1. Comparison of the Structures and Interdependences in the Slovak economy in 2000 and 2005 Mikuláš Luptáčik Wirtschaftsuniversität Wien Martin Lábaj Institute of Economic Research, Slovak Academy of Sciences, Bratislava Input-Output-Workshop 2010 18th – 19th March Halle

2. Structure of the presentation Database and methodology Basic structure of the Slovak economy Multipliers – final demand effects on: production, value added, import and employment Structural decomposition – methodology Structural decomposition Employment Import Concluding remarks

3. Database and Methodology Input – output tables for Slovakia 2000, 2005 current prices Input – output tables for Slovakia 2005, constant prices (2000) commodity x commodity technology (Eurostat methodology) Version B (without import) – effects on domestic production Data in SKK Leontief I-O model Structural Decomposition – Dietzenbacher, Los

4. Changes in employment, import, value added and final consumption components in the Slovak economy between 2000 and 2005 (constant prices 2000, billions SKK) 20002005Percentage change Final consumption expenditure by households359,2399,911,3 % Final consumption expenditure by government (including NPISH)193,6207,06,9 % Gross capital formation158,3192,321,5 % Exports660,91 000,651,4 % Total final demand1 372,01 799,731,2 % Employment (in thousand)2 101,22 204,84,9 % Imports506,74691,436,4 % Value added865,281108,328,1 %

5. Export structure in Slovakia, 2000 10 most important commodities % of total export Import multipliers Employment multipliers 34 Motor vehicles, trailers and semi-trailers 14,93%0,830,32 27 Basic metals 9,33%0,500,89 60 Land transport; transport via pipeline services 7,18%0,461,16 24 Chemicals, chem. prod. and man-made fibres 6,72%0,530,65 29 Machinery and equipment n.e.c. 6,43%0,570,93 51 Wholesale trade and commission trade services, except of motor vehicles and motorcycles 6,33%0,281,07 23 Coke, refined petroleum products and nuclear fuels 5,64%0,830,19 31 Electrical machinery and apparatus n.e.c. 4,72%0,600,81 21 Pulp, paper and paper products 3,37%0,490,90 28 Fabricated metal products, except machinery and equipment 2,91%0,431,99 Total exports -0,521,13

6. % of total export Import multipliers Employment multipliers 34 Motor vehicles, trailers and semi-trailers 16,26%0,780,29 27 Basic metals 8,55%0,510,55 29 Machinery and equipment n.e.c. 6,72%0,540,80 32 Radio, television and communication equipment and apparatus 5,83%0,830,56 31 Electrical machinery and apparatus n.e.c. 5,69%0,670,81 23 Coke, refined petroleum products and nuclear fuels 4,96%0,720,17 60 Land transport; transport via pipeline services 4,91%0,251,20 51 Wholesale trade and commission trade services, except of motor vehicles and motorcycles 4,85%0,150,93 24 Chemicals, chem. prod. and man-made fibres 3,98%0,570,67 25 Rubber and plastic products 3,74%0,610,77 Total exports -0,520,92 Export structure in Slovakia, 2005 10 most important commodities

7. Contribution to export growth 10 most important commodities Weighted contribution to growth in export in p.p. Share on export growth in % 34 Motor vehicles, trailers and semi-trailers 9,68 18,84 32 Radio, television and communication equipment and apparatus 6,85 13,34 31 Electrical machinery and apparatus n.e.c. 3,90 7,58 29 Machinery and equipment n.e.c. 3,73 7,27 27 Basic metals 3,61 7,03 25 Rubber and plastic products 3,00 5,84 28 Fabricated metal products, except machinery and equipment 2,62 5,10 30 Office machinery and computers 2,11 4,10 15 Food products and beverages 1,91 3,72 23 Coke, refined petroleum products and nuclear fuels 1,87 3,65 Total export growth 51,38 %-

8. Final demand effects on production Production multipliers in Slovakia, 2000 and 2005 Categories of final demand Induced gross production in billions SKK Induced gross production proportion (%) Production multipliers (Version B) 200020052000200520002005 Final consumption expenditure by households660,96614,029,2 23,71,841,54 Final consumption expenditure by government295,96277,713,1 10,71,5011,34 Gross capital formation294,62323,913,0 12,51,8611,68 Exports1 008,801371,444,6 53,01,5261,37 Total final demand2 260,352587,0100 100,01,6471,44

9. Final demand effects on value added, Value added multipliers in Slovakia, 2000 and 2005 Categories of final demand Induced value added in billions SKK Induced value added proportion (%) Value added multipliers 200020052000200520002005 Final consumption expenditure by households272,23313,631,5 28,30,760,78 Final consumption expenditure by government164,25179,619,0 16,20,850,87 Gross capital formation112,61133,913,0 12,10,70,70 Exports316,19481,236,5 43,40,48 Total final demand865,281108,3100 100,00,630,62

10. Final demand effects on imports Import multipliers in Slovakia, 2000 and 2005 Categories of final demand Induced imports in billions SKK Induced imports proportion (%) Import multipliers 200020052000200520002005 Final consumption expenditure by households86,9886,317,2 12,50,240,22 Final consumption expenditure by government29,3727,45,8 4,00,150,13 Gross capital formation45,6558,49,0 8,40,30,30 Exports344,74519,368,0 75,10,52 Total final demand506,74691,4100 100,00,370,38

11. Changes in import requirements induced by final demand categories between 2000 and 2005 Import changes in billions SKK Import changes proportion Percentage change in imports induced by corresponding category of final demand Final consumption expenditure by households -0,66-0,4%-0,8% Final consumption expenditure by government -1,94-1,1%-6,6% Gross capital formation 12,746,9%27,9% Exports 174,5794,5%50,6% Total final demand 184,70100,0%36,4%

12. Final demand effects on employment Employment multipliers in Slovakia, 2000 and 2005 Categories of final demand Induced employment (thousands) Induced employment proportions Employment multipliers 200020052000200520002005 Final consumption expenditure by households590,86491,628,1 22,31,641,23 Final consumption expenditure by government523,75503,024,9 22,82,712,43 Gross capital formation241,8280,311,5 12,71,581,46 Exports744,77929,835,4 42,21,130,93 Total final demand2101,22204,8100 100,01,531,23

13. Changes in employment induced by final demand categories between 2000 and 2005 Employment changes Employment changes proportion Percentage change in employment induced by corresponding category of final demand Final consumption expenditure by households-99210-95,8%-16,8% Final consumption expenditure by government-20787-20,1%-4,0% Gross capital formation3852737,2%15,9% Exports185070178,6%24,8% Total final demand103600100,0%4,9%

14. Structural decomposition techniques Dietzenbacher, E. – Los, B.: Structural Decomposition Techniques: Sense and Sensitivity. Economic Systems Research, Vol. 10, No. 4, 1998. Polar decompositions – taking average All decompositions – average and standard deviation Approximate decomposition with mid-point weights

15. Structural decomposition with two determinants Two alternative ways (taking average) Excact solution – only in the case of two determinants

16. Import and employment determinants m 57x5 matrix of induced import w 57x5 matrix of induced labor v 57x1 vector of import intensity (direct) u 57x1 vector of employment intensity L 57x57 Leontief inverse B 57x5 final demand structure f 5x1 vector of final demand (volume by categories and total) 57x57 complex import intensity 57x57 complex employment intensity F 57x5 final demand (volume by categories and total)

17. Decomposition of changes in imports, in billions SKK Dietzenbacher – mid-point weights Two determinants Change in imports Change in complex import intensity Change in final demand Final consumption expenditure by households-0,72,1-2,8 Final consumption expenditure by government-1,91,1-3,1 Gross capital formation12,73,29,5 Exports174,6-16,6191,2 Total final demand184,7-10,2194,9

18. Decomposition of changes in imports, in billions SKK Polar decomposition – weight for import intensity from 2000 Two determinants Change in imports Change in complex import intensity Change in final demand Final consumption expenditure by households-0,72,6-3,3 Final consumption expenditure by government-1,91,0-2,9 Gross capital formation12,74,88,0 Exports174,6-14,7189,2 Total final demand184,7-6,3191,0

19. Decomposition of changes in employment Dietzenbacher – mid-point weights Two determinants Change in employment Change in labor complex intensity of production Change in final demand Final consumption expenditure by households-99210-100130920 Final consumption expenditure by government-20787-8814767360 Gross capital formation38527-2724465771 Exports185070-147809332878 Total final demand103600-363330466930

20. Decomposition of changes in employment Polar decomposition – weight for labor intensity from 2000 Two determinants Change in employment Change in complex labor intensity of production Change in final demand Final consumption expenditure by households-99210-11314013931 Final consumption expenditure by government-20787-9593475147 Gross capital formation38527-3257871105 Exports185070-191526376596 Total final demand103600-433178536778

21. Decomposition of changes in imports, in billions SKK Change in imports Change in import intensity of production Change in Leontief matrix Change in the structure of final demand Change in final demand volume Final consumption expenditure by households-661 31114 989 920-12 901 175-12 071 5409 321 484 Final consumption expenditure by government-1 941 4518 012 260-6 878 462-4 980 2731 905 024 Gross capital formation12 736 9446 767 077-3 536 937-558 16810 064 972 Exports174 569 303-2 227 016-14 411 19614 500 302176 707 213 Total final demand184 703 48427 542 241-37 727 770-3 109 679197 998 692

22. Decomposition of changes in imports Corresponding effects direction Change in imports Change in import intensity of production Change in Leontief matrix Change in the structure of final demand Change in final demand volume Final consumption expenditure by households + + Final consumption expenditure by government + + Gross capital formation ++ + Exports + ++ Total final demand ++ +

23. Share of final demand categories on import changes induced by particular component Change in imports Change in import intensity of production Change in Leontief matrix Change in the structure of final demand Change in final demand volume Final consumption expenditure by households -0,4%54,4%34,2%388,2%4,7% Final consumption expenditure by government -1,1%29,1%18,2%160,2%1,0% Gross capital formation 6,9%24,6%9,4%17,9%5,1% Exports 94,5%-8,1%38,2%-466,3%89,2% Total final demand 100,0%

24. Contribution of particular components to changes in import induced by final demand categories Change in imports Change in import intensity of production Change in Leontief matrix Change in the structure of final demand Change in final demand volume Final consumption expenditure by households100%-2267%1951%1825%-1410% Final consumption expenditure by government100%-413%354%257%-98% Gross capital formation100%53%-28%-4%79% Exports100%-1%-8%8%101% Total final demand100%15%-20%-2%107%

25. Decomposition of changes in employment Change in employment Change in labor intensity of production Change in Leontief matrix Change in the structure of final demand Change in final demand volume Final consumption expenditure by households-99 210-30 322-69 808-57 58258 502 Final consumption expenditure by government-20 787-52 412-35 73532 93534 425 Gross capital formation38 527-1 665-25 57915 01950 753 Exports185 070-64 199-83 610-16 284349 162 Total final demand103 600-148 598-214 732-25 911492 841

26. Decomposition of changes in employment Corresponding effects direction Change in employment Change in labor intensity of production Change in Leontief matrix Change in the structure of final demand Change in final demand volume Final consumption expenditure by households + Final consumption expenditure by government ++ Gross capital formation +++ Exports ++ Total final demand ++

27. Share of final demand categories on employment changes induced by particular component Change in employment Change in labor intensity of production Change in Leontief matrix Change in the structure of final demand Change in final demand volume Final consumption expenditure by households-95,8%20,4%32,5%222,2%11,9% Final consumption expenditure by government-20,1%35,3%16,6%-127,1%7,0% Gross capital formation37,2%1,1%11,9%-58,0%10,3% Exports178,6%43,2%38,9%62,8%70,8% Total final demand100,0%

28. Contribution of particular components to changes in employment induced by final demand categories Change in employment Change in labor intensity of production Change in Leontief matrix Change in the structure of final demand Change in final demand volume Final consumption expenditure by households 100,0%30,6%70,4%58,0%-59,0% Final consumption expenditure by government 100,0%252,1%171,9%-158,4%-165,6% Gross capital formation 100,0%-4,3%-66,4%39,0%131,7% Exports 100,0%-34,7%-45,2%-8,8%188,7% Total final demand 100,0%-143,4%-207,3%-25,0%475,7%

29. Concluding remarks Export – fastest growing final demand category between 2000 and 2005 – 51,4 % High import intensity of export unchangend – 0,52 Export – important for employment – in 2000 – every third employee worked for export, in 2005 every second till third employee worked for export Export – main source of empolyment growth between 2000 – 2005 Importance of I-O tables in constat prices – allows us to analyse structural changes in economy and distinguish technology and price changes Structural decomposition – importat tool for analysis of changes that are not visible at first glance Evaluate contradicting effects – which of them is higher (stronger)

30. Thank you for attention...