Sectoral interdependences and cost structure in the Belgian economy : an application for input-output tables

Abstract

Input-output tables (IOT) offer a comprehensive view of an economy, describing supply and demand flows according to activity branches, including flows between these branches, i.e. intermediate consumption. Based on the latest published IOT, i.e. over the year 2000, this article develops the so-called cumulative approach, which delivers a global view of the effects of the economic activity of a given branch on others and on the economy as a whole. More specifically, the nature of relationships between branches, the peculiarities regarding the degree of openness and the production process of the Belgian economy, and the cost structure are illustrated in turn. Indirect effects vary significantly among branches, as they are a function of the importance of domestic intermediate consumption in the production process. Generally speaking, business sector services are an important beneficiary of indirect effects from all branches, especially, and increasingly, from industry as a result of outsourcing. Industrial activity presents fewer spill over effects in Belgium than in other European countries, as a result of higher leak effects through imports. As opposed to this, indirect effects of business sector services activity are stronger than elsewhere, due to important business activities outsourcing in these branches also. From 1995 to 2000, the cumulative intermediate import content of Belgian output has raised to the expense of value added, which, aside from a price effect, also indicates an increasing reliance on imports. Intermediate import dependency, which is larger in Belgium, mainly takes the form of industrial products, but is also more important than elsewhere for business sector services. While import dependency looms heavy for exports, it is also large for households’ consumption. In terms of cost structure, wages represent globally more than a third of total production. However, the share of wages amounts to about a quarter of the total costs related to households consumption recorded in the HICP, while the share of indirect taxes is 17 p.c.input-output tables, sectoral interdependences, cost structure