Centre for Advanced Spatial Analysis, University College London
Abstract
We present a new, flexible and extensible alternative to multi-regional
input-output (MRIO) for modelling the global economy. The limited coefficient set of MRIO (technical coefficients only) is extended to include two
new sets of coefficients, import ratios and import propensities. These new
coefficient sets assist in the interaction of the new model with other social
science models such as those of trade, migration, international security
and development aid. The model uses input-output models as descriptions of the internal workings of countries’ economies, and couples these
more loosely than in MRIO using trade data for commodities and services from the UN. The model is constructed using a minimal number
of assumptions, seeks to be as parsimonious as possible in terms of the
number of coefficients, and is based to a great extent on empirical observation. Two new metrics are introduced, measuring sectors’ economic
significance and economic self-reliance per country. The Chinese vehicles sector is shown to be the world’s most significant, and self-reliance is
shown to be strongly correlated with population. The new model is shown
to be equivalent to an MRIO under an additional assumption, allowing
existing analysis techniques to be applied