The use of the Scottish Input-Output framework for policy evaluation

The use of the Scottish Input-The use of the Scottish Input-Output framework for policy Output framework for policy

evaluationevaluation

Sandy StewartSandy Stewart

Scottish GovernmentScottish Government

Scottish Input-Output Analysis - Scottish Input-Output Analysis - OverviewOverview

History of I-O in ScotlandHistory of I-O in Scotland Recent developmentsRecent developments Future developmentsFuture developments Recent uses of I-ORecent uses of I-O Environmental ExtensionsEnvironmental Extensions Suggestions?Suggestions?

History of Input-Output in ScotlandHistory of Input-Output in Scotland

First tables 1973 (FAI, IBM, SCRI) and First tables 1973 (FAI, IBM, SCRI) and 1979 (FAI, SCDI and SO)1979 (FAI, SCDI and SO)

1989 (first official SO publication)1989 (first official SO publication) 1992-1996 (ESA79)1992-1996 (ESA79) 1998-2004 (ESA95)1998-2004 (ESA95) 1998 – 2004 (consistent time-series tables 1998 – 2004 (consistent time-series tables

– published March 2009)– published March 2009)

Recent developmentsRecent developments I-O constrained to Regional Accounts headline I-O constrained to Regional Accounts headline

GVA figures (2002 onwards)GVA figures (2002 onwards) Weights from I-O incorporated into GDP(O) Weights from I-O incorporated into GDP(O)

systemsystem Construction of Tourism Satellite Account Construction of Tourism Satellite Account Scottish Labour Market Intelligence ProjectScottish Labour Market Intelligence Project Global Connections Survey 2002-2007Global Connections Survey 2002-2007 Systematic quality improvements in data Systematic quality improvements in data

sources and methodologiessources and methodologies Scottish National Accounts Project (launched Scottish National Accounts Project (launched

October 2008) October 2008)

Scottish National Accounts Project Scottish National Accounts Project (SNAP)(SNAP)

Estimating quarterly GDP (production, income and Estimating quarterly GDP (production, income and expenditure approaches) expenditure approaches)

Use of I-O framework to ‘balance’ and benchmark short Use of I-O framework to ‘balance’ and benchmark short term estimatesterm estimates

I-O tables from 1998 to be dynamic, reflecting I-O tables from 1998 to be dynamic, reflecting methodology and definitional chages over timemethodology and definitional chages over time

Constructing artificial SU matrices quarterly – for Constructing artificial SU matrices quarterly – for modelling and impact studiesmodelling and impact studies

Creating experimental national accounts for Scotland Creating experimental national accounts for Scotland (household, industry, trade and environmental accounts)(household, industry, trade and environmental accounts)

CGE modellingCGE modelling

Family SpendingHHFCE AEA Inventories by product LFSGlobal Connections AEA by Scottish industry

InvestmentStock change

Regional AccountsSTES, ASHEABI1, ABI2PAYE

Property PricesTaxes & Subsidies

MPIMIDDSFSIONS

HMTBERR

HMRCSPI

FRSBERR

Labour Market Extensions

Scot : Government Expenditure and

Revenues Scotland

SNAP

Scot IME

Scot Global Connections Survey

Symmetric tables, IxI PxP, Leontief Inverses

CGE Models

HMT: COINS, PESA, CRA

ONS : PSA, QNA

UK GDP(P)

UK INPUT-OUTPUT

SCOT INPUT-OUTPUT

Scot GDP(E)

Scot GDP(I)

Scot GDP(P)

UK NATIONAL ACCOUNTS UK ENV ACCOUNTS

UK GDP(E)

UK GDP(I)Impact Assessments

Environmental Extensions

Example 1Example 1UK Government Efficiency SavingsUK Government Efficiency Savings

UK Government planned budget cuts for 2010-UK Government planned budget cuts for 2010-11 and 2011-1211 and 2011-12

Reduction in Scottish budget of £500m in each Reduction in Scottish budget of £500m in each year - £250m current expenditure, £250m capital year - £250m current expenditure, £250m capital expenditureexpenditure

Current expenditure spread using Central & Current expenditure spread using Central & Local Government columns in I-O tablesLocal Government columns in I-O tables

Capital expenditure spread using public sector Capital expenditure spread using public sector element of Gross Fixed Capital Formation element of Gross Fixed Capital Formation column in I-O tablescolumn in I-O tables

Impact on Scottish EconomyImpact on Scottish Economy

£500m cut to Scottish budget each year £500m cut to Scottish budget each year leads to:leads to:

- £700m reduction in output- £700m reduction in output

- 8,700 job loses (4,500 in public - 8,700 job loses (4,500 in public admin admin and 2,000 in construction) and 2,000 in construction)

Direct effects Indirect effects Total Direct + Indirect effects Total Direct + Indirect + Induced effects

Industry

Output (£m)

Employ- ment (FTE)

Income (£m)

GDP(I)Gross Value Added

Output (£m)

Employ- ment (FTE)

Income (£m)


Output (£m)

Employ- ment (FTE)

Income (£m)


Agriculture, forestry and fishing -0.01 0 0.00 0.00 -0.95 -9 -0.18 -0.33 -0.96 -10 -0.18 -0.33Mining 0.00 0 0.00 0.00 -4.51 -24 -1.16 -1.51 -4.51 -24 -1.16 -1.51Manufacturing -61.25 -565 -16.78 -26.20 -25.53 -209 -7.06 -9.72 -86.78 -774 -23.84 -35.92Energy and water 0.00 0 0.00 0.00 -5.91 -14 -0.55 -1.65 -5.91 -14 -0.55 -1.65Construction -148.66 -1,506 -40.29 -64.18 -45.75 -463 -12.40 -19.75 -194.40 -1,969 -52.68 -83.93Distribution and catering -0.02 -1 -0.01 -0.01 -10.94 -175 -4.04 -6.59 -10.96 -175 -4.05 -6.60Transport and communication -2.39 -16 -0.85 -1.59 -15.58 -179 -5.94 -8.55 -17.97 -195 -6.79 -10.14Finance and business -21.07 -256 -8.50 -13.54 -60.36 -635 -19.03 -34.75 -81.43 -891 -27.53 -48.29Public admin etc -266.58 -4,140 -121.92 -145.66 -25.68 -454 -11.25 -14.40 -292.26 -4,594 -133.17 -160.06Other services -0.01 0 0.00 -0.01 -0.93 -19 -0.50 -0.76 -0.94 -20 -0.51 -0.77Total -500.00 -6,483 -188.35 -251.19 -196.13 -2,181 -62.11 -98.00 -696.13 -8,664 -250.47 -349.19

PressPress ““Brown's £1bn cuts 'will cost 8,700 Scots jobs' – Brown's £1bn cuts 'will cost 8,700 Scots jobs' –

Salmond” – The Scotsman, Feb ’09Salmond” – The Scotsman, Feb ’09Gordon Brown was accused yesterday of placing 8,700 Gordon Brown was accused yesterday of placing 8,700 Scottish jobs at risk under the UK government's plans for £1 Scottish jobs at risk under the UK government's plans for £1 billion of cuts north of the Border.billion of cuts north of the Border.

““PM sticks to his medicine for poorly Scotland” – PM sticks to his medicine for poorly Scotland” – The Glasgow Herald, Feb ’09The Glasgow Herald, Feb ’09The loss of £500m for 2010 to the Scottish Budget would The loss of £500m for 2010 to the Scottish Budget would "destroy" 8700 jobs right across the economy, said Mr "destroy" 8700 jobs right across the economy, said Mr Salmond, who produced a table of where the axe would fall. Salmond, who produced a table of where the axe would fall. Public administration, i.e. the Scottish Government and Public administration, i.e. the Scottish Government and councils, would be hit the worst with more than 4500 jobs councils, would be hit the worst with more than 4500 jobs being lost while construction would lose around 2000. being lost while construction would lose around 2000.

Example 2a Example 2a Skykon project in CampbeltownSkykon project in Campbeltown

Skykon take-over of Vestas wind turbine plant in Skykon take-over of Vestas wind turbine plant in CampbeltownCampbeltown

Redevelopment of plant funded by £35m from Redevelopment of plant funded by £35m from Skykon and £9.8m from Scottish GovernmentSkykon and £9.8m from Scottish Government

Project aims to:Project aims to:

- Safeguard current jobs- Safeguard current jobs

- Construct new facilities for larger - Construct new facilities for larger capacity turbines capacity turbines

- Expand production- Expand production

Impact on Scottish economy of Impact on Scottish economy of safeguarding jobssafeguarding jobs

Directly safeguards 85 jobs at Vestas in 2009 – Directly safeguards 85 jobs at Vestas in 2009 – plant likely to have closed without fundingplant likely to have closed without funding

Supports 45 jobs in wider economy through Supports 45 jobs in wider economy through supplier industries and increases in household supplier industries and increases in household spend due to increased employmentspend due to increased employment

Direct effects Indirect + induced effects Total Direct + Indirect + Induced effects

Industry

Output (£m)

Employ- ment (FTE)

Income (£m)


Output (£m)

Employ- ment (FTE)

Income (£m)


Output (£m)

Employ- ment (FTE)

Income (£m)


Agriculture, forestry and fishing 0.00 0 0.00 0.00 0.06 1 0.01 0.02 0.06 1 0.01 0.02Mining 0.00 0 0.00 0.00 0.05 0 0.01 0.01 0.05 0 0.01 0.01Manufacturing 9.36 85 3.02 5.50 0.86 7 0.24 0.35 10.22 92 3.26 5.85Energy and water 0.00 0 0.00 0.00 0.20 0 0.02 0.06 0.20 0 0.02 0.06Construction 0.00 0 0.00 0.00 0.11 1 0.03 0.05 0.11 1 0.03 0.05Distribution and catering 0.00 0 0.00 0.00 0.98 19 0.37 0.59 0.98 19 0.37 0.59Transport and communication 0.00 0 0.00 0.00 0.40 4 0.14 0.21 0.40 4 0.14 0.21Finance and business 0.00 0 0.00 0.00 1.10 8 0.22 0.66 1.10 8 0.22 0.66Public admin etc 0.00 0 0.00 0.00 0.28 4 0.11 0.14 0.28 4 0.11 0.14Other services 0.00 0 0.00 0.00 0.04 1 0.03 0.04 0.04 1 0.03 0.04Total 9.36 85 3.02 5.50 4.08 45 1.18 2.13 13.44 130 4.20 7.63

Example 2bExample 2bImpact on Scottish economy of Impact on Scottish economy of

construction of new facilitiesconstruction of new facilities

£20m spend on construction of larger capacity £20m spend on construction of larger capacity wind turbines in 2010wind turbines in 2010

Directly supports 203 jobs in construction Directly supports 203 jobs in construction industryindustry

Supports a further 187 jobs in whole economy Supports a further 187 jobs in whole economy through indirect and induced effectsthrough indirect and induced effects


Industry

Output (£m)

Employ- ment (FTE)

Income (£m)


Output (£m)

Employ- ment (FTE)

Income (£m)


Output (£m)

Employ- ment (FTE)

Income (£m)



Example 2cExample 2cImpact on Scottish economy of Impact on Scottish economy of

production expansionproduction expansion

Supports a further 158 jobs in whole economy Supports a further 158 jobs in whole economy through indirect and induced effectsthrough indirect and induced effects

Production expansion expected to create 300 Production expansion expected to create 300 additional jobs in 2011additional jobs in 2011


Industry

Output (£m)

Employ- ment (FTE)

Income (£m)


Output (£m)

Employ- ment (FTE)

Income (£m)


Output (£m)

Employ- ment (FTE)

Income (£m)



PressPress ““Huge expansion for turbine plant” – BBC News, Huge expansion for turbine plant” – BBC News,

March ’09March ’09Mr Salmond said: "The impact of this investment will be truly Mr Salmond said: "The impact of this investment will be truly transformational, not just for the Kintyre peninsula but for all of transformational, not just for the Kintyre peninsula but for all of Scotland. It creates high quality and skilled employment in Scotland. It creates high quality and skilled employment in the local area and gives Scotland a lead in the development the local area and gives Scotland a lead in the development of clean, green energy technology - putting our nation at the of clean, green energy technology - putting our nation at the forefront of global developments.”forefront of global developments.”

““Argyll will see economic benefits of wind farm Argyll will see economic benefits of wind farm revamp – Salmond” – The Scotsman, March ‘09revamp – Salmond” – The Scotsman, March ‘09One of Scotland's most remote areas will be transformed by a One of Scotland's most remote areas will be transformed by a £45 million investment which will create hundreds of jobs, £45 million investment which will create hundreds of jobs, Alex Salmond said today.Alex Salmond said today.

Other uses of I-OOther uses of I-O

Marine industryMarine industry

Carbon AccountingCarbon Accounting

100+ ad hocs in 2008, 50 in 2009 so far100+ ad hocs in 2008, 50 in 2009 so far

Marine IndustryMarine Industry

IO analysis used to IO analysis used to inform the Marine Bill in inform the Marine Bill in 2008. 2008.

Estimates of ‘productive’ Estimates of ‘productive’ status of the seas and status of the seas and marine economic activitymarine economic activity

In 2004, value of marine-In 2004, value of marine-related sector in Scotland related sector in Scotland was £2.2 billion was £2.2 billion supporting 50,000 FTE supporting 50,000 FTE employeesemployees

Carbon AccountingCarbon Accounting

SG commissioned work by FAI to use CGE SG commissioned work by FAI to use CGE modelling to forecast COmodelling to forecast CO22 emissions 2010 to emissions 2010 to

2050 under various scenarios2050 under various scenarios Model involved further disaggregation of the Model involved further disaggregation of the

electricity production sectorelectricity production sector Uses AMOSENVI (environmental CGE model)Uses AMOSENVI (environmental CGE model) Model considers impact on economy and Model considers impact on economy and

environment of efficiency savings in electricity environment of efficiency savings in electricity productionproduction

Ad-hoc requestsAd-hoc requests

Over 100 requests in 2008 – 51 daysOver 100 requests in 2008 – 51 days Customers include: Shetland Island Customers include: Shetland Island

Council, SPICE, Council of Economic Council, SPICE, Council of Economic Advisers, Fraser of Allander Institute, Advisers, Fraser of Allander Institute, Scotch Whisky Association, Scottish Scotch Whisky Association, Scottish Enterprise, BBCEnterprise, BBC

Increasing interest in I-O and in ad-hoc Increasing interest in I-O and in ad-hoc analysesanalyses

Environmental input-output Environmental input-output economics and policyeconomics and policy

Environmental itemsEnvironmental items Natural resourcesNatural resources PollutantsPollutants

Policies addressing environmental problems:Policies addressing environmental problems: Impose quantity limits on destructive activitiesImpose quantity limits on destructive activities Discourage harmful activities by Discourage harmful activities by taxationtaxation Specify Specify property rightsproperty rights

Models need to focus directly on the implications Models need to focus directly on the implications of different policy interventionsof different policy interventions

More work required on a “whole systems” More work required on a “whole systems” approachapproach

Components of an environmental Components of an environmental modelmodel

1. Establish product inputs for output goods1. Establish product inputs for output goods 2. Environment coefficients associated with unit 2. Environment coefficients associated with unit

production production 3. Information on technology or abatement activity 3. Information on technology or abatement activity

associated with unit productionassociated with unit production 4. Labour input coefficients associated with production 4. Labour input coefficients associated with production

and abatementand abatement 5. Policy description – how much should be abated, who 5. Policy description – how much should be abated, who

pays?pays? 6. Need sophisticated assumptions about both 6. Need sophisticated assumptions about both

production and consumption over time and space.production and consumption over time and space.

FinallyFinally

Thoughts welcomeThoughts welcome

LinksLinks SNAP - SNAP - www.scotland.gov.uk/SNAPwww.scotland.gov.uk/SNAP

ScotStat – ScotStat – www.scotland.gov.uk/Topics/Statistics/scotstatwww.scotland.gov.uk/Topics/Statistics/scotstat

Scottish Input-Output Analysis - Scottish Input-Output Analysis - www.scotland.gov.uk/Topics/Statistics/Browse/Economy/Input-Outputwww.scotland.gov.uk/Topics/Statistics/Browse/Economy/Input-Output

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The use of the Scottish Input-Output framework for policy evaluation