90 This research deploys the constant elasticity substitution (CES) approach to reflect cross price elasticity, which are used to adjust the input output technical coefficients to describe a new eco[.]
90 This research deploys the constant elasticity substitution (CES) approach to reflect cross-price elasticity, which are used to adjust the input-output technical coefficients to describe a new economic structure underpinned by new technology in food, water and energy generation The sectoral substitution with all mathematical specifications and estimated parameters will be discussed later in this section The final section will assess the new scenarios’ impacts in detail Each scenario will present a new trend in Vietnam’s socio-economic progress and environmental impacts while adopting respective energy, food and water policy pathways 4.4.1 Introduction to Input-Output Modelling Developed by Wassily Leontief in 1936, input-output tables—as Figure 4-3 illustrates— capture the entire portrait of an economy, with flows of products and services, during a certain year These flows of products and services are well-represented as the underlying links between economic sectors Essentially, an I-O table consists of the following core elements: intermediate demand, final demand and primary inputs Matrix A in Figure 43 represents the product flows that are both produced and consumed during goods’ production, and are known as ‘inter-industry flows’, or ‘intermediate demand’ Final demand is the demand for goods that are not used to produce other goods, as opposed to intermediate demand; this demand within the I-O table consists of final demand data for the output of a particular industry, such as demands for household consumption, government expenditures, investments or exports Two types of primary inputs are the primary inputs (Matrix C) for producing industries (e.g raw materials) and (D) those for direct consumption (e.g imported electricity), which are directly consumed and not used in producing other goods Figure 4-3 describes the I-O table’s basic format and its key elements The I-O table and its derived coefficients form the basic elements of an input-output analysis Fundamentally, the I-O table consists of three economic system elements: the primary inputs, inter-industry transactions, and final demand The inter-industry table illustrates the flow of goods and services between production sectors as well as the outputs from the inputs for other sectors; as such, this flow is commonly called ‘intermediate demand’ The primary inputs include the payments to production factors, and the primary inputs in a standard model include the payments to households, such as