Economic analysis based on input-output tables: Definitions, indicators and applications for Latin America

This manual summarizes the theoretical bases of the input-output model applied in the economic analysis of countries and groups of countries (subregions). The input-output tables developed by the Regional Integration Unit of the International Trade and Integration Division of the Economic Commission for Latin America and the Caribbean (ECLAC) will be of use to government experts for conducting their own calculations and analyses, following and adapting the guidelines and recommendations contained the manual to design specific public policies. Some indicators suggested in the document include the intensity of imported inputs in production and exports, forward and backward production linkages, import dependency analyses, the domestic value added in exports or imported content by trade partner, and extensions and applications related to export employment and CO2 emissions. This manual can also serve as a useful aide for academics, researchers and students in understanding sometimes elusive and complex literature.Introduction .-- I. The Input-Output Table as a tool for economic analysis .-- II. Basic indicators .-- III. Vertical specialization .-- IV. Value Added Indicators .-- V. Extensions and applications of input-output tables .-- VI. Conclusions

Análisis de la sostenibilidad de inversiones verdes en el camino hacia la transición energética y la descarbonización de la Economía. La importancia de las cadenas de valor

n the last centuries, Humankind has lived sourced by fossil fuels and under a linear economic perspective based on extractive activities, environmental depletion and lack of circularity. Ironically, what goes around, comes around. The prevailing paradigm of production-consumption-waste (take-make-dispose) that excluded the environmental perspective was wrong. How production and consumption patterns are settled nowadays, have repercussions in all the spheres (economy, society and the environment). Consequently, the world is currently facing significant challenges that affect all the people: Climate Change, energy security, increasing electricity demand, economic growth and employment creation are among the top concerns today. They are present in the national agendas as reflected in the Sustainability Development Goals (SDGs) to achieve sustainability resilience and, ultimately, welfare. The economy and energy systems strongly condition these goals. Regarding the former, production processes now are more distant due to globalisation, information and communication technologies (ICT), offshoring and the international trade growth, and have made that production and consumption develop through complex global value chains (GVC) with different countries that produce different parts of a final product that is eventually consumed elsewhere. The Covid19's pandemic is a recent example of how the GVC phenomenon has propagated the economic shocks across sectors and countries (via lockdowns, upstream bottlenecks, dependencies and transportation problems). Understanding how GVC behave is fundamental to describing the dependencies and networks that define today's world economy. Hence, GVC become the backbone of this thesis. Concerning the later, energy coming from fossil fuels is still mainstream. This fact hinders the efforts to fight against Climate Change, which implies meeting the Paris Agreement goals. Countries are committed to reducing their greenhouse gases emissions for the year 2030. The strategy to achieve the mitigation goals needs a low carbon economy and energy transition path, so countries worldwide have launched national policy packages to increase renewable energy sources (RES). However, two main issues arise: on the one hand, these green investments planned are insufficient. On the other side, the required energy transition may impact other aspects of sustainability and resilience that imply both synergies and trade-offs between SDGs and social and economic spheres of sustainability that should be assessed. Furthermore, world energy demand is expected to increase. In developing countries, growth is dramatic. For example, the Middle East and North Africa (MENA) region grew at a rate of 6-8% per year in the past years. It is expected to triple by 2030. Developing countries face the same challenges as developed ones, departing from a disadvantaged position (in terms of technology, labour skills and capital endowments, institutional robustness, and political priorities). In this context, an energy transition towards decarbonisation, focused on developing regions, plays cardinal importance in the thesis. Renewable electricity ensures climate protection and energy security, as well as employment opportunities, economic growth and human welfare. It becomes part of the solution to today's problems to achieve sustainability. With Covid19, the future of energy and the global value chains is uncertain. The debate about the virtues GVC and the dependencies in the production process obviously affect the citizens' health and safety and have implications for international trade and investment (renewables included). Policymakers responsible for taking today's critical investment decisions need complete analysis and evidence of their choices' broad impacts. This is the main objective of the thesis. Aiming to depict the current functioning of the production processes focused on RES deployment, this document covers the insertion of developing regions in GVC (their role, insertion and implications), through socioeconomic and environmental indicators, and policy recommendations. The present thesis, entitled "Sustainability assessment of green investments on the path to the energy transition and the decarbonisation of the economy. The importance of global value chains", is structured in six chapters: Chapter 1 introduces the two intertwined concepts present in the whole document: energy and the global value chains. Chapters 3 to 5 deal with these two concepts at different levels (regional, national and local, respectively). It also presents the main research questions and lists the work performed up to the present date. Chapter 2 links RES deployment and value chains through a common methodological framework: the input-output analysis. It is a widely used way to measure GVC and sustainability impacts related to investments such as renewables. One of the main advantages of this method is its ability to account for a wide range of dimensions in the three spheres of sustainability along with detailed full inclusion of the GVC, including both direct and indirect effects. However, one of the main shortcomings of this methodology is the lack of data available for developing regions: many countries are not covered in the main multi-regional input-output (MRIO) databases, hindering the measurement of GVC in regions like South America or Africa. Chapter 3 addresses data shortcomings by using a regional input-output table (RIOT). Chapter 3 analyses South America's role in GVC through the Koopman, Wang and Wei (KWW) decomposition. The KWW scheme is extended to explain the limitations when using a RIOT. A novel adaptation of the KWW gross exports decomposition scheme, suitable for any RIOT, is created to this end. The implications of using a RIOT are assessed. Besides, the results are complemented with those obtained using a Multiregional Input-Output (MRIO) table. It is confirmed the low insertion of South America in GVC and its upstream position as a provider of intermediate goods and services: imported content in South American exports comes primarily from outside the region, and only Uruguay is vertically integrated. Finally, using a RIOT is not recommended for a complete sustainability analysis when MRIO tables are available. In chapter 4, Mexico's green investments for the period 2018-2030 are assessed in terms of value added, employment, materials, land use, water and CO2eq emissions in a multiregional input-output framework. These green investments are expected to account for nearly an increase of 1%, both GDP and employment, in Mexico and scheduled mitigation of around 63 Mt CO2eq, once the new facilities are fully deployed. Nevertheless, the deployment and operation, and maintenance phases will increase the emissions (0.82%), the water and material footprint (0.19 and 0.9%, respectively) and the land use (0.19%) with a substantial share of the positive and negative effects leaked outside the country borders. We compare the results with the International Renewable Energy Agency (IRENA) proposal, aligned with the COP21 goals. If additional RES to meet the Paris Agreement is deployed in Mexico, GDP and employment are estimated to almost triple concerning the national package assessed. Chapter 5 presents a sustainability assessment of concentrated solar power (CSP) hybridisation with biomass technology to be installed in Tunisia. Environmental impacts have been assessed by Life Cycle Analysis (LCA). For socioeconomic impacts, an MRIO analysis was used to estimate the production of goods and services, value added and employment creation. Regarding the results, the system reports 22 gCO2eq per kWh. The most critical component in terms of emissions is the gasifier system, due to biomass transport. Socioeconomic results show significant impacts on Tunisia's employment creation, coming essentially from the operation and maintenance (O&M) phase. The multiplier effect of the direct investment in producing goods and services amounts to 2.4 (3.5 accounting induced impacts). Domestic value added in investment is low, only 28.9% of the overall value added created. Thus, increasing the national content of the investment stage would bring additional local benefits. Using extended MRIO, CO2 emissions have also been calculated, and the CO2 emission differences with both methodologies are discussed. This thesis concludes with some final remarks regarding the importance of RES deployment in achieving the Paris Agreement and some of the Agenda 2030 goals while identifying how GVC affect these green investments, especially in developing countries. GVC potential weaknesses and the benefits of fostering local RES components niches should be considered to create policy actions. Finally, brief comments on current and future research lines include exploring other technologies such as carbon capture, storage and use (CCUS), capital endogenisation and methodological hybridisations to contribute to identifying the benefits of green investments in the way to sustainability

INTRA-REGIONAL TRADE IN SERVICES IN SOUTH AMERICA: AN INPUT-OUTPUT APPROACH

<div><p>ABSTRACT Purpose: The growing importance of the services sector is not only a fact in developed countries but is also visible in the South American subcontinent, in terms of Gross Domestic Product share, employment and foreign trade. Taking a closer look at the role of services, the present article analyzes the main linkages in trade in services in the two largest South American economies, namely, Brazil and Argentina. Originality/Value: The recently available South American input-output table provided by United Nations Economic Commission for Latin America and the Caribbean (UN ECLAC). It is a ten-region open model that is used to study two important aspects of trade in services for the two selected economies: first, testing whether the participation of services in total trade increases when the calculation is specified in terms of value added; and second, assessing the role of services in promoting the countries’ exports. Design/methodology/approach: The present research helps to better understand the position of the region as provider and demander of intra-regional services. However, the scarcity of statistics related to trade in services is a limitation that must be solved. The data was obtained from the South American input-output table. A single-regional input-output model was generated for Argentina and Brazil for 2005. Findings: The main findings of the article include that 1. in both economies, the participation of services in foreign trade is higher in terms of value added than under conventional gross trade data, and 2. Argentina is more integrated with the region than Brazil in terms of intra-regional imported services in its exports.</p></div

Análisis económicos a partir de matrices de insumo-producto: definiciones, indicadores y aplicaciones para América Latina

En este manual técnico se sistematizan las bases teóricas del modelo de insumo-producto aplicado a análisis económicos de países y grupos de países (subregiones). A partir del programa Insumo Producto y Cadenas de Valor, desarrollado por la Unidad de Integración Regional de la División de Comercio Internacional e Integración de la Comisión Económica para América Latina y el Caribe (CEPAL), y de las matrices de insumo-producto de la CEPAL asociadas a este, los técnicos de los Gobiernos podrán realizar sus propios cálculos y análisis siguiendo las pautas y recomendaciones del manual y adecuándolas a las necesidades de diseño de políticas públicas específicas. Asimismo, los académicos, investigadores y estudiantes podrán contar con una guía útil para comprender mejor una literatura que puede resultar esquiva y compleja. Algunos ejemplos de indicadores sugeridos son la intensidad de insumos importados en la producción y exportación, los encadenamientos productivos hacia adelante y hacia atrás, los análisis de dependencia de importaciones, el valor agregado doméstico incorporado en las exportaciones o el contenido importado por socio, además de extensiones y aplicaciones relacionadas con el empleo exportador y las emisiones de carbono.Introducción .-- I. La matriz de insumo-producto como herramienta del análisis económico .-- II. Indicadores básicos .-- III. Especialización vertical .-- IV. Indicadores de Valor Agregado .-- V. Extensiones y aplicaciones de las matrices insumo-producto .-- VI. Conclusiones

Energy-socio-economic-environmental modelling for the EU energy and post-COVID-19 transitions

Relevant energy questions have arisen because of the COVID-19 pandemic. The pandemic shock leads to emissions’ reductions consistent with the rates of decrease required to achieve the Paris Agreement goals. Those unforeseen drastic reductions in emissions are temporary as long as they do not involve structural changes. However, the COVID-19 consequences and the subsequent policy response will affect the economy for decades. Focusing on the EU, this discussion article argues how recovery plans are an opportunity to deepen the way towards a low-carbon economy, improving at the same time employment, health, and equity and the role of modelling tools. Long-term alignment with the low-carbon path and the development of a resilient transition towards renewable sources should guide instruments and policies, conditioning aid to energy-intensive sectors such as transport, tourism, and the automotive industry. However, the potential dangers of short-termism and carbon leakage persist. The current energy-socio-economic-environmental modelling tools are precious to widen the scope and deal with these complex problems. The scientific community has to assess disparate, non-equilibrium, and non-ordinary scenarios, such as sectors and countries lockdowns, drastic changes in consumption patterns, significant investments in renewable energies, and disruptive technologies and incorporate uncertainty analysis. All these instruments will evaluate the cost-effectiveness of decarbonization options and potential consequences on employment, income distribution, and vulnerability.All the authors belong and thank the support to the MENTES net-work on Energy Modelling for a Sustainable Energy Transition, by theSpanish Ministry of Science, Innovation and Universities (project/grantRED2018-102794-T).I.A. and I.C. thank the support of the Spanish Ministry of Science, In-novation and Universities (MALCON, RTI2018-099858-A-I00), the Spanish State Research Agency through María de Maeztu Excellence Unit accreditation 2018-2022 (Ref. MDM-2017-0714) and Basque Gov-ernment BERC Programme. L.J.M., I.A. and I.C. gratefully acknowledgethe project LOCOMOTION H2020-LC-CLA-2018-2 (No 821105) and L.J.M. MODESLOW, funded under the Spanish National Research, Devel-opment and Innovation Programme (Ministry of Economy and Compet-itiveness of Spain, ref. ECO2017-85110-R). I.C. and R.L thank the Spanish Ministry of Science, Innovation and Universities (PID2019-106822RB-I00). M.A.C., L.A.L. and J.Z. thank the support of the University of Castilla-La Mancha and the European Fund for Regional Development(FEDER) (Ref. 020-GRIN-29137). P.L. gratefully acknowledges the sup-port of project RTI2018-093692-B-I00 by the Spanish Ministry of Science and Innovation (MCI), the National Research Agency (AEI) and the European Fund for Regional Development (FEDER). Y.L. and S.B. gratefully acknowledge the support of project MUSTEC, funded by theEuropean Union's Horizon 2020 research and innovation programme under grant agreement no. 764626