Introduction
Features of the 1994 IO Table
Description of the Tables

The 1994 Input-Output (IO) Accounts is the eighth of a series of interindustry accounts made for the country since the construction of the first benchmark IO table for 1961. The first two IO tables (1961 and 1965) were prepared and published independently by the National Economic Council (forerunner of the National Economic Development Authority or NEDA) and the Bureau of the Census and Statistics (now the National Statistics Office or NSO). The next three tables (1969, 1974 and 1979) were produced as a collaborative effort of these two offices. In 1987, the Statistical Coordination Office of NEDA which was tasked with the compilation of national accounts and input-output tables evolved into an independent body named the National Statistical Coordination Board (NSCB). The last three IO’s (1985, 1988 and 1994) were accomplished as a joint undertaking between the NSCB and NSO.

The 1994 table highlights the structure of the different sectors of the economy and their interrelationships. It also described the general features and defined the various transactions and analytical tables used.

The latest IO follows the same format adopted since the 1985 IO compilation wherein distinction is made between commodities and industries. Thus, two intermediate tables- the MAKE and USE matrices – are first compiled before deriving the symmetric IO table.

Industries and commodities are classified into the disaggregated 229 sector details comparable with the 1988 classification, except that steam replaces the gas sector. An aggregated 59 X 59 and 11 X 11 table, parallel to the national accounts classification, are also made available. Primary input is broken down into four components while the final demand has six categories. Another feature of the 1994 IO which was first introduced in 1988 is the presentation of total import duties as a separate item which is added to the total gross value added by sector to come up with Gross Domestic Product. Concepts of output, intermediate consumption and final demand are the same as those of the national accounts.

There are two versions of the IO: the competitive-imports type and the non-competitive-imports type or domestic IO. The difference between the two is in the treatment of imported inputs. In the former, the intermediate inputs contain both domestic and imported components while in the latter, the imported components of intermediate inputs and final expenditure are separated out. Thus, in the non-competitive imports type IO, all intersectoral transactions consist of locally-produced commodities only.

The present IO system includes an integrated set of MAKE and USE matrices as well as the symmetric commodity by commodity IO table. The MAKE and USE matrices represent an intermediate stage between the basic statistics and the symmetric IO tables which are more useful in economic analysis and modeling. From the basic IO tables, other analytical tables such as the technical coefficient matrix and the inverse matrix are derived.

1. MAKE Matrix

   The MAKE matrix is an industry by commodity matrix showing the value of each commodity produced by each industry. Industries are listed at the beginning of the rows while commodities are named at the head of the columns.

   The entries in a row represent the values of the different types of commodities named at the head of the column produced by an industry named at the beginning of a row. Row entries, therefore, show the product mix of an industry. They represent both the primary and secondary products produced by an industry. In a square matrix, the value of the primary product of an industry is shown in the diagonal cell (the cell where the row with an industry number intersects with the column of the same number). The secondary products of an industry (primary products to other industries) are shown in the other cells along the row.

   The entries in a column of the MAKE matrix represent the value of production by each industry of the commodity named at the head of the column. Each column therefore shows the different types of industries that produce the specific commodity either as a primary product or a secondary product.

   In a MAKE matrix, the row total is industry output, while the column total is commodity output. Industry totals are not necessarily equal to column total because of secondary production.

2. USE Matrix

   The use matrix gives information on the uses of goods and services, and on cost structures of the industries. It consists of the intermediate use quadrant, the final use quadrant and the value added components quadrant. The commodity by industry intermediate use quadrant shows intermediate consumption of commodities by industries (along the rows and columns). The final demand quadrant shows the amount of goods and services that are consumed by final users. The value added component quadrant shows compensation of employees, taxes less subsidies on production, depreciation and operating surplus by industry.

   In the USE matrix, the row total is total commodity output (regardless of which industry contributed to that output) and the column total is the total industry output (regardless of what commodities were produced). The column totals of the MAKE matrix are equal to the row totals of the full USE matrix, equivalent to commodity outputs. On the other hand, the row totals of the MAKE matrix are equal to column totals of the full USE matrix, equivalent to the industry outputs.

3. Symmetric Commodity by Commodity Input-Output Table

   A symmetric IO table is one in which there are the same classifications or units used in both rows and columns. A commodity by commodity table shows which commodities are used in the production of which other commodities. The table is constructed from the MAKE and USE matrices. In principle, the transformation involves transfer of outputs in the form of secondary products in the MAKE matrix so that secondary products are treated as additions into the activities for which they are principal and removed from the activities in which they are produced, and transfer of inputs in the USE matrix associated with secondary outputs from the industry in which that secondary output actually takes place to the activity to which they principally (characteristically) belong. The mathematical methods used when transferring outputs and associated inputs hinge on two types to technology assumption: industry technology assumption and commodity technology assumption. The industry technology assumption assumes that all products (whether principal or secondary) produced by an industry have the same input structure, while the commodity technology assumption assumes that a product has the same input structure in whichever industry it is produced. While the commodity technology assumption makes more economic sense than the industry technology assumption, its automatic mathematical derivation sometimes produces results that are unacceptable, e.g. negative technical coefficients. Thus, in this exercise, the symmetric commodity by commodity table is derived by using the industry technology assumption. The industry technology assumption satisfies the Leontief material balance that total output equals the product of input-output coefficients and total output plus the final demand.

   While the MAKE and USE matrices can themselves be used for various analytical purposes, the symmetric tables impose even stronger accounting constraints on the data, since row and column totals have to be identical for each product. The symmetric IO table therefore provides the analytical framework for economic modeling. From the symmetric IO transaction table, the inverse matrix is calculated.

4. Technical Coefficients

   The technical coefficients or direct requirements matrix shows the unit cost structure of production. Read columnwise, it shows coefficient value of intermediate and primary inputs required in the production of one unit of output in that sector. An industry by commodity technical coefficient matrix shows the commodity inputs required to produce a peso worth of an industry output. A commodity by commodity technical coefficients matrix shows the different commodity inputs required to produce a peso worth of specific commodity output. The technical coefficients are derived by dividing each element in the intermediate transaction matrix by the total input of each sector as shown in the column total.

5. Inverse Matrix

   The inverse matrix shows the production required, both directly and indirectly, per peso of delivery to final demand. The elements in a column correspond not only to the direct requirements but also to the indirect sectoral output requirements needed to meet a unit increase in the final demand for that sector’s output. To illustrate, the effect of an increase in demand for a certain product does not end with its required direct intermediate inputs. It generates a long chain of interaction in the production processes since each of the products used as inputs needs to be produced, and will, in turn, require various inputs. One cycle of input requirements requires another cycle of inputs, which in turn requires another cycle. The sum of all these chained reactions is shown in the inverse matrix.

   The Leontief inverse is very important in IO analysis as it provides the link between production and final demand. Given a postulated set of final demands, it is possible through the inverse matrix to calculate what output levels would be required to meet the specified demand. The matrix is computed as the inverse of the technology matrix, (I-A), where A is the matrix of input coefficients and I is the identity matrix.

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