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Looking for the inverted pyramid: An application using input-output networks

Cahen-Fourot, Louison and Campiglio, Emanuele and Dawkins, Elena and Godin, Antoine and Kemp-Benedict, Eric (2019) Looking for the inverted pyramid: An application using input-output networks. Ecological Economic Papers, 25. WU Vienna University of Economics and Business, Vienna.

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Abstract

Herman Daly's view of the economy as an "inverted pyramid" sitting on top of essential raw material inputs is compelling, but not readily visible in monetary data, as the contribution of primary sectors to value added is typically low. This article argues that "forward linkages", a classical development theory concept capturing the relevance of a sector for downstream activities, is a more appropriate measure to identify key sectors. Using Input-Output (IO) data from eighteen European countries, we identify mining as the sector with the highest average forward linkages, and confirm the consistency of this result across countries via cluster analysis. By treating IO tables as the adjacency matrix of a directed network, we then build and visualise national inverted pyramid networks, and analyse their structure. Our approach highlights the key importance of natural resources in providing the necessary inputs to modern European economies.

Item Type: Paper
Additional Information: The research leading to these results has received funding from the Swedish Foundation for Strategic Environmen- tal Research (Mistra) and the Oesterreichische Nationalbank (OeNB).
Keywords: inverted pyramid; input-output; networks; forward linkages; natural resources
Classification Codes: JEL C67; O10; Q32; Q57
Divisions: Departments > Sozioökonomie > Ecological Economics
Depositing User: Daniel Schmelz
Date Deposited: 29 Apr 2019 15:27
Last Modified: 20 May 2019 14:32
FIDES Link: https://bach.wu.ac.at/d/research/results/90967/
URI: http://epub.wu.ac.at/id/eprint/6943

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