3. Structure of the model, economic flows and linkages North East Regional Economic Model( NEEM)...

3. Structure of the model, economic flows

and linkages

North East Regional Economic Model( NEEM)

Overview and Training Session

24 June 2008North East Economic Model. Overview and training session 1

North East industrial sectors - production and sales

Trade

Government (local and central)

Sub-regional breakdowns

Households (regional population)

Qualifications

Rest of UK

Rest of World(inc. breakdowns)

Occupations

Industrial clusters

Capital investment

Schematic diagram

24 June 2008North East Economic Model. Overview and training session

• This is a basic way of thinking about the model.• A more formal schematic based upon economic theory

provides a more fruitful way of conceptualizing the model• ‘Circular flow of income’

The circular flow of income

NORTH EASTFIRMS

NORTH EASTHOUSEHOLDS

GOODS & SERVICES

SPENDING ON GOODS AND SERVICES

LABOUR AND OTHER FACTOR SERVICES

WAGES AND OTHER FACTOR INCOMES


Expanded circular flow

NORTH EASTFIRMS

NORTH EASTHOUSEHOLDS

GOODS & SERVICES

SPENDING ON GOODS AND SERVICES

LABOUR AND OTHER FACTOR SERVICES

WAGES AND OTHER FACTOR INCOMESTAXATION

IMPORTS Rest UK and Oseas

SAVINGS

GOVERNMENTSPENDING

EXPORTS Rest UK and Oseas

INVESTMENT

These monetary flows can be clearly seen in the rows and

columns on the next overhead

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Primary 7 0 38 - 1 2 2 3 53 2 66 - 217 14 1 2 354Secondary 0 2 8 12 6 0 1 0 29 2 0 - 281 129 92 1 534

Manufacturing 8 9 781 12 137 91 224 188 1,450 146 458 - 8,929 3,934 2,345 139 17,401Utilities 4 14 257 538 7 24 60 70 973 0 344 - 1,178 - - 3 2,499

Construction 3 10 51 27 1,022 25 429 198 1,765 1,735 114 - 1,987 - - 5 5,607Distribution 10 7 505 9 44 47 180 109 912 48 3,271 - 896 823 571 32 6,553

Private services 23 80 1,560 106 379 913 3182 1,028 7,270 250 5,380 488 9,885 8 36 1,208 24,524Public services 3 1 79 7 9 12 189 290 590 24 825 9,940 1,106 - - 77 12,560

Total NE purchases 57 123 3,278 711 1,605 1,114 4,268 1,886 13,043 2,207 10,458 10,428 24,480 4,907 3,045 1,465

Overseas imports 16 50 3,733 158 267 66 1,093 913

UK regional imports 120 165 6,000 814 1,145 1,165 4,559 2,024

Net expenditure taxes 10 16 385 76 162 132 722 252

GVA 174 210 5,415 925 2,374 3,675 12,544 7,629Inc. compensation of

employment 78 161 4638 247 1360 2109 6347 6858

Total industry output 377 564 18,811 2,684 5,553 6,153 23,186 12,704 70,033

2003 North East Regional Input-Output Table

Intermediate Purchase Sectors Final Demand Sectors

Notes:The Government sector also includes NPISHCapital expenditure includes changes in valuables, etcOverseas tourist spending is included in overseas service exports, tourists from the rest of the UK are included in exports to the UKValues in the lower right hand quadrant of the table have been omitted for simplicitySome of these figures are approximate and should not be quoted, accurate figures can be obtained from the Durham University/OneNE regional economic model

-' represents a null value, '0' represents a value of less than 0.5

Benefits of input-output tablesThe annual I-O Tables display the transactions of

all goods and services in the NE economy for a single year in matrix form.

This adds an important extra dimension to the way economic accounts are compiled and presented.

Other national & regional accounts statistics are concerned with the composition and value of goods and services entering final demand (for example, purchases by consumers), and with the outputs and incomes generated by the economic process.They do not display the inter-industry

transactions which link these activities.24 June 2008North East Economic Model. Overview and training session

Benefits of input-output tablesThe production of Annual I-O Tables allows

a close examination of the consistency of theregional accounts by linking the components

of industries’ gross value added, inputs and outputs

components of final demand within a single framework. Reconciliation of components of the production, income and expenditure measures of Gross Domestic Product (GDP) are reconciled during the production of these tables.


Structural features110 Industries and product groupsFor each industry data is available on

Output and GVACapital expenditureWorker headcountsFTE workers

FTE workers by industry can be disaggregated into7 Qualification groupings22 Occupation groupings

Business size


Structural featuresFor each industry data is available on

Goods exports by 14 EU countries, 7 other overseas areas, and other UK regions

Service exports, overseas and other UK regionsImports from overseas and other UK regions

Income and spending for 11 household groups (SOC classification plus unemployed and retired)

Spending patterns of domestic and overseas tourists

Spending patterns of local and national government


Intermediate Production

Household Incomes

Final Demands

Exo

geno

us

Hou

seho

lds

Leakages

Tot

al I

nput

s

Total Outputs

Core dataThe model is

contained within a series of interconnected matrices.

The core is an Input-Output matrix.

This core matrix maps to additional matrices forQualificationsOccupationsBusiness sites


North East Overseas Imports

Agriculture Forestry Fishing

Agriculture 26.7 0 0

Forestry 0 6.1 0

Fishing 0 0 0.2

North East Rest of UK Imports


Agriculture 8.4 0 0

Forestry 0 0.3 0

Fishing 0 0 0

North East Domestic


Agriculture 6.7 0 0

Forestry 0 1.2 0

Fishing 0 0 0.1

Goods and Services within the North East Economy =

Locally produced +

Imports from the rest of the UK +

Imports from overseas

North East Economy



Forestry 0 7.6 0

Fishing 0 0 0.3

Each of these tables is a large matrix containing various pieces

of information.The ‘NE Domestic Matrix’

contains over 21,000 cells …

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North East Rest of UK Imports



Forestry 0 6.1 0

Fishing 0 0 0.2

North East Overseas Imports


Agriculture 8.4 0 0

Forestry 0 0.3 0

Fishing 0 0 0

North East Domestic


Agriculture 6.7 0 0

Forestry 0 1.2 0

Fishing 0 0 0.1

Goods and Services within the North East Economy =

Locally produced +

Imports from overseas +

Imports from the rest of the

UK

North East Economy



Forestry 0 7.6 0

Fishing 0 0 0.3

Intermediate

Sales/ Purchases

(111x111)

Capital

Sales

(40x111)

Household

Purchases

(11x111)

Government & NPISH

(3x111)

Export Sales/

Purchases

(23x111)

Tourist

Spending

(2x111)

Wages etc.

Tax

Taxes Taxes

Savings

Taxes Taxes

The ‘wages’ element of the intermediate matrixmaps to ‘social accounting matrices’.

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Wage costs etc.

FTEs


Corporate Managers

0 40 23

Managers in agric. …

2664 26 64

Science and tech prof. …

0 28 11

Incomes (£m)


Corporate Managers

0 1.4 0.3

Managers in agric. …

55.3 0.7 0.6

Science and tech prof. …

0 1.3 0.1

Incomes by sector and occupation

(25x111)

FTEs by industry and occupation

(25x111)

Headcounts by FT, PT & self employed by sector

(3x111)

FTEs by industry and qualification

(7x111)

Qualifications

Degree or equiv

Higher Education

GCE A-Level or Equiv

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3. Structure of the model, economic flows and linkages North East Regional Economic Model( NEEM)...

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