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IDENTIFYING OPTIMAL SECTOR GROUPINGS WITH THE HYPOTHETICAL EXTRACTION METHOD *
Author(s) -
Temurshoev Umed
Publication year - 2010
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.2010.00678.x
Subject(s) - key (lock) , linkage (software) , set (abstract data type) , economics , group (periodic table) , econometrics , industrial organization , computer science , chemistry , biochemistry , computer security , organic chemistry , gene , programming language
We formulate the problems of finding a key sector and a key group of sectors in the economy by the hypothetical extraction method (HEM), and derive their analytic solutions that are termed industries’ factor worths . It is shown that the key group of k ≥ 2 sectors is, in general, different from the set of top k industries selected on the basis of the key sector problem, the issue which is totally ignored in the input–output (IO) linkage literature. Further, the related problems of finding a key region and a key group of regions in an interregional IO setting are discussed. We also examine how a change in an input coefficient affects the factor worth of an industry. The key group problem is applied to the Australian economy for factors of water use, CO 2 emissions, and generation of profits and wages.