Input-Output Analysis in Economic Impact Studies
Summary
Input-output analysis provides a systematic framework for quantifying how changes in one economic sector propagate through others. At its core lies the input-output table, which records inter-sectoral transactions and enables computation of the Leontief inverse matrix. This yields multipliers that decompose impacts into direct effects (changes in the targeted sector), indirect effects (first-order supplier responses) and induced effects (household spending linked to income changes). Widely used to assess output, value-added, employment and environmental footprints, the method informs policy on sustainable development, infrastructure investment and resource management. Recent methodological advances integrate environmental extensions, dynamic and spatial dimensions, and supply-driven scenarios, while high-resolution sectoral disaggregation and global trade linkages sharpen insights into carbon emissions, employment trade-offs and supply-chain vulnerabilities. By translating complex interdependencies into actionable metrics, input-output analysis remains central to evaluating economic contributions and policy trade-offs at regional, national and global scales.
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Input-Output Analysis in Economic Impact Studies publication trend
The graph below shows the total number of articles in input-output analysis in economic impact studies across all publications each year (not limited to Nature Index journals).
Technical terms
Input-Output Table: A matrix recording values of goods and services exchanged between sectors within an economy.
Leontief Inverse: The matrix obtained by inverting (I–A), where A is the technical coefficient matrix; it captures total (direct and indirect) requirements per unit of final demand.
Multiplier Effect: The ratio of total impact (direct + indirect + induced) to the initial change in demand or output in a sector.
Direct Effect: The immediate change in production or employment within the targeted sector following an external shock.
Indirect Effect: The subsequent changes in supplier sectors as they adjust inputs to meet altered demand from the targeted sector.
Induced Effect: The additional economic activity generated by changes in household income and spending resulting from direct and indirect effects.
References
- Tensions between the carbon, employment and value added generated by marine sectors: Triple bottom line analysis using a novel input–output table for the UK. Sustainable Development (2024).
- Economic Impacts and Challenges of Chinese Mining Industry: An Input–Output Analysis. Frontiers in Energy Research (2022).
- The Impact of Transportation on the Croatian Economy: The Input–Output Approach. Economies (2021).
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