Interregional Input Output 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.

An Integrated Framework for Estimating Origins and Destinations of Multimodal Multi-Commodity Import and Export Flows Using Multisource Data

Estimating origin-destination (OD) demand is integral to urban, regional, and national freight transportation planning and modeling systems. However, in developing countries, existing studies reveal significant inconsistencies between OD estimates for domestic and import/export commodities derived from interregional input-output (IO) tables and those from regional IO tables. These discrepancies create a significant challenge for properly forecasting the freight demand of regional/interregional multimodal transportation networks. To this end, this study proposes a novel integrated framework for estimating regional and international (import/export) OD freight flows for a set of key commodities that dominate long-distance transportation. The framework leverages multisource data and follows a three-step process. First, a spatial economic model, PECAS activity allocation, is developed to estimate freight OD demand within a specific region. Second, the international (import and export) freight OD is estimated from different zones to foreign countries, including major import and export nodes such as international seaports, using a gravity model with the zone-pair friction obtained from a multimodal transportation model. Third, the OD matrices are converted from monetary value to tonnage and assigned to the multimodal transportation super network using the incremental freight assignment method. The model is calibrated using traffic counts of the highways, railways, and port throughput data. The proposed framework is tested through a case study of the Province of Jiangxi, which is crucial for forecasting freight demand before the planning, design, and operation of the Ganyue Canal. The predictive analytics of the proposed framework demonstrated high validity, where the goodness-of-fit (R2) between the observed and estimated freight flows on specific links for each of the three transport modes was higher than 0.9. This indirectly confirms the efficacy of the model in predicting freight OD demands. The proposed framework is adaptable to other regions and aids practitioners in providing a comprehensive tool for informed decision-making in freight demand modeling.

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.

Estimating high-resolution interregional input–output tables: a Bayesian spatial approach

ABSTRACT Due to the scarcity of subnational interregional input–output (IRIO), various approaches to their estimation are actively under investigation in the literature. This paper focuses on the application of spatial econometric method. It determines intra- and interregional coefficients through a joint procedure which successfully avoids the direct recycling of estimates for other geographies and granularities. Instead, the use of Bayesian methods is proposed, which formally integrate limited evidence from existing regional tables (Finland) with a set of sectoral data on value added for 73 NUTS-3 regions in Poland, the latter being dominant. An empirical test of replicating the Korean survey-based IRIO table demonstrates that the accuracy of this approach slightly outperforms an alternative IRIOLQ procedure. The incorporation of time-based distance measurement has only modest effects on empirical fit, and the use of big geolocation dataset to account for commuting relocates 18.9% of the induced effect from a city to its periphery.

Mapping Potential Agriculture Sectors In The SULAMPUA Region As An Impact of Capital City of Nusantara Development

The development of Capital City of Nusantara (IKN), which is geographically closer to the SULAMPUA region, expected trigger the SULAMPUA economy, especially the agricultural sector. This study aims to determine the potential agricultural sector in the SULAMPUA region due to IKN development. The study uses IRIO (Inter-Regional Input-Output) from Statistics Indonesia in 2021, specifically for seven agricultural sub-sectors. The SULAMPUA region comprises ten provinces, with the Golden Triangle region comprising South Sulawesi, Central Sulawesi, and West Sulawesi. The results of the study show that no agricultural industry is a strategic sector in the SULAMPUA. Based on the criteria set out in the research, no sector falls into the category of very potential to be developed. The potential sectors to be developed in the SULAMPUA Region are (1) food crops; (2) seasonal and annual plantation crops; (3) livestock; (4) forestry and logging; and (5) fishery. Local governments need to consider policies related to potential agricultural sectors. Because the agricultural sector is a labor-intensive and the availability of resources.

Economic Simulation of Central Java: Indonesia’s Province-Based IRIO Analysis

This study simulates increased sectoral investment in the economy of Central Java Province, Indonesia. Using output and household income indicators, several policy scenarios are applied to Indonesia's interregional input-output (IRIO) tables, including green economic scenarios. The aim of this research is to identify the most impactful policy on the economy of Central Java based on the results of investment policy simulations. Investment injections are conducted in production sectors within Central Java and in sectors outside the province. By assessing the direct, indirect and induced effects on economic sectors and households, cross-sectoral insights for regional development policies, the simulation results show that the Central Java economy experiences the best impact in terms of sectoral household output and income levels. In IRIO analysis, this impact is seen as a multiplier effect from sectors within and beyond Central Java. The findings imply that policies focused on local sector development will generate the highest income levels and largest output multiplier for Central Java given the existing economic conditions, while green economic policies do not have insignificant economic impacts compared to non-green policies. It is crucial to develop additional policy scenarios targeting both local and non-local industries to obtain more sensitive simulation results.

The European regions in the global value chains: New results with new data

AbstractThis article contains the methodology and main results related to the update and extension of the widest interregional input–output tables for the entire EU27, UK and the European Free Trade Association (EFTA) countries. This work continues the outstanding effort developed in the past years regarding the estimation and analysis of different multiregional input–output (MRIO) databases at the country level (world input–output database, EXIOBASE, ICIO, FIGARO, etc.) and the MRIO tables developed for the European Union (EU) at the NUTS2 level. The main contribution consists of updating and extending the current EUREGIO collection to obtain a EUREGIO table for 2017, which will be referred (NUTS‐2 Rev.2016) for all the EU27 + UK + EFTA countries and will be embedded in the new FIGARO multicountry 2017. Such effort was developed in the context of the ESPON‐IRIE project. This article summarises the methodology used and compares the results obtained with the ones of the main benchmarks, providing an analysis of the national and regional participation in the global value chains (GVCs). The main results suggest that, on average, 65% of value added is embodied in the goods and services sold to the same NUTS‐2 region, 16% is embodied in the ones sold to regions in the same country and the remaining 20% is exported (to other countries). Exploring the heterogeneity within these figures can also be seen that the variety is higher across regions than across sectors. Our analysis suggests that, to a large extent, the heterogeneous participation of EU27 + UK + EFTA regions in the GVCs is explained by their sectoral structure more than by the regional idiosyncratic characteristics. Such results open the floor for the correct design of industrial policies, embedded in the smart specialisation paradigm.

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.

Measurement and driving factors of carbon productivity in China's provinces: From the perspective of embodied carbon emissions.

Carbon productivity incorporates economic development and carbon emissions within a unified framework for measuring the economic value per unit carbon emissions. In the context of climate change, improving carbon productivity is of great value for promoting low-carbon development in a country or region. From the perspective of embodied carbon emissions, this study constructs an embodied carbon productivity (ECP) index and uses the Logarithmic Mean Divisia Index decomposition method to study the evolution trends and driving factors of ECP in China's provinces based on China Interregional Input-Output Tables for 2002, 2007, 2012, and 2017. The following results were obtained: First, China's overall ECP showed a continuously increasing trend during the entire period, with the energy efficiency factor playing the largest role among all driving factors. Second, the ECP in 19 of the 30 Chinese provinces continued to increase and the contributions of energy emission ratio, ECP per capita, and population size factors to the increase in ECP presented evident disparities among different provinces. Third, the ECP in three major regions ranged from high to low in the order of East, Central, and West, with the largest growth in the Central, followed by the West, with the smallest in the East. Based on the analysis of research results, we proposed relevant policy recommendations to further improve China's ECP and achieve low-carbon economy.

Regional Impact Analysis of Carbon Tax Implementation on Indonesia’s Coal Power Plant with Interregional Input-output Method

The excessive use of greenhouse gases (mainly carbon dioxide) causes a global emission of greenhouse gases. This has eventually brought climate change and global warming, that will affect the human life standard. Also it has several economical impacts such as increasing the mitigation budget for anticipating the climate change problems by applying a carbon tax as one of strategies to reduce carbon emissions. Carbon tax is one of additional economic instrument and has high possibility to be implemented in Indonesia to help its future low carbon development especially on energy sector. Under such a circumstance, this paper aims to predict the possible impact of implementing a carbon tax implementation on Coal Power Plant (CPP) and revenue recycling for 6 regions in Indonesia i.e. Sumatera, Jawa, Bali and Nusa Tenggara, Kalimantan, Sulawesi, Maluku and Papua. The IRIO (InterRegional InputOutput) model of six regions in Indonesia has been developed based on the Central Bureau of Statistics with seventeen sectors in 2016 to evaluate the impact of carbon taxes with a carbon price of 2,1 USD/ton on CPP and to show the scenarios for the distribution impact of carbon tax revenues on output, wages, and GRDP. The results show the implementation of a carbon price of e 2.1USD/ton will give extra revenue of around 241 Billion Rupiah nationally with the distribution of 73%, 15%, 7%, 3%, 2%, and 1% from Java, Sumatera, Kalimantan, Bali-Nusa Tenggara, and Maluku-Papua, respectively. Through revenue recycling, those values could increase the total output, wages, and GDRP per region by around 451, 100, and 169 Billion Rupiah, respectively. The revenue recyling option and its economic impact for each 17 sectors are also identified in the study with spesific characteristics for each region. In conclusion, the result could help the government determine its climate change mitigation strategy, so it could boost the regional economy. Based on the study results, this paper recommends the government to conduct an intensive monitoring and evaluation on low carbon policies for CPP in Java and Sulawesi.

Inflation and Spatial Spillovers in a Large Archipelago: Evidence from Indonesia*

This study examines inflation dynamics in Indonesia, a large archipelagic country, using the Phillips curve specification. Utilising province‐level data from 2015 to 2019, the analysis accounts for regional interaction across Indonesian provinces and estimates spatial spillovers. To address the challenges of applying spatial methods to the world's largest archipelagic nation, two new approaches for the spatial weight matrix criteria are introduced: contiguity‐based from artificial boundaries (Thiessen polygons) and trade‐based from the Interregional Input–Output Tables. Furthermore, exploiting a new dataset, the study contrasts alternative measurements of inflation and output gap. These distinctions yield new findings. The results indicate the presence of a conventional Phillips curve in Indonesia. Different measures of inflation and the output gap have distinct spatial spillover effects.

Linkages between Sectors and Regions in the Aceh Economy

This study analyzes the economy of Aceh not only based on the linkage between industries but also based on the linkage between regions. The analysis used forward linkages and backward links to determine the leading sectors in Aceh. The data used is secondary data from Indonesia's 2016 Inter-Regional Input Output (IRIO) based on domestic transactions at producer prices. The data is sourced from Statistics Indonesia. The study results show that the key sectors in Aceh are Electricity and Gas and Manufacturing. These sectors have the highest spreading power (backward linkage) and sensitivity (forward linkage) because they are in the first quadrant. In addition, inter-regional linkage analysis shows that the final demand shock in Aceh has a large output impact on DKI Jakarta, North Sumatera, and Riau. On the other hand, the economy of Aceh was affected by the final demand shock from several provinces on the island of Sumatra, namely North Sumatera, Bengkulu, West Sumatera, Jambi, and Sumatra Selatan. The policy implications that can be applied to increase labor skills and management in leading sectors will have a multiplier effect on other sectors and the cooperation between provinces in a special economic zone.

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.

Analisis Sektor Pariwisata Provinsi Nusa Tenggara Barat dan Dampak MotoGP Mandalika

The tourism industry in West Nusa Tenggara (NTB) province continues to develop with the construction of the KEK (Special Economic Zone) Mandalika and the performance of international events. The MotoGP event was expected to have an economic impact on NTB province and the nation. This study analyzes the role of tourism industry in NTB province by focusing on the 2022 MotoGP event in Mandalika on the economy of NTB province and other provinces in Indonesia. The research method used in this study was the Inter-Regional Input Output (IRIO) method. One of essential findings from this research was the role of the tourism industry in the economy of NTB province, which was still relatively small, nevertheles, tourism was considered as a key and potential industry in the future. The MotoGP event impacts on the formation of an output of IDR606,92 billion, added values of IDR315,94 billion, labor wages of IDR137,67 billion, and potential taxes of IDR14,25 billion. The spillover impact on the other provinces was still relatively small. With that impact on the economy, international events must be held regularly. For future research, some sources of shocks to government spending and investment may be interesting to be studied

Input–output analysis of the Ukraine war: A tool for assessing the internal territorial impacts of the conflict

AbstractThe Russian invasion of Ukraine on February 24, 2022, scaled up the ongoing conflict in Donbas beyond its regional borders, hindering and halting different aspects of economic life. Considering the internal geography of Ukraine's economic structure, the damage to physical infrastructure and supply chain disruption are likely to propagate to other parts of the country through an intricate plot of production and income linkages. From a disaggregated analysis of multiregional and multisectoral linkages, this article offers a systematic, integrated account of the structural linkages that allows modeling spillovers from one Ukrainian region to another. This approach breaks new ground by highlighting the internal economic effects of the conflict in Ukraine. We develop an interregional input–output system for Ukraine, providing the numerical basis for developing analytical frameworks to support knowledge‐building in the recovery process of distressed territories during the postwar period. We offer this database to the international scientific community to support modeling projects focusing on structural features of the Ukrainian economy. As shown in our illustrative exercises, understanding the structure of intersectoral and interregional linkages is critical to better understanding the propagation of exogenous shocks to the economy.

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.

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.

Regional inequality in China during its rise as a giant exporter: A value chain analysis

AbstractChina's exports success has implications for regional income inequality, because most of its export products are manufactured in the coastal zone. We propose a value chain‐based accounting framework to quantify the contributions of exports to regional income inequality. We employ newly developed interregional input–output tables for China, which distinguish between processing export activities and ordinary export activities. We analyze the period 2002–2012, the decade during which China became the “Factory of the World.” We find that an RMB of processing exports contributed much more to regional inequality than an RMB of ordinary exports or domestic final demand. Still, changes in regional inequality (increasing in 2002–2007 and decreasing between 2007 and 2012) are much more due to rising ordinary exports in the first subperiod and the growth of domestic final demand coupled with changes in the configuration of value chains in the second.