Semi-input-output and multisectoral planning

Abstract

Interindustry analysis, though widely recognized as a powerful analytical technique at the sectoral level of planning, often becomes an exercise in compromise between the requirements of macro- and micro-economic analysis during the actual planning process in developing countries. This is far from denying, of course, that input-output analysis has no distinct advantages over other methods when it comes to analysing interrelated sectoral developments in an economy. Without this method it seems hardly possible to estimate changes in the composition of demand, in the sectoral distribution of production and investment, and in a country’s trade pattern in a consistent way, i.e., avoiding shortages in some sectors and surpluses in others. Moreover, requirements of intersectoral consistency in the presence of non-substitutability between sectors often put additional constraints on the rate of growth of an economy, causing an upward bias in estimates obtained with more aggregative methods. Finally, the use of an input-output framework offers a useful basis for discussion between project or sector specialists and those concerned with macro-economic analysis and planning (Taylor 1975, p. 42).