Input/Output analysis

1. A technique used to examine the flows into and out of a system. It has been developed to examine economic systems, particularly at the national level, as an aid to decision-making. In such an application it is used to examine the interindustry traffic in raw materials, intermediate products, and technical and financial services that necessarily precedes the delivery of finished products to final markets. An input/output table is used to display in its horizontal rows the outputs (sales) by each industry to other industries and, in its vertical columns, the inputs (purchases) by each industry from other industries.

2. The information in such a table may be held in the memory of a computer and then becomes a working model of the economy under consideration. Input/output analysis may then be used for estimating industrial markets, the availability of producers' supplies, wage and price trends, opportunities for investment, and the repercussions of government expenditures and new social and technological innovations.

3. Since it coordinates information on performance in all industrial sectors simultaneously, the technique also provides a framework for consistent analysis of natural resource constraints and environmental pollution of different types.