About the Role of Input-Output Balance in Government Regulation of the Economy

• Published in: Economic and social changes Vol. 10; no. 3 (51); pp. 41 - 58
• Main Author: Lukin, Evgenii
• Format: Journal Article
• Language: English
• Published: Russian Academy of Sciences, Vologda Research Center 01-07-2017
• Subjects: analysis; forecasting; government regulation of the economy; input-output balance; modeling
• ISSN: 2307-0331; 2312-9824
• DOI: 10.15838/esc.2017.3.51.2

March 30, 2017, a notable event took place in Russia: the Federal State Statistics Service (Rosstat) published the basic input-output balance (IOB) for the national economy for 2011 and the tables that show the resources and utilization of products for 2012–2014. Economists have been waiting for this event for more than 20 years. The latest IOB was made in 1995. The present paper summarizes theoretical foundations of input-output balance and basic methodological approaches to its construction. It is shown that input-output balance is the basis for government regulation of the economy in industrialized countries. The paper evaluates the situation with the availability of necessary statistical information to build the “input – output” tables for the Russian economy. The author highlights possible areas, in which input-output balance can be used in government regulation of the economy. It is proved that input-output balance contains all the main macroeconomic indicators of the country (region) in its sectoral and national economic context. It is established that IOB is an important analytical tool for the study of inter-industrial interaction in the economy, for carrying out structural analysis of a wide range of indicators (structure of production, formation of resources, purchasers’ prices, intermediate consumption, use of goods and services, value added, and others). It helps analyze exchange of the products in current production (intermediate) consumption and the products that enter final consumption. In addition to the study of the structure of the economy, input-output balance provides an opportunity to calculate important economic and sectoral proportions. On the basis of IOB it is also possible to calculate cost-effectiveness ratios in individual industries and the whole national economy. These ratios include labor productivity, capital productivity, and return on assets ratio. Relevant practical examples are provided for all the directions considered. It is shown that variants and forecast calculations are a significant part of interdisciplinary research. Input-output models help carry out variants calculations of the state of the economy taking into consideration changes in both personal and social needs, and in production capabilities. The author presents the results of variants calculations of economic development with the use of IOB of Russian and foreign researchers. The paper substantiates the main difference between forecast and variants calculations, which consists in using dynamic matrices of direct costs ratios. The paper classifies basic methods of forecasting direct costs ratios, summarizes the types of inter-sectoral socio-economic forecasts (demographic, social and environmental forecasts, forecasts of dynamics and structure of production, development of specific sectors, natural resources, etc.). It is concluded that the use of analytical and forecasting opportunities of input-output balances provides a strong basis for government regulation of the economy