Input–Output Analysis, Technological Change and Relations between Industry and Services

Abstract

This paper proposes an analytical approach to Input–Output methods which can estimate technological progress accurately and systematically. The methodology adopted first suggests the computation of technical coeffcients which can be used to adjust intersectoral expenditure coeffcients for those price components that depend on demand factors exogenous to the direct requirements of the productive apparatus. Second, demand factors can be usefuliy separated from the operator, based on Leontief's inverse that expresses the share of induced activity by sectors and subsystems. Moreover, the differences between those indicators constructed by means of observed values and those from theoretical indicators offer a helpful indication of the economy's reproductive potential and its evolution over time. A first, essentially macroeconomic, empirical check covering the major sectors of the Italian economy in the years 1970 and 1978 yields significant results on the relationship between industry and the services sector.