A vertically integrated approach to structural decomposition: an analysis of the Brazilian economy from 2000 to 2018

Ricardo Azevedo Araujo, Theo Santini and Rafael de Acypreste

Chapter 12 in Income Distribution, Economic Growth and Unemployment, 2025, pp 254-281 from Edward Elgar Publishing

Abstract: The present work evaluates the evolution of productivity in Brazil from 2000 to 2018, using the vertically integrated approach (Pasinetti, 1981) to input–output decomposition instead of the traditional Leontief approach. This allows us to consider production as the outcome of vertically integrated sectors (VIS), making it possible to account for gains arising from changes in production techniques, economies of scale, incorporation of productivity from other sectors, and learning by doing. Furthermore, this approach incorporates the effects of ‘outsourcing’ production across sectors, which could not be captured by considering only direct labour. In the end, the structural decomposition under vertical integration for employment manages to capture the variations in employment due to changes in labour productivity or variations in final demand. The analysis aims to understand the structural dynamics of the Brazilian economy from 2000 to 2018, identifying the VIS that grew or lost participation in production.

Keywords: Productivity; Input-Output Analysis; Vertical Integration (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035342556
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