Sectoral structure of the Romanian economy

• Author: Duguleana C., Duguleana L.
• Pages: 259-280

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 9 (58) No. 2 – 2016

Sectoral structure of the Romanian economy

Constantin DUGULEANĂ1, Liliana DUGULEANĂ2

Abstract: The paper analyzes the input-output structure of Romanian economy and the

diffusion mechanisms of economic effects in 2010, being the most recent year for which the

national symmetric input-output table (SIOT) was available in Eurostat databases. The

input-output models for the network of sectoral activities assess the direct and indirect

impact on the economy. The shocks such as changes of final demand, changes of production

or of input-output technological inter-linkages of sectoral production levels, during the

propagation processes influences the impact throughout the economy. The complexity of

linkages between economic sectors can be understood with the input-output analyses. This

input-output method can show the relevance of diffusion mechanisms in the future behavior

of sectors. Knowing the future behavior at macroeconomic level could be useful for the

economic policies of different sectors and for keeping the desired equilibrium.

Key-words: input-output tables, input and output coefficients, output multipliers, backward

linkage, forward linkage

1. Introduction

The input-output table shows the production and consumption structures of an

economy. The input-output table is a matrix whose columns are the economic

activities: the production sectors and the categories of final demand and the rows are

the corresponding inputs of these activities: products of the sectors, in the same

order, and primary inputs (wages, capital etc.). The cost structure may be determined

based on the columns. The rows show the revenues of a sector from all the

corresponding other sectors.

The four quadrants of the input-output table refer to the requirements for

intermediate inputs in production, in quadrant I, the final use of goods and services

for consumption and investment, as final demand, in quadrant II, the requirements

for primary inputs: labor, capital, land - for each sector, in quadrant III and quadrant

IV, normally is empty, yet some transactions could, albeit rarely, be reported.

The input-output analyses are based on the input-output tables and the

purpose is to describe the flows between all sectors of an economy over a period of

1 Transilvania University of Braşov, cduguleana@unitbv.ro

2 Transilvania University of Braşov, ldugul@unitbv.ro

Bulletin of the Transilvania University of Braşov • Series V • Vol. 9 (58) No.2 - 2016

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time. These analyses provide information about the input flows used in production:

intermediates, labor, capital, and land.

The NACE classifications for industries and CPA for products are used in the

matrices which describe the production processes and products' transactions in

Supply and Use tables.

The Supply table shows the supply of goods and services of domestic

industries and imports. The Use table shows the goods and services by type of use:

the intermediate consumption – quadrant I and final consumption, gross capital

formation or exports – quadrant II. The components of gross value added:

compensation of employees, other taxes except for subsidies on production, net

mixed income, net operating surplus and consumption of fixed capital are presented

in quadrant III.

Supply and Use tables are interlinked by the identities:

- by industry: output = intermediate consumption + value added

- by product: output + imports = intermediate consumption + final consumption +

gross capital formation + exports.

Based on the information of Supply and Use tables there can be analyzed: the

structure of production costs, the structure of value added in the production process,

the flows of goods and services produced within a national economy and the

transactions with the Rest of the World. A national symmetric input-output table

(SIOT) is a matrix which contains both Supply and Use table in a single table with

the same classification of products or industries both in rows and columns.

The method of using input-output framework can be used also to analyze the

value added chains in interdependent markets when there are considered the

production processes of interconnected economies in a global approach.

2. Input-output table of the Romanian economy, in 2010

According to ESA 2010, the product-by-product approach is the most important for

symmetric input-output table. This kind of table was used here to analyze the

Romanian economy. Using the SIOT for Romania in 2010, the last year introduced

in Eurostat databases, after some summing operations of CPA levels, there were

obtained the data from Table 1, for six aggregate branches, defined as specified in

Eurostat Manual of Supply, Use and Input-Output Tables (2008, p. 480).

Based on Classification of Products by Activity (CPA) in Table 1, the

structure of the Romanian economy for the following six sectors is presented in a

condensed form:

– Agriculture: Products of agriculture, forestry, fisheries and aquaculture;

– Manufacturing: Products of mining and quarrying, manufactured products and

energy products;

– Construction: Constructions and construction works;