An Introduction to Regional Input-Output Analysis

Sound economic development decisions require information about the impacts of economic growth and/or decline and the relative benefits and costs of alternative development strategies. Increasingly, university researchers, Cooperative Extension personnel and state and local development officials are being called upon to provide this information. This is as true in the many communities experiencing economic growth as in communities facing stagnation or economic decline. The chapter presents in nontechnical terms the basic formulation of an input-output model. To use the input-output framework for regional analysis, it is necessary to establish an input-output model specific to the region. The transaction table is used to organize all the information about the regional economy; the other tables are derived from the transactions table. The transactions table shows the flow of all goods and services produced (or purchased) by sectors in the region. The direct requirements table is similar to the transactions table in its format.