Page 57 - Special Topic Session (STS) - Volume 2

STS452 Joseph M.
product affects the output of sectors supplying intermediates to it—that is, a
sector’s supply dependency.
The elements across the rows of the VBY matrix provide the amount of a
sector’s value added in the final demand for any given economy-sector’s
output, thus specifying the sector’s contributions to the productive processes
of all economy-sectors, including to its own processes. These downstream
productive linkages that detail how and by whom a sector’s products are being
used are called forward linkages. The degree of criticality of an economy-
sector’s products to the production processes of various sectors and
economies can be discerned from the information provided across the rows.
It shows how a sector’s output would be affected by changes in the final
demand for other sectors’ output—that is, an economy-sector’s demand
dependence. From an economy’s perspective, the non-diagonal blocks across
the rows indicate its level of export dependence or export concentration. It
also shows how regionally diversified an economy-sector’s export markets are.
The impacts of all exports on any given sector can also be discerned through
the information across the relevant row.

4. Discussion and Conclusion
Basically, in a VBY matrix, the value added terms across and along the
rows and columns referring to a given sector show, respectively, how its output
was produced and how it was used. Information discerned across the rows and
along the columns show the length, distribution, and concentration of a given
commodity’s production chain. The entire economic input–output system
expressed in terms of transactions in value added, as detailed by the VBY
matrix, facilitates the measurement, analysis, and evaluation of the sectoral
and economy-wide impacts of economic decisions on production and
consumption. Since a multi-sectoral and multi-economy global economic
system and the intersectoral and inter-economy interconnectedness and
dependencies are depicted comprehensively by the input–output framework,
the economy-wide and sectoral transmission and diffusion of the economic
effects of the decisions can be traced, mapped, and quantified by the VBY
matrix. This feature of the input–output system makes it a very powerful
economic analysis tool especially in studying the level of economic integration
of regions and in tracking temporally and spatially the impact of major
investment activities such as economic corridor development.

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