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Identification of Strategic Industries: A Dynamic Perspective

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Bart Los ()

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Abstract

Every once in a while, national governments face difficult decision problems regarding financial support of important domestic firms or even entire national national industries. Similar problems are often faced by regional or urban governments. Given these problems, it is important to get indications of the societal value of industries. In principle, input-output tables provide a lot of information in revealing the linkages between industries. On the basis of these tables, various measures of the value of industries have been derived. One of these measures is found by applying the 'hypothetical extraction method', originally proposed by Strassert (Jahrb.Nat.Stat., 1968) and refined and applied by, among others, Milana (MetrEc., 1985), Groenewold, Hagger & Madden (Reg.Stud., 1987) and Dietzenbacher & Van der Linden (J.Reg.Sci., 1997). This approach has two major drawbacks. First, it is a purely static approach, in which technological progress does not play a role at all. Second, it assumes that output and employment levels are purely demand-determined. In this paper, I propose a biregional supply-side input-output model with two factors of production (high-skilled and low-skilled labor) and interregional interindustry technology spillovers. Applying hypothetical extraction methods to this model yields an alternative framework for identifying important sectors in a dynamic sense.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa01p112.

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Date of creation: Aug 2001
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Handle: RePEc:wiw:wiwrsa:ersa01p112

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  1. Bart Los & Bart Verspagen, 2006. "The Evolution Of Productivity Gaps And Specialization Patterns," Metroeconomica, Blackwell Publishing, vol. 57(4), pages 464-493, November. [Downloadable!] (restricted)
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  2. ten Raa, Thijs & Wolff, Edward N., 2000. "Engines of growth in the US economy," Structural Change and Economic Dynamics, Elsevier, vol. 11(4), pages 473-489, December. [Downloadable!] (restricted)
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  3. Zvi Griliches, 1992. "The Search for R&D Spillovers," NBER Working Papers 3768, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Dietzenbacher, Erik, 1992. "The measurement of interindustry linkages : Key sectors in the Netherlands," Economic Modelling, Elsevier, vol. 9(4), pages 419-437, October. [Downloadable!] (restricted)
  5. Jaffe, Adam B & Trajtenberg, Manuel & Henderson, Rebecca, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 577-98, August. [Downloadable!] (restricted)
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  6. Keld Laursen & Valentina Meliciani, 2002. "The relative importance of international vis-ý-vis national technological spillovers for market share dynamics," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 875-894, August.
  7. Robert Stehrer, 2001. "Industrial specialisation, trade, and labour market dynamics in a multisectoral model of technological progress," Computing in Economics and Finance 2001 230, Society for Computational Economics.
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  8. Jan Fagerberg, 1999. "The Economic Challenge for Europe: Adapting to Innovation-Based Growth," Working Papers 2, Centre for Technology, Innovation and Culture, University of Oslo.
  9. Bart Los, 2001. "Endogenous Growth and Structural Change in a Dynamic Input–Output Model," Economic Systems Research, Taylor and Francis Journals, vol. 13(1), pages 3-34, March. [Downloadable!] (restricted)
  10. Meller, Patricio & Marfan, Manuel, 1981. "Small and Large Industry: Employment Generation, Linkages, and Key Sectors," Economic Development and Cultural Change, University of Chicago Press, vol. 29(2), pages 263-74, January.
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