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Blue Economy

Responding to Covid-19 by using the Leontief Matrix for Impact Analysis

In 2019, the Caribbean Development Bank (CDB) pursued the option of using the System of National Accounts (SNA) to highlight the growth potential of the Blue Economy[1].  This research used a Leontief matrix to estimate the pass through of increased demand in “blue industries”. CDB aims to build these models across the Region – data permitting.  A critical data gap in this area is the presence of Input Output Tables or sufficiently developed Supply and Use Tables (SUT).  Jamaica was the pilot country for this model in 2019.  In 2020, a partnership between the Central Statistical Office of Saint Lucia and CDB replicated the Leontief matrix for the country and assessed the potential growth impact of increased investments in marine and marine related industries. This strategy employed the recently updated 2016 SUT for Saint Lucia, which was restructured into Input-Output Tables to facilitate construction of the Leontief matrices.

The model provided to estimate the Blue Economy industries can be retooled to measure the impacts of other prevailing economic conditions.  For example, a restructuring of the industry grouping can generate Leontief matrices for all industries measured against those immediately impacted by COVID 19.  The agility of the model to respond to real time shocks builds from its use of the interdependency ratios captured in a country’s SNA.  Going forward, and as more country models are developed, this analysis can help country stress test the interindustry linkages and domestic output to any major shock to productive activities. click here for Leontief analysis in response to COVID-19 pandemic.

[1] See Measuring the Blue Economy: The System of National Accounts and Use of Blue Economy Satellite Accounts.  Dr. Justin Ram, Dindial Ramrattan and Raquel Frederick.  Caribbean Development Bank, 2019.

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