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Input-output analysis is a technique that is used to discover how changes in one or more than one outputflow in a static or dynamic supply and demand network are shared over the various users (input flows). A static system is a system whose levels and flows do not vary from period to period. In a dynamic system the levels and flows vary with time.
The first phase of the technique is concerned with building a matrix of the flows of resources, expressed in money values, between the main sectors of the network being considered. The following ultra-simplified example indicates the form of the matrix:
| To | |||||
|---|---|---|---|---|---|
| Industry | | Agriculture | | Consumers | |||
| Industry | 3 | 1 | 1 | 5 | |
| From | Agriculture | 1 | 1 | 8 | 10 |
| Consumers | 10 | 5 | 5 | 20 | |
| 14 | 7 | 14 | |||
All values $m
The second phase consists of the development of a set of equations representing intersectoral flows based upon the transactions established in the original matrix. In the third phase the equations can be used to estimate the effects of any given set of changes in outputs or inputs upon all elements of the system.
The main applications of the technique have been at the level of macro-economics in which the flows of product between the main sectors in an entire national economy are considered, e.g. the usage of the products of the iron and steel industry, in the chemical industry. Some applications have been reported at the level of a single company, e.g. the usage of French-made motor engines in the Spanish body plant.
Ref: Wassily Leontieff - Input-Output Economics - New York
In objective setting there is a difference between the inputs to, outputs from and the outcomes of a particular objective. It is important to know the distinction between these and exactly what is being assessed.
For example, if car parking is a particular problem a local objective might be:
“To reduce the number of illegally parked cars within a three mile radius of the Town Hall”
The monitoring of this objective would be via:
The above illustrates that monitoring outcomes is the most definitive way of informing whether an objective is being realised.
