Multiplier Product Matrix Analysis for Interregional Input-Output Systems: An Application to the Brazilian Economy

Abstract

In this paper, using a set of interregional input-output tables built by the authors for the year of 1992 for 2 Brazilian regions (Northeast and rest of the economy), attention is focused on a new approach to the interpretation of Miyazawa’s concepts of left and right multipliers in the decomposition of interregional input-output systems. Using the technique of the multiplier product matrix (Sonis et al., 1997) and Sonis and Hewings (1999), the hierarchical decomposition proposed exploits the insights offered by the fields of influence theory and provides a way of interpreting Miyazawa’s left and right multipliers in terms of interregional feedback loops. When this technique is applied to an interregional system for 2 Brazilian regions (Northeast and the Rest of Brazil) the results shows that: (a) the Rest of Brazil region seems to be more developed and has a more complex productive structure than the Northeast region; (b) the inputs that the Northeast region buys from the Rest of Brazil region practically make no contribution to the total linkages in either of the regions; and (c) when isolated from the whole economy system, there is little contribution from the Northeast region to the linkages of the Rest of Brazil region, and vice-versa. Extension of this work could be considered in two directions, namely, providing sectoral detail and extending this approach to the n region case.