Aggregate Measures of Complex Economic Structure and Evolution

Richard Wood and Manfred Lenzen

Journal of Industrial Ecology, 2009, vol. 13, issue 2, 264-283

Abstract: It is perhaps in the nature of complex systems that they call for aggregate measures that enable analysts to grasp their structure and evolution without being overwhelmed by their very complexity. Complex interindustry theory and models are a typical case, where the underlying database—an input−output table—routinely contains thousands of data points for a single year. Within input−output analysis, quantitative measures have been developed that describe and characterize interindustry interactions and that have been used to compare economies, both in a static taxonomy and through their evolution over time. First, we review and critically discuss a number of concepts that have been proposed and applied to interindustry systems, such as interconnectedness, interrelatedness, linkages, and economic landscapes. Second, we apply these concepts to a case study of the Australian economy between 1975 and 1999 in terms of environmental headline indicators. Our results enable the reader to judge the usefulness and ability of the measures in capturing the key structural elements and evolutionary processes governing the interaction between the economy and the environment. For the Australian case study, the measures showed a diversifying economy occurring together with a specialization of environmental flows.

Date: 2009
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