Income Multipliers In Input – Output Analysis: Case Of Vietnam
Abstract— The question arises as to which income group will benefit from GDP growth? This paper assesses the success or failure of Vietnam's economic policy through an input - output analysis, the research estimates the spread of final demand to type of income. It proposes some ideas for adjusting macroeconomic policies. In this article, value added is divided into income groups such as: Income of labor groups (labors in the state enterprises; labors in the non-state enterprises and in the FDI sector); operating surplus of state-owned enterprises; operating surplus of non-state sector and operating surplus of FDI sector.
Key Words— income, input-output, multipliers, Vietnam
I. INTRODUCTION
The average GDP growth of Vietnam in the period of
2008 - 2017 was about 6.2%, this is quite a high growth rate for countries in the world and in the region. However, the growth of Vietnam's economy is tending to decrease gradually, before joining the WTO, the average GDP growth of Vietnam during 1990-2000 was about 7.7%, from 2000-
2009. Average growth GDP decreased to 6.8%, from 2009 -
2018 average GDP growth was 6.2%. Thus, before joining the integration and the current period, the average GDP growth rate decreases by 1.5 percentage points.
The study uses the input-output system was developed by W. Leontief. In the 1930s, Wassily Leontief published a first paper that laid the groundwork for the later IO model [1]. W. Leontief applied the idea of François Quesnay to research, development and construction [2]. An input - output table for the United States, this work focuses on describing the flow of transactions between industries of the economy. Next he introduced Leon Walras's idea of supply and demand to provide a framework for mathematically pre- defining the relationship not only of the relationship between industries but also the relationship of final demand to production and income [3].
Leon Walras argues that an economy has many types of products, so there are many equations of supply - demand, when the supply and demand of the product meet, it will form the price of that product he said that the solution
Published on April 26, 2020.
Duong Mạnh Hung, the National Account Department – General Statistics
Office of Vietnam.
(e-mail: dmhung74@yahoo.com)
Nguyen Quang Thai, Vietnam Development Research Institute, Vietnam. (e-mail: thai.nguyenquang@gmail.com)
Bui Trinh, Vietnam Development Research Institute, Vietnam.
(corresponding e-mail: buitrinhcan@gmail.com) because the number of equations equals variables, W. Leontiefformalizes this idea by applying linear algebra and the theoretical framework from the matrix system applied by W. Leontief subtly to solve [4]. Miller and Blair also explain an IO table that describes "the flow of products from each industry considered a producer for each industry that is considered the buyer side" and that it is a "excellent description tool” [5]. It is also called “a powerful analytical technique” [6, 7]. In the manufacturing process, each industry uses products produced by other industries and produces outputs consumed by the final consumer (for private consumption, government consumption, investment and export) and other sectors such as inputs for intermediate consumption [8]. Other studies on IO models can be found in some studies [9, 10, 11, 12, 13, 14].
Today, the IO system of Leontief has been created and applied in most countries around the world; in 1968 the IO board was added to the National Accounts System and viewed as the center of this whole system[15].
Multiplier input - output can include input, output multipliers, and value-added multipliers. The total effects are understood to include the direct, indirect, inter-sectoral feedback and spillover effects of a change in demand that is ultimately defined by West [16].
In this research, the value added was divided as follows:
+ Compensation of employees was divided as below:
- Labor’s income of state area
- Labor’s income of non – state area
- Labor’s income of FDI area
+ Operating surplus was divided as follow:
- State
- Non - State
- FDI
+ Domestic final demand includes:
- Final consumption
- Gross capital formation of state sector
- Gross capital formation of non - state sector
- Gross capital formation of FDI sector
- Export of goods
- Export of services
The input – output table was used in research include 19 sectors in 2012