IO Models Are At the Heart of the QuERI Global Trade and Industry Model
At the heart of the QuERI Global Trade and Industry Model are 72 country IO models covering the years 1990 through 2014. These are synthetic models developed from the base 2002 US detailed IO.
Row Scaling is used to adjust coefficients to reflect the known consumption in the country. Column totals are adjusted to reflect UN estimates of value-added shares over time and by country. Multiple passes through the adjustment process shifts the coefficients so that the new IO model reflects the unique industry mix of the country and year. As a result we have 72 country models that reflect the unique pattern of consumption and production in these countries and also changes in technology and product mix that influence production.
In the model the resulting total intermediate sales of Industry A to all other industries is a critical component driving production for Industry A, but the real benefit to private companies is to integrate these unique models internally to understand which industries are the key drivers of their business and how changes in consumption patterns must impact sales projections.
How Can These Models Help My Company
Lets look at an actual example of how the models provide clarity and help explain trends in consumption. Just one example may help --the processed food industry in 1990 purchased 44% of its factor inputs from the primary agricultural sector and by 2014 with the changes in how processed goods are marketed the share of total production had fallen to just 11%. The purchases in 1990 from the consulting and business services were 5.6% and by 2014 the share had increased to 13.6%. Understanding these changes can help senior managers involved in deploying sales forces or projecting sales by industries understand what is happening and prepare for further erosion or growth opportunities.