4.2. Relevance of
input-output analysis to policy
System of Input-Output Tables is a powerful analytical tool
for policy analysis. Mainly through the product-by-product input-output table,
technical coefficients are defined in terms of A = (aij)i,j =
1,...,n (where n is the number of products) and represent the direct
requirements of product i needed to produce a physical unit of product
j in monetary units. This matrix is calculated by dividing each entry
of the IO table by the corresponding column total (output) (José M.
Rueda-Cantuche et al., 2005: 8; Eurostat, 2002: 17-23).
Appropriate extensions of the input-output system allow
evaluating both direct and indirect impacts of economic policies on other
economic variables such as labor, capital, energy uses, emissions and resources
use. Moreover, most of these policy issues have to be analyzed along with
macroeconomic models providing a minimum of industrial break down (Eurostat,
2002: 17-23).
The so-called central equation system for input-output
analysis offers multiple approaches for analysis. Mathematically, this equation
is defined as Z = B(I-A)-1F, where
B is a matrix of input coefficients for a specific
variable (intermediate uses, labor, capital, energy, emissions, etc.),
(I-A)-1 stands for the Leontief inverse,
F represents a diagonal matrix for final demand and
Z a matrix with results for direct and indirect
requirements (intermediates, labor, capital, energy, emissions, etc.).
Basically, this approach would provide quantitative assessment of e.g. total
primary energy requirements or total carbon dioxide emissions for the
manufacturing of a vehicle in all the stages of production. Labor and capital
content of
Products may also be computed (Eurostat, 2002: 17-23).
Particularly on sustainable production and consumption issues,
input-output analysis is crucial for policy assessment. Several prospective
studies of environmental policies can be envisaged using this tool, i.e.
economy-wide implications of technical change in products or processes
(including emission reduction), economy-wide implications of changes in life
style and consumption patterns and economy-wide effects of taxation and of
internalizing external costs. Furthermore, ex-post analysis of the
effectiveness of environmental policies might be addressed either monitoring
eco-efficiency over time (environmental impacts per unit of value added)
(Rueda-Cantuche, J.M., 2007: 2-21).
4.3. System of National Accounts of Rwanda
Due to technical reasons that include huge informal and
non-monetary sectors (about 65% of the economy in 2006) and data availability
among others, in Rwanda National Accounts are only compiled using the
Output/Production approach. On the other hand as far as the expenditure
approach is concerned, it is only the final household expenditure that cannot
be measured on a yearly basis. Hence in this case it can then be calculated by
subtracting as a balancing item from the output approach (Republic of Rwanda,
NISR, 2010: 1-11).
Therefore finally GDP estimates of both the production and
expenditure approaches are computed annually in Rwanda. National Accounts are
estimated by economic activities which are classified according the
International Standard Industrial Classification of all economic activities
(ISIC). This is used alongside the United Nations Central Product
Classification (CPC) that is linked to the Harmonized System (HS) used for
classifying international trade (Republic of Rwanda, NISR, 2010: 1-11).
All these, are adapted to Rwanda's development level keeping
their framework as much as possible. The Industries include:
A.Agriculturea.- Food cropb.- Export cropc.- Livestockd.- Forestrye.-
FisheriesB.- Industrya.- Mining and quarryingb.- Manufacturingc.- Electricity,
gas and waterd.- ConstructionC.- Servicesa.- Whole sale and retail tradeb.-
Hotels and restaurants. Transport, storage and communicationd.- Finance,
insurancee.- Real estate, business servicesf.- Public
administrationg. Educationh.- Healthi.- Other
personal services (trade unions, religious activities, sporting, hair dressing,
domestic services, visiting national parks etc) (Republic of Rwanda, NISR,
2010: 1-11).
In Rwanda, national accounts are estimated on an annual basis
by the National Institute of Statistics of Rwanda and from time to time the
estimation methodology is revised due to reasons that include: improvement in
data sources and systems and changes in the national economic structure.
In this regard the first benchmark of 2001 was done in 2003 and now the
National Institute of Statistics of Rwanda is in the process of rebasing the
benchmark to 2006 (Republic of Rwanda, NISR, 2010: 1-11).
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