A Regional and Interregional Input-Output Analysis of the Puerto Rican Economy

Zalacain, Fernando

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Description

Title

A Regional and Interregional Input-Output Analysis of the Puerto Rican Economy

Author(s)

Zalacain, Fernando

Issue Date

1981

Department of Study

Agricultural Economics

Discipline

Agricultural Economics

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

Economics, Agricultural

Abstract

• This study is a regional and interregional structural analysis of the Puerto Rican economy with a particular emphasis on the food sectors. The analysis considers sectoral interactions and impacts within Puerto Rico and between Puerto Rico and the United States. The selected approach implied the use of the input-output model with the purpose of measuring these interactions. In the model, Puerto Rico and the United States are treated as the two components of an interregional system.
• The first part of the study contains a structural analysis of the food sector using a multiplier approach. An interesting methodological aspect is the comparison of the traditional input-output multipliers with the modified multipliers. Selected key variables as income, output, energy and employment were used to measure the interactions and impacts of the food sectors among themselves and with other sectors of the economy. Included in the regional analysis is a price impact section in which the effects of wage induced inflation are compared with that of imported inflation. This problem has been analyzed in the context of the special role that imported inflation could play in a regional economy.
• The interregional section of the study emphasizes the measurement of the economic benefits derived by the United States and Puerto Rico as a result of their economic relationship. The selected approach implied the use of the main economic flows between the two countries and the measurement of their impacts. These flows have been classified under transfers to the government and to persons, trade transactions, tourist expenditures and exports of profits. Investment flows were not included due to the static character of the model. Especially relevant is the approach followed in measuring the impacts in the United States of food aid to Puerto Rico.
• The construction of an interregional input-output model using the Leontief-Isard formulation is the main empirical component of this section. This is the first time that this type of model is estimated using more reliable trade statistics. The development of a new type of interregional feedback effect is also included.
• The results of this study indicate that the food industry of Puerto Rico is not closely linked to the agricultural sector. Output of agriculture increases only 0.16 dollars per dollar of final demand for processed food, which is about one fourth of the level obtained for the United States agriculture. However, specific sectors like dairy and meat products are more related to the farm sector, which suggest that if the demand for the final goods of these sectors is estimulated the agricultural sector will receive important impacts in terms of indirect and induced effects.
• The interregional analysis indicates that transfers from the United States to Puerto Rico generate a substantial income effect in the United States. In the case of food aid to Puerto Rico the income impact in the United States is equivalent to 40 per cent of the value of the food aid. The economic flows between the two countries generate more output and income in the United States than in Puerto Rico, but the employment impacts are similar in both countries.

Graduation Semester

1981

Type of Resource

text

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http://hdl.handle.net/2142/69843

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