The coronavirus pandemic is going to have potentially devastating and lasting impacts on the world’s economy. The main interest is now on assessing and mitigating these impacts. To be able to do that we need to realise that today’s world economy is amazingly complex. A shock hitting one sector in the economy can quickly propagate to others through the linkages between sectors (as an example, in the last post I showed what sectors were linked to final household consumption in Italy). Our understanding of the possible effects of the crisis needs to start from how goods and services flow between sectors and economies.
In this and the next three posts, I will demonstrate how to construct a map of the world’s economy using publicly available data, visualise it and analyse it using graph analytics.
Introduction to Input-Output Tables
To create a map of the world economy, we use input-output tables. As OECD puts it, “Input-Output Tables (IOTs) describe the sale and purchase relationships between producers and consumers within an economy.” A graphical demonstration might explain the concept better so let’s look at an example of an imaginary input-output table.
The table above represents a simple world economy with 2 countries and 2 sectors. A sector can either sell to another sector or to the consumer. Looking at the table, Sector 1 in Country A for example sold to sector 2 in country A at price 20. It also sold to sector 2 in Country B at price 30. This sample table can be also visualised as a network shown below.
One advantage of visualising the input-output tables as a network is that we can map properties to the vertices (the country, sector pairs) and edges (the arrows linking the vertices). Here, vertices are colored according to the country they belong to and their size is scaled according to the total value of payments they make and receive. The width of the link is scaled according to the size of the flow.
Now that we are familiar with the concept of input-output networks and understand the advantages of visualising them as networks, we can finally download real input-output tables and start exploring.
List of publicly available input-output tables databases
Lots of agencies and organisations collect and publish input-output tables. In the table below, I share some of the sources I have worked with, other data scientists at FNA used or are by trusted institutions.
1.World Input Output Database
- 28 EU Countries and 15 other major countries
- From 2000 to 2014
2. The Eora Global Supply Chain Database
- 190 Countries
- From 1990 to 2015
3. OECD Input-Output Tables
- All OECD countries and 28 non-member economies
- From 2005 to 2015
4. Bureau of Economic Analysis
- Covers US
- From 1997 to 2018
- EU countries (for most of the years, only EU-level data is available)
- From 2010 to 2018
The list is by no means exhaustive, so please feel free to reach out if you know of any source we should add to the list.
In the next post, I will talk about 3 tips on visualisation of these large input-output networks (the network I constructed using the world input output database has over 6 million edges). Until then, happy exploring!