A NOTE ON THE INTEGRATION OF PROJECT AND SECTOR ANALYSIS
| DOI | http://doi.org/10.1111/j.1468-0084.1974.mp36002003.x |
| Date | 01 May 1974 |
| Author | S.R. C. WANHILL |
| Published date | 01 May 1974 |
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A NOTE ON THE INTEGRATION OF PROJECT AND
SECTOR ANALYSIS
By S. R. C. WANHILL*
This paper is an extension of some previous work by P. G. Sadler [1]. In his
paper Mr. Sadler posed the problem of the differing criteria used at each of the
various levels of planning. In particular, there is on the one hand, at sector level,
Tinbergen's semi-input-output system [2] which takes value-added as the criterion
for sector selection and on the other, at project level, the Little-Mirrlees (L-M)
method [3] which takes the re-investable surplus in the hands of the government at
border prices to be the criterion for project choice. In this paper we will show how
the semi-input-output method may be modified to accommodate the L-M criterion.
SEMI-INPUTOUPUT
The economy is divided into 1,. .., F international sectors, f =1, .. ., F, and
n = F +1,. .., P national sectors such that P = F + N. The system of equations
representing the international sectors may be written as
d, v9+ if9+xfmf+cfY=vf f=l, ..., F (1)
p=l.....F.....P
where df9 = marginal input coefficient relating intermediate products from sector f
to sector p
= change in production of sector f during the period of observation.
p = change in investment requirements by sector p from sector f
x = change in exports of product f
= change in imports of product f
C1 = marginal propensity to consume
Y change in gross national product (GNP)
Secondly we define a set of national sectors which are interlinked with the in-
ternational sectors of the economy. Thus, a project in an international sector will
generate an increase in the demand for a number of national products which, by
reason of transport immobility, do not enter into trade. This distinction between
international and national sectors has its equivalent in L-M's division between
traded and non-traded goods at the project level. The national sectors may be
shown by n=F+l,...,P (2)
p=F+N
By assuming no time lag between investment and increases in production, the
* Thanks are due to my colleague, P. G. Sadler and M. FG. Scott of Nuffield College for
helpful discussion. Errors and omissions remain the responsibility of the author.
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