A New Method for Interindustry Linkage Analysis Based on Demand-Driven and Multisector Input-Output Model and Its Application in China’s Manufacturing and Producer Services

Abstract

Interindustry linkage analysis is an important interdisciplinary research field of technical economic and complex systems, and the results can be used as critical bases for making strategies and policies of economic development. This study reviews the previous methods for measuring interindustry linkages and their disadvantages and puts forward a new method for interindustry linkage analysis in a complex economic system on the basis of demand-driven and multisector input-output model. Firstly, it makes a further decomposition of the Leontief inverse matrix in the economic sense and decomposes the gross output of one industrial sector or its sub-industries into three components. Then, it analyzes the structural features of output and measures the interindustry linkages between two industrial sectors with three indices: interindustry linkage effect, interindustry linkage contribution, and interindustry linkage coefficient. Compared with the previous measurements, the method in this study has three obvious advantages: it integrates the sectoral internal effect and external linkage effect at the same time; it can not only measure the interindustry linkage effects between two given industrial sectors but also clearly describe the composition ratio of the direct and indirect interindustry linkage effects; and it adopts, respectively, the absolute flow value, relative flow value, and unit relative value to measure the linkages comprehensively. Finally, this study takes China’s input and output in 2017 as an application case to analyze the structural features of output of its manufacturing and producer services and measure the interindustry linkages between them.