriculture Sector in Bali: Interregional Input-Output Analysis

This study aims to estimate the economic impact of 2021 fiscal stimulus on agriculture, forestry and fishing sector in Bali at national and regional levels. This study utilizes secondary data from Bali Province Regional Fiscal Review year 2021 from Regional Office of Directorate General of State Treasury of Bali Province and statistical data from the Central Statistics Agency. The interregional input-output (IRIO) model is employed to determine the value of the economic impact on 17 business sectors in 34 provinces in Indonesia. This study found that the fiscal stimulus on the agriculture sector has a positive impact on Bali economy resulting in two and a half times greater than the direct impact. Furthermore, the sector with the largest total impact was the construction sector, mining and quarrying sector and agriculture, forestry and fishing sector in Bali. In addition, the fiscal stimuli on the agriculture sector resulted in a significant economic growth impact not only in Bali as the region receiving the stimuli, but also in the neighboring regions. The implications of this research are related to stimulus allocation on the certain sector when the negative shocks occurred such as covid-19 pandemic, which can be used as input for evaluating government spending policies. In general, it can be concluded that the Government of Indonesia was successful in carrying out fiscal stimuli since they produced an economic impact greater than the allocated incentives.

Interregional economic impacts of an extreme storm flood scenario considering transportation interruption: A case study of Shanghai, China

As engines of economic growth, coastal cities are vulnerable to future extreme floods with climate change and rapid urbanization. Flood damage and flood-induced transportation interruptions inevitably affect local economic activities and generate interregional ripple effects due to the networked economy. We incorporate the impacts of transport disruptions into the interregional input-output (IRIO) model and evaluate the combined economic effects of transport disruptions and supply chain bottlenecks on the mainland of China due to a 1,000-year return period storm flood scenario in Shanghai. Except for production bottlenecks, the temporary rerouting of freight flows, transport delay and transport cost change are modeled, and important adaptive behaviors such as supplier substitution and inventories are also considered. Our results show that East China may suffer more than 53.1% of China's indirect economic losses (IELs), while Shanghai's IELs account for 28%. National IELs are very sensitive to the duration of transport delay, i.e., China's IELs increase by 80.8% if the delay time increases from 3 to 14 days. These findings highlight the importance of building a resilient transportation system and strengthening the resilience of regional supply chains and have significant implications for promoting urban resilience through various resilience strategies.

Agricultural industry in West Papua Province: An analysis of backward and forward linkages

Agriculture, Forestry and Fisheries Sector in West Papua Province contributes significantly to the Gross Regional Domestic Product (GRDP). While on the employment side, this sector also able to absorb a third of the workforce in this province. It indicates the important role of this sector in the economy of West Papua Province. The purpose of this paper is to determine the magnitude of the forward and backward linkage of agricultural industry in West Papua Province. The combination of forward and backward linkage will produce a key industry. The Inter-Regional Input Output (IRIO) model and 2016 IRIO data was used in this study. The findings show that Food Crops Agriculture; Annual Horticultural Crops, Annual Horticulture, others; and Livestock is included in the undeveloped category. Meanwhile, Seasonal and Annual Plantations, Forestry and Logging Industries, and Fisheries are in growing industries category. Gross value-added multiplier of all agricultural industries is below one where the highest value is in the Forestry and Logging Industry whereas Livestock Industry is the lowest.

The effects of oil royalties on regional inequality in Brazil

This article evaluates the impact of oil royalties on Brazil’s production structure and their effects on regional inequality. An interregional input-output model was used, encompassing the 27 Brazilian states and 26 sectors, with base year 2008. The simulation strategy assumed 75% of these funds are channelled into education and 25% into the health sector, as mandated by Law 12.858/2013. To measure the effect of royalties on regional inequality, the Gini coefficient was calculated both ex-ante and ex-post with respect to the impact analysis. The main findings indicate that interregional and intersectoral spillovers are weak; but, in the Southeast and Northeast regions, the investment of royalties in education and health could help reduce intraregional inequality.

Tourism-led economic contribution, interregional repercussion effects, and intersectoral propagation activities in Tokyo Metropolitan

This study aims to investigate the contribution of visitors’ expenditure to Tokyo Metropolitan’s economy including its decomposition, the interregional repercussion effect between Tokyo and the rest of Japan, and the intersectoral propagation activities between tourism and the other sector in Tokyo based on two-region interregional input–output model and Miyazawa’s partitioned matrix multipliers. Measurement in tworegion model yielded to a higher value compared to single-region model, where domestic visitors lead the major contribution in overall, prominently on services sectors. The indirect and feedback effects to industries in Tokyo were strongly linked to tertiary sector, while spillover effect to the rest of Japan was more widely distributed. The economic activities in Tokyo were highly dependent on the industries in the rest of Japan, in similar manner as tourism on the other sectors within Tokyo. Tourism industries have strong inducible effects on the other sector. Considering these interregional and intersectoral interdependencies, improving the tourism sector in Tokyo may imply a promising effect to benefit the economy of Tokyo and subsequently other Japanese regions.

China's regional imbalance in electricity demand, power and water pricing - From the perspective of electricity-related virtual water transmission

This paper investigates the linkage between regional electricity pricing and water resources based on an accounting of the electricity-related virtual water (VW) transmissions in the framework of interregional input-output model. This study finds out that the water resource conditions of the provinces with scarce water resources but rich energy resources are worsening due to power generation and thus the power generation's impacts on water resources in these regions should be seriously addressed across its entire life cycle. This study confirms the coexistence of the transmission of low-priced electricity to the regions with higher electricity prices and the hidden transmission of high-priced water resources to the regions with rich water resource endowment and lower water prices through electricity-related VW transmissions, which can aggravate the “invisible imbalance” of the spatial allocation of water resources. This study also emphasizes that China's regional electricity pricing mechanisms should fully involve the external costs of water to stimulate energy enterprises' willingness to control water use. The results of this study can provide scientific references for joint management of water and energy, and thus are conducive to policy formulations relevant to electricity pricing reforms in China.

Skill-based functional specialization in trade: an input–output analysis of multiscalar value chains in Brazil

ABSTRACT Sophisticated spatial labour markets can promote better opportunities for functional upgrading in value-added trade. This paper estimates the skill-based functional specialization in Brazilian labour factor content in trade in value-added (LTiVA), considering different geographical scales. We combined an interregional input–output model for Brazilian states with occupational data to identify the skill intensity embedded in LTiVA based on the hypothetical extraction method (HEM) technique. Our findings show that the largest Southeastern economic area specializes in highly sophisticated functions, while the rest of the country embodies low skills in value-added trade for domestic and global trade levels. Furthermore, the results reveal a central role for the São Paulo state governing the subnational value chains and reinforcing the international uneven spatial functional division pattern at the subnational level.

Resource-Based Industries and CO2 Emissions Embedded in Value Chains: A Regional Analysis for Selected Countries in Latin America

This paper analyzes the relative content of CO2 emissions embedded in regional supply chains in four different countries in Latin America: Brazil, Chile, Colombia, and Mexico. We estimate both the trade in value-added (TiVA) and the CO2 content embedded in interregional and foreign exports, mapping the relative intensity of CO2 emission levels on value chains. For that, we applied an inter-regional input-output model to determine the interplay between the CO2 emission embedded in goods of resource-based industries and their linkages with other economic industries, revealing a map of CO2 emissions on trade in value-added trade from a subnational dimension. The main result reveals an interregional dependence, indicating a higher level of embedded CO2 on value-added in each regional economy for resource-based industries, usually intense in CO2 emissions. This finding has considerable implications for the sustainable development goals of these subnational areas, as the spatial concentration of production leads to an unbalanced regional capacity for promoting reductions in CO2 emissions along with value chains.

Examining the role of China's outward direct investment in realizing carbon neutrality: empirical evidence from Belt and Road countries

PurposeKnown as the major capital providers in Belt and Road countries and the largest carbon emitter in the world, what role China's outward direct investment (ODI) plays in carbon neutralization has become a matter of concern. This study aims to measure the impact of China's ODI on the carbon emissions of Belt and Road countries.Design/methodology/approachBased on an econometric model and an inter-regional input–output model, a new model measuring the carbon emission effects of ODI is developed.FindingsThe empirical results show that (1) in general, China's ODI generates an emission-reduction effect in Belt and Road countries; (2) The relationship between the emission-reduction effect and income level of host countries shows an approximate inverted U-shaped trend; and (3) China's ODI generates stronger emission-reduction effects on capital-intensive industries.Originality/valueThis study quantitatively measures the scale of carbon emission-increase and reduction effect, which is relatively lacking in previous studies. This study explores the heterogeneity from the perspectives of regions, countries and industries. The authors have compiled an inter-regional input–output table for the Belt and Road countries for 2014 to provide a broad basis for the study of related issues.

Regional inequality and CO2 emissions-based trade across value chains networks: a multiscalar analysis from Brazilian states

ABSTRACT This article analyses the interregional linkages and the relative intensity of CO2 emissions embedded into domestic and global value chains from Brazilian states. An extended environmentally interregional input–output model (EEIIO) was applied to measure the bilateral trade in value-added (TiVA) and the total implicit emissions trade (TTE). The results reveal unbalanced pollution patterns in space. Few manufacturing hubs in core Brazilian states (mainly São Paulo and Rio de Janeiro) are net importers of intensive greenhouse gas (GHG) inputs from peripheries, implying an environmental responsibility driven by networks’ governance and relative position. By recognizing the role that multiscalar integration plays in implicit CO2 in both production and trade, it is possible to build local strategies to reduce sustainable spatial gaps.

INTERDEPENDENCE OF MANUFACTURING INDUSTRY BETWEEN KOREA AND ASEAN-5 COUNTRIES: ASIAN INTERNATIONAL INPUT-OUTPUT ANALYSIS

The purpose of this study is to analyze the interdependence of the manufacturing industry between South South Korea and ASEAN-5 countries. To conduct an international analysis for the manufacturing industries, an interregional input-output (IRIO) model is applied. The Asian International Input-Output Table (AIIO) provided by IDE-JETRO (2017) is employed and the spillover effects of manufacturing industry are compared in terms of inducement production, value added and backward/forward linkages. The results indicate that the production inducement outcome between Malaysia and South Korea and the effect of forward and backward linkage industry are high, and the dependence on industry is high. On the other hand, in terms of decomposition of value added exports to ASEAN from South South Korea in the manufacturing sector; Vietnam, Singapore, and Indonesia are the states where South South Korea's domestic value-added exports are high. The result shows that South South Korea is necessary to diversify economic cooperation between East Asian and ASEAN member states.

The impact of electricity investment on inter-regional economic development in Indonesia: An Inter-Regional Input-Output (IRIO) approach

Electricity is a development priority for low and middle income countries, including Indonesia, especially in the households living in suburban and rural areas. By 2020, Indonesia's electrification ratio has reached 96.71%. However, there were 433 villages that did not have electricity, most of which were located in eastern Indonesia (Papua, West Papua, East Nusa Tenggara, and Maluku). Investment in the electricity sector will drive regional economic growth. This research attempts to figure out the impact of investment in electricity on economy. This study used Indonesian inter-regional Input-Output data. The method used in this study was the Interregional Input-Output (IRIO) model. The analysis shows that electricity impacted not only the territory being built but also other regions in Indonesia. Electricity industry investment in Indonesia have been able to provide a multiplier effect on the economy as many as 3.11. Java region gets the greatest benefit from electricity development in Indonesia. This was rationally acceptable due to the fact that most of the industry was located in this region. This causes a development gap between Java and outside Java. It is necessary to accelerate reallocate several national strategic industries on various islands in Indonesia based on the advantages of each region and to strive for areas that are still "dark" to have electricity.JEL Classification E22; L94; R15