Global Dynamics

Chapter 4A Global Inter-country Economic Model Based on Linked Input–Output Models

Robert G. Levy, Thomas P. Oléron Evans and Alan Wilson

4.1 Introduction

The objective of this chapter is to present a global economic model that can be used as the basis for assessing the impacts of future changes in trade, migration, security and development aid. Because these topics are often associated with developing countries, it is important that the model have as few coefficients as possible to enable the future addition of countries who publish little data on their economic structure. The model as it is presented here represents a first ‘proof-of-concept’ step towards these ambitious goals. At this stage, the focus is on creating a model of global trade which will form a skeleton onto which additional social science models will be added in future work. The economies of individual countries are represented as 35-sector input–output models, each of which is linked through trade flows representing imports and exports. This has recently been made feasible by the publication of the World Input–Output Database (WIOD) (Timmer et al., 2015), a collection of national input–output tables (NIOTs) for 40 (mostly OECD) countries across 17 years from 1995 to 2011. The NIOTs are linked through data from the United Nations, covering trade in both products¹ and services.²

While other models of world trade based on the input–output methodology exist, the model presented here is one of the first to integrate ...