« The World Input‐Output Database (WIOD): Contents, Sources and Methods Edited by Marcel Timmer (University of Groningen) ...»
The World Input‐Output Database (WIOD):
Contents, Sources and Methods
Edited by Marcel Timmer (University of Groningen)
With contributions from:
Abdul A. Erumban, Reitze Gouma, Bart Los, Umed Temurshoev and
Gaaitzen J. de Vries (University of Groningen)
Iñaki Arto, Valeria Andreoni Aurélien Genty, Frederik Neuwahl, José
M. Rueda‐Cantuche and Alejandro Villanueva (IPTS)
Joe Francois, Olga Pindyuk, Johannes Pöschl and Robert Stehrer (WIIW), Gerhard Streicher (WIFO) April 2012, Version 0.9 This project is funded by the European Commission, Research Directorate General as part of the 7th Framework Programme, Theme 8: Socio-Economic Sciences and Humanities.
Grant Agreement no: 225 281 Contents
1. World Input-Output Database: basic contents, set-up and construction philosophy
2. Construction of national Supply and Use tables (SUTs)
3. Sources and methods for Bilateral International Trade data
4. Construction of international Supply and Use tables (Int SUTs)
5. Construction of World Input-Output Tables (WIOTs)
6. Environmental Accounts (EAs): Sources and Methods
7. Socio-economic Accounts (SEAs): Sources and Methods Appendix Tables
1. World Input-Output Database: basic contents, set-up and construction philosophy The World Input-Output Database has been developed to analyse the effects of globalization on trade patterns, environmental pressures and socio-economic development across a wide set of countries. The database covers 27 EU countries and 13 other major countries in the world for the period from 1995 to
2009. It is downloadable at http://www.wiod.org/database/index.htm.
1.1 Basic contents of WIOD Broadly, the WIOD consists of time series of World Tables (annual, 1995-2009) International Supply and Use table at current and previous year prices, with use split into domestic and import by country (35 industries by 59 products) World input-output table at current prices and at previous year prices (35 industries by 35 industries) Interregional Input-Output table for 6 regions (35 industries by 35 industries) National Tables (annual, 1995-2009) National supply and use tables at current and previous year prices (35 industries by 59 products) National Input-Output tables in current prices (35 industries by 35 industries) Socio-Economic Accounts (annual, 1995-2009) Industry output, value added, at current and constant price (35 industries) Capital stock, investment (35 industries) Wages and employment by skill type (low-, medium- and high-skilled) (35 industries) Environmental Accounts (annual, 1995-2009) Gross energy use by sector and energy commodity Emission relevant energy use by sector and energy commodity CO2 Emissions modeled by sector and energy commodity Emissions to air by sector and pollutant Land use, Materials use and Water use by type and sector Full lists of the variables covered can be found in the respective sections. The list of countries covered is given in Table 1.
Table 1 List of countries in WIOD-database
1.2 Concept of a world input-output table (WIOT) In this section we outline the basic concept of a world input-output tables (WIOT) and our approach in construction them. We start with the discussion of a national input-output (IO) table. In Figure 1 the schematic outline for a national input-out table (IOT) is presented. This table is of the industry by industry type. 1 For ease of discussion we assume that each industry produces only one (unique) product. The rows in the upper parts indicate the use of products, being for intermediate or final use. Each product can be an intermediate in the production of other products (intermediate use). Final use includes domestic use (private or government consumption and investment) and exports. The final element in each row indicates the total use of each product. The industry columns in the IOT contain information on the supply of each product. A product can be imported or domestically produced. The column indicates the values of all intermediate, labour and capital inputs used in production. The vector of input shares in output is often referred to as the technology for domestic production. The compensation for labour and capital services together make up value added which indicates the value added by the use of domestic labour and capital services to the value of the intermediate inputs. Total supply of the product in the economy is determined by domestic output plus imports. An important accounting identity in the IOT is that total output by the domestic industry is equal to the use of output from the domestic industry such that all flows in the economic system are accounted for.
[Figure 1 about here] A world input-output table (WIOT) is an extension of the same concept. The difference with the national tables is that the use of products is broken down according to their origin. Each product is produced either by a domestic industry or by a foreign industry. In contrast to the national IOT, this information is made explicit in the WIOT. For a country A, flows of products both for intermediate and final use are split into
domestically produced or imported. In addition, the WIOT shows in which foreign industry the product was produced. This is illustrated by the schematic outline for a WIOT in Figure 2.
[Figure 2 about here] Figure 2 illustrates the simple case of three regions: countries A and B, and the rest of the world. In WIOD we will distinguish 40 countries and the rest of the World, but the basic outline remains the same.
For each country the use rows are split into two separate rows, one for domestic origin and one for foreign origin. In contrast to the national IOT for country A it is now clear from which foreign industry the imports originate, and how the exports of country A are being used by the rest of the world, that is, by which industry or final end user. This combination of national and international flows of products provides a powerful tool for analysis of global production chains and their effects on employment, value added and investment patterns and on shifts in environmental pressures. While national IO tables are routinely produced by NSIs, WIOTs are not as they require a high level of harmonisation of statistical practices across countries. In the following sections we outline our efforts in constructing a WIOT.
1.3. World Input-Output Table (WIOT): Construction Method
In this section we outline the construction of the WIOT and discuss the underlying data sources. As building blocks we will use national supply and use tables (SUTs) that are the core statistical sources from which NSIs derive national input-output tables. In short, we derive time series of national SUTs and link these across countries through detailed bilateral international trade statistics to create so-called international SUTs. These international SUTs are used to construct the symmetric world input-output table which is product or industry based, depending on the set of alternative assumptions used.
The construction of our WIOT has two distinct characteristics when compared to e.g. the methods used by GTAP, OECD and IDE-JETRO. First, we rely on national supply and use tables (SUTs) rather than inputoutput tables as our basic building blocks. Second, to ensure meaningful analysis over time, we start from output and final consumption series given in the national accounts and benchmark national SUTs to these time-consistent series. SUTs are a more natural starting point for this type of analysis as they provide information on both products and (using and producing) industries. A supply table provides information on products produced by each domestic industry and a use table indicates the use of each product by an industry or final user. The linking with international trade data, that is product based, and socio-economic and environmental data, that is mainly industry-based, can be naturally made in a SUT framework. In contrast, an input-output table is exclusively of the product or industry type. Often it is constructed on the basis of an underlying SUT, requiring additional assumptions.
In Figure 3 a schematic representation of a national SUT is given. Compared to an IOT, the SUT contains additional information on the domestic origin of products. In addition to the imports, the supply columns in the left-hand side of the table indicate the value of each product produced by domestic industries. The upper rows of the SUT indicate the use of each product. Note that a SUT is not necessarily square with the number of industries equal to the number of products, as it does not require that each industry produces one unique product only.
A SUT must obey two basic accounting identities: for each product total supply must equal total use, and for each industry the total value of inputs (including intermediate products, labour and capital) must equal total output value. Supply of products can either be from domestic production or from imports. Let S denote supply and M imports, subscripts i and j denote products and industries and superscripts D and M denote domestically produced and imported products respectively. Then total
supply for each product i is given by the summation of domestic supply and imports:
This identity indicates that for each industry the total value of output (at left hand side) is equal to the total value of inputs (right hand side). The latter is given by the sum of value added (VA) and intermediate use of products.
In the first step of our construction process we benchmark the national SUTs to time-series of industrial output and final use from national account statistics. Typically, SUTs are only available for a limited set of years (e.g. every 5 year) 2 and once released by the national statistical institute revisions are rare. This compromises the consistency and comparability of these tables over time as statistical systems develop, new methodologies and accounting rules are used, classification schemes change and new data becomes available. These revisions can be substantial especially at a detailed industry level. By benchmarking the SUTs on consistent time series from the National Accounting System (NAS), tables can be linked over time in a meaningful way. In the next section we provide further information about the extrapolation and linking procedures.
In a second step, the national SUTs are combined with information from international trade statistics to construct what we call international SUTs. Basically, a split is made between use of products that were domestically produced and those that were imported, such that
Though recently, most countries in the European Union have moved to the publication of annual SUTs.
I i, j I iDj I iMj i, j,,
So far we have only considered imports without any geographical breakdown. To study international production linkages however, the country of origin of imports is important as well. Let k denote the country from which imports are originating, then an additional breakdown of imports is needed such that
The international SUTs for each country are combined into a world input-output table, as given in Figure
2. This transformation step requires additional assumptions that are spelled out in more detail below.
The breakdown of the use table into domestic and imported origin is a crucial step, but empirically hard to make. Ideally one would like to have additional information based on firm surveys that inventory the origin of products used, but this type of information is hard to elicit and only rarely available. We use a non-survey imputation method that relies on a classification of detailed products in the International Trade Statistics, extending the familiar Broad Economic Categories (BEC) classification. Thus we do not rely on the standard import proportionality assumption. Based on this, we allocate imports across use categories in the following way. First, we used the share of use category l (intermediates, final consumption or investment) to split up total imports as provided in the supply tables for each product I across the three use categories. Within each use category allocation is based on proportionality assumption. This generates the import use table. Second, each cell of the import use table is split up to the country of origin where country import shares might differ across use categories, but not within these categories.
It is well known that there are discrepancies between the import values recorded in the National Accounts on the one hand, and in international trade statistics on the other. Some of them are due to conceptual differences, and others due to classification and data collection procedures (see extensive discussion in Guo, Web and Yamano 2009). As we rely on NAS as our benchmark we apply shares from the trade statistics to the NAS series. Thus, to be consistent with the imports as provided in the SUTs we use only shares derived from the ITS rather than the actual values.
Similarly, let f denote the final use categories (final consumption by households, by non-profit organisations and by government). Then the amount of product group i imported from country k and used
as final use category f, FCiMf,k, is given by:
This approach does not necessarily guarantee non-negativity of domestic use values. In those cases when negatives arise, additional constraints are defined through the definition of re-exports such that all values are non-negative (see section on international SUTs).