Title:
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An economic/technical study of the U.K. paint industry
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Many critisisms have been made on the usefulness, of input-output analysis and the whole possibility of representing an economy by simple motionless coefficients in a single inter-industry table. The assumption of constant coefiicients can only be a first approximation to the more complex production functions of the real world. Changes in product mix, input substitutions and technological innovations all do occur but the question of real importance is "Are the errors involved in using the simplifying assumption, satisfactorily small?" Tests have already been performed in the United States and Japan (1) (2), but not in England, as to the stability of coefficients and Leontief has tried to quantify changes which do occur over time (3). Carter (4) sums up the real need in input/output analysis in taking into account these changes:- "As detailed planning and forecasting become standard practice for business and government the integration of ideas on new techniques, trends and commonsense business judgement in a consistent economic framework is required. Blending of these disparate elements is not possible in a highly aggregative system or in terms of net factor inputs alone. Working with details of intermediate as well as primary input requirements has the advantage that it permits the absorption of a great deal of fragmentary information from extra-economic sources". I have tried to disaggregate one sector in the input-output table by combining technical information on the one hand and economic analysis on the other. The input-output coefficients have been produced by a systematic approach forming the framework of a timeless. model taking into account the factors of product mix, input substitutions (price changes) and technological innovations.
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