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15-201-XIE
The input-output structure of the Canadian economy
2000-2001


Data quality, concepts and methodology

Data quality, concepts and methodology

Presentation of data

A. Contents of the input-output tables

In the Canadian System of National Accounts, the Input-Output Accounts have two sets of interrelated accounts:

  1. the Industry Accounts;
  2. the Commodity Accounts.

The Industry Accounts contain the commodity composition of industry output and its complete costs of production including profits (surplus). The Commodity Accounts, on the other hand, show the supply and disposition of goods and services. The framework of the Canadian Input-Output Tables is closely related to the one described in the United Nations report, System of National Accounts, 1993. The inputs and outputs of industries, classified by commodity, are presented in separate tables. The Canadian Input-Output Tables are rectangular rather than square since the number of goods and services exceeds the number of industries. Square tables have been an international standard for most countries from the beginning of Input-Output concepts. Square means having the same dimensions, either product-by-product tables or industry by industry. The product by product table shows which products are used in the production of which other products; the industry by industry table which is by far the most widely used shows which industry uses the output of which other industry. From our own rectangular framework we can build square tables: industry by industry and industry by categories of final demand.

For each year, three basic tables are prepared:

  1. Make (Output) Matrix;
  2. Use (Input) Matrix; and
  3. Final Demand Matrix.

The Input-Output Accounts are prepared and balanced at the most detailed level known as the "Worksheet" (W) level, with 300 industries for the year 2000 and 2001. The number of goods and services and primary inputs add to 727 in 2000 and 2001. In the final demand, there are 170 categories for the years 2000 and 2001. The Worksheet (W) level data are then aggregated into Link (L), Medium (M), and Small (S) levels for consistency during the entire period as shown in the following table.

At the W, L and M levels of detail, some of the entries in various national matrices are confidential under the provisions of the Statistics Act. Consequently, data are provided to users after suppressing the confidential cells where applicable. The provincial tables are available at the “S” level of aggregation only and cell suppression is performed at that level.

The tables in the present publication are at the S level of aggregation, covering 51 goods and services and 8 primary inputs, (a total of 59), 25 industries and 16 final demand categories 1. The concordances among the various levels of aggregation for industries, goods and services and primary inputs are provided in the Appendix I .

Text table 1
Dimension table

Designation of aggregation                        Number of industries Number of final demand categories Number of goods and services and primary inputs
S (Small) 25 16 59
M (Medium) 62 37 111
L (Link) 117 120 469
W (Worksheet) 300 170 727

B. Understanding the content of the national input-output tables

This section presented here highlights the descriptive as well as the analytical usefulness of input-output data, using a series of examples. Observed relationships between industries producing several goods and services and various users of these goods and services allow establishing meaningful economic relationships. A number of possible applications of the data are also offered. The examples are meant to familiarize the reader with the richness of the basic data as well as their potential for various analytical uses. For simplicity we present the data content using the National Input-Output Tables . The same demonstration applies to the provincial tables as well.

The illustration uses one industry “manufacturing”, and one commodity, “petroleum & coal products”, at the S level of aggregation. Utilizing data for 2001 (tables 7, 8 and 9), the industry can be identified as column 8 of the Make and Use Matrices and the commodity as row 26 in the Make, Use and Final Demand Matrices.

  1. Producers
  2. Users
  3. Composition of outputs and inputs
  4. Gross domestic product (GPD) by industry
  5. Gross domestic product (GPD) for the total economy
  6. Domestic availability of goods and services
  7. Import shares
  8. Export shares
  9. Indirect taxes and subsdidies

(i) Producers

The simple question, “who produces what?” is easily answered by referring to the Make Matrix where each row shows the distribution of output of each commodity by industry and where each column lists the distribution of output of each industry by commodity. For example, one may find that in 2001 the manufacturing industry (column 8 of the Make Matrix) produced $35,230 million of petroleum and coal products (row 26) whereas all domestic industries combined (row 26 in the last column of the Make Matrix) produced $39,705 million of that commodity. Thus, the manufacturing industry accounted for 88.7 percent of the total domestic production of this commodity in 2001 (35,230 / 39,705) x 100 = 88.7 percent.

(ii) Users

The Input-Output Tables display the demand for various goods and services which may be used as intermediate inputs (goods and services that are purchased by an industry from other industries to produce its outputs) or for final consumption by persons, governments, etc. So, the question, “who buys what?” is answered by referring to the Use (Input) and Final Demand Matrices. Elements in the row of the Use Matrix show the use of a particular commodity by various industries whereas elements of the same row appearing in the Final Demand Matrix indicate its use by various categories of final demand. For example, in 2001, altogether, industries used petroleum and coal products worth $25,560 million – the sum of row 26 across the columns of the Use Matrix. Individual entries across row 26 represent individual uses by the industry shown as a column.

(iii) Composition of outputs and inputs

The detailed presentation of data on outputs and inputs presented in this publication permits analysis of the composition of outputs and inputs of each industry over time. Once again, using the Make Matrix, one is able to observe, say for 2001, that the total output of the manufacturing industry (column 8) amounted to $583,799 million. Of this, petroleum and coal products accounted for $35,230 million which represents 6.0 percent of the total output of that industry. In a similar manner, inputs that are needed to produce outputs of industries can be identified in the Use Matrix. For example, column 8 of the Use Matrix lists various inputs needed to produce the output of the manufacturing industry. The magnitude of changes in the value of inputs over time can be identified and analyzed.

(iv) Gross domestic product (GDP) by industry

Generally speaking, the gross output of an industry consists of the value of the goods and services produced by that industry: the value of steel produced by the steel industry; the value of cars and trucks produced by the motor vehicles manufacturing industry; etc. A brief reflection tells us that, for example, the production of steel requires coal and iron ore and other inputs. These goods and services are not the products of steel mills. Rather, they are produced by other industries and used by the steel mills as their inputs. Thus, a measure of the unduplicated production of an industry should exclude all intermediate inputs purchased from other industries. This measure is called value added or Gross Domestic Product.

The Use Matrix displays all the costs incurred in production by an industry: the goods and services used as intermediate inputs; indirect taxes and subsidies; and returns to the factors of production (rows 56 to 59 of the Use Matrix), namely: wages and salaries, supplementary labour income, mixed income and other operating surplus.

(v) Gross domestic product (GDP) for the total economy

There are two measures of the Gross Domestic Product which provide valuation of the production of goods and services at different levels. They are:

  1. Gross Domestic Product at Basic Price and
  2. Gross Domestic Product at Market Prices.

It is important to note that the valuation at basic price is the internationally preferred method to value the cost of factors of production used in the production process. Market price valuation reflects actual costs to the users. It is a concept that is used to measure consumption. The difference between the two concepts is the value of taxes on products, net of subsidies. GDP at basic price can be calculated from the IO Tables. In the detailed tables we distinguish eight elements in the primary inputs which can be used to calculate both the GDP at market price and the GDP basic price. The detailed list of these primary inputs is as follows:

  • Indirect taxes on products;
  • Subsidies on products;
  • Subsidies on production;
  • Indirect Taxes on production;
  • Wages and salaries;
  • Supplementary labour income;
  • Mixed income;
  • Other operating surplus.

To Calculate GDP at market price all the components above must be added while the GDP basic price is obtained by summing the last six components of the same list.

Basic Price valuation represents the earnings of the factors of production as measured by the costs of labour (wages and salaries, supplementary labour income); capital inputs (mixed income and other operating surplus); plus indirect taxes on factors of production less subsidies on production. Indirect taxes on products(row 52) are a cost to the industry and are reflected in the market price of goods and services produced by the industry. Subsidies on products (row 53), where applicable, have the effect of lowering cost to the firms receiving them, and thus reduce the market prices of goods and services produced by the industry. They are shown as negative (-) entries in the Use (Input) Matrix. Both indirect taxes and subsidies on products and on production affect the market price valuation of goods and services.

It should be noted that indirect taxes are paid not only by the business sector but also by other sectors of the economy which are covered in the Final Demand Matrix of this publication. Subsidies, by definition, apply only to the business sector of the economy.

The GDP at Market Prices as calculated from a revenue approach is called income-based GDP and from an expenditure approach is called expenditure based GDP. The Input-Output Accounts also incorporate components of expenditure-based GDP and is obtained by summing up personal expenditure, capital formation, government current expenditure, change in the value of inventories and net exports (exports less imports) appearing in the Final Demand Matrix. In the Final Demand Matrix, these categories are shown at a finer level of detail.

(vi) Domestic availability of goods and services

It may be of interest to know the domestic availability of a particular commodity (or all goods and services) for one or many years. The domestic availability of a commodity is defined as total production less exports plus imports (assuming no inventory change). These values can be read directly from the Input-Output Tables. In 2001, the domestic production of petroleum and coal products was $39,705 million (last column of the Make (Output) Matrix) while total exports were $9,361 million (column 14 of the Final Demand Matrix) and imports were $4,854 million (column 16 of the Final Demand Matrix). Thus, the domestic availability of this product can be derived as: $39,705 million domestic production - $9,361 million exports + $4,854 million imports = $35,198 million.

(vii) Import share

The data used in the preceding section also allow the calculation of the import share of a commodity, that is, what portion of the domestic availability of a commodity comes from foreign countries. From these data, the import share for the same commodity can be calculated as follows:

(Total imports / Total domestic availability) x 100

that is for 2001:

(4,854 / 35,198) x 100 = 13.8 percent.

(viii) Export share

For countries with considerable foreign trade like Canada, there is a keen interest in measures of export intensity. A simple indicator of such an intensity is the proportion of total domestic production that is exported. Using the same commodity as in the previous illustrations, 23.6 percent of the domestic production of petroleum and coal products was exported in 2001 as follows:

(9,361 / 39,705) x 100 = 23.6 percent.

(ix) Indirect taxes and subsidies

In compiling Input Output Accounts at producers’ prices and purchasers’ prices, the costs or margins that arise between the value received by the producer (i.e. the value that covers all costs of production) and the value paid by the purchaser must be identified. One of these margins is the value of commodity taxes paid by the purchaser, be it an industry or a category of final demand. All commodity indirect taxes and all other indirect taxes are classified to the industry or final demand category paying them. The total of such taxes agrees with values published in the National Economic and Financial Accounts (Catalogue 13-001-XPB) but the Input Output Accounts provide additional information such as the industries and final demand categories which pay these taxes. Similarly, in the Input-Output Tables, subsidies are allocated to the industries receiving them. Also, from 1986 onwards, subsidies are broken down into two categories: commodity subsidies and non-commodity subsidies. These details and their routing in the Input-Output Accounts make additional analyses possible, e.g., to determine the effects of taxes and subsidies, to build certain policy simulation models, etc 2.

Data Accuracy Measures

Data from Input-Output Accounts presented in this publication are assessed for relative statistical reliability and assigned a rating that indicates the level of confidence with which they may be used. The ratings refer to data for the latest benchmark year for which estimates are published. The ratings are ‘A’ for the most reliable data, ‘B’ for reliable data, and ‘C’ for data that is less reliable but still acceptable. The ratings are determined for outputs, intermediate inputs and GDP components of each Link or ‘L’ level input-output industry. The ratings apply to entire vectors, rather than individual data points. For instance, a rating of ‘A’ or most reliable applies to all outputs of the Crop and animal production industry, whereas the industry’s intermediate input vector as a whole is assigned a ‘B’ rating. The industry’s GDP components are also assigned a ‘B” rating.

Data reliability ratings are a product of data integration and analysis inherent in the compilation of input-output tables. They rely both on the quantitative attributes of the survey and administrative data sources that are used, such as sample size, response rate and coefficient of variation, and on the expert judgement of analysts who undertake data integration of various source data. In general, the highest quality rating is assigned to a data set that originates from a survey or administrative source with the largest sample size and smallest undercoverage that requires no indirect estimation of missing detail. A reliable or ‘B’ rating is assigned to a data set estimated from source data with some but not all of the above attributes. Finally, data sets with a ‘C’ rating involve significant application of indirect estimation techniques and rely on source data with small samples, undercoverage, or both.

Text table 2
Quality ratings* of Input-Output estimates by industry1, 2000-2001 NAICS

L Aggregation - Industry  Title              Seq. # NAICS Outputs Inputs 2 GDP
Crop and animal production 1 11A0 A B B
Forestry and logging 2 1130 C B B
Fishing, hunting and trapping 3 1140 C C B
Support activities for agriculture and forestry 4 1150 B B B
Oil and gas extraction 5 2111 A B B
Coal mining 6 2121 A B B
Metal ore mining 7 2122 A A A
Non-metallic mineral mining and quarrying 8 2123 A A A
Support activities for mining and oil and gas extraction 9 2131 B B B
Electric power generation, transmission and distribution 10 2211 A C C
Natural gas distribution, water and other systems 11 221A A A A
Residential building construction 12 230A A C C
Non-residential building construction 13 230B A C C
Transportation engineering construction 14 230C A C C
Oil and gas engineering construction 15 230D A C C
Electric power engineering construction 16 230E A C C
Communication engineering construction 17 230F A C C
Other engineering construction 18 230G A C C
Repair construction 19 230H B C C
Other activities of the construction industry 20 230I B C C
Animal food manufacturing 21 3111 A B B
Sugar and confectionery product manufacturing 22 3113 A B B
Fruit and vegetable preserving and specialty food manufacturing 23 3114 A B B
Dairy product manufacturing 24 3115 A B A
Meat product manufacturing 25 3116 A B A
Seafood product preparation and packaging 26 3117 A B A
Miscellaneous food manufacturing 27 311A A B B
Soft drink and ice manufacturing 28 312A A B B
Breweries 29 312B A B B
Wineries 30 312C A B A
Distilleries 31 312D A B B
Tobacco manufacturing 32 3122 A B B
Textile and textile product mills 33 31A0 A B A
Clothing manufacturing 34 3150 A B A
Leather and allied product manufacturing 35 3160 A B A
Wood product manufacturing 36 3210 A B A
Pulp, paper and paperboard mills 37 3221 A B A
Converted paper product manufacturing 38 3222 A B A
Printing and related support activities 39 3231 A B B
Petroleum and coal products manufacturing 40 3241 A B B
Basic chemical manufacturing 41 3251 A B A
Resin, synthetic rubber, and artificial and synthetic fibres and filaments 42 3252 A B A
Pesticides, fertilizer and other agricultural chemical manufacturing 43 3253 A B B
Pharmaceutical and medicine manufacturing 44 3254 A B B
Miscellaneous chemical product manufacturing 45 325A A B A
Plastic product manufacturing 46 3261 A B A
Rubber product manufacturing 47 3262 A B A
Cement and concrete product manufacturing 48 3273 A B B
Miscellaneous non-metallic mineral product manufacturing 49 327A A B A
Primary metal manufacturing 50 3310 A B A
Fabricated metal product manufacturing 51 3320 A B A
Machinery manufacturing 52 3330 A B A
Computer and peripheral equipment manufacturing 53 3341 B B B
Electronic product manufacturing 54 334A A B B
Household appliance manufacturing 55 3352 A B A
Electrical equipment and component manufacturing 56 335A A B A
Motor vehicle manufacturing 57 3361 A B A
Motor vehicle body and trailer manufacturing 58 3362 A B A
Motor vehicle parts manufacturing 59 3363 A B A
Aerospace product and parts manufacturing 60 3364 A B A
Railroad rolling stock manufacturing 61 3365 B B A
Ship and boat building 62 3366 A B A
Other transportation equipment manufacturing 63 3369 A B A
Furniture and related product manufacturing 64 3370 A B A
Miscellaneous manufacturing 65 3390 B B B
Wholesale trade 66 4100 A C C
Retail trade 67 4A00 A C C
Air transportation 68 4810 B B B
Rail transportation 69 4820 C C C
Water transportation 70 4830 C C C
Truck transportation 71 4840 A B B
Transit and ground passenger transportation 72 4850 A A A
Pipeline transportation 73 4860 A A A
Scenic and sightseeing transportation and support activities for transportation 74 48A0 C C C
Postal service and couriers and messengers 75 49A0 A A A
Warehousing and storage 76 4930 C C C
Motion picture and sound recording industries 77 5120 A B A
Radio and television broadcasting 78 513A A A A
Pay TV, specialty TV and program distribution and telecummunications 79 51A0 A A A
Publishing industries, information services and data processing 80 51A0 A B B
Monetary authorities and depository credit intermediation 81 5A01 A A A
Insurance carriers 82 5A02 A A A
Lessors Of real estate 83 5A03 C B C
Owner-occupied dwellings 84 5A04 C C C
Rental and leasing services and lessors of non-financial intangible ass. 85 5A05 B B B
Other finance, insurance and real estate, and management of companies 86 5A06 C C C
Advertising and related services 87 5418 A B B
Architectural, engineering, legal and accounting services 88 541A A B B
Other professional, scientific and technical services 89 541B A B B
Administrative and support services 90 5610 B C B
Waste management and remediation services 91 5620 B C B
Educational services (except universities) 92 611A C C B
Health care services (except hospitals) and social assistance 93 62A0 B B B
Arts, entertainment and recreation 94 7100 B B B
Accommodation and food services 95 7200 B B B
Repair and maintenance 96 8110 B C C
Grant-making, civic, and professional and similar organizations 97 813A C C C
Personal and laundry services and private households 98 81A0 B B B
Religious organizations 106 NP11 C C B
Non-profit welfare organizations 107 NP12 C C B
Non-profit sports and recreation clubs 108 NP13 C C B
Other non-profit institutions serving households 109 NP19 B B B
Non-profit education institutions 110 NP20 B B B
Hospitals 111 GS11 B B A
Government residential care facilities 112 GS12 A B A
Universities 113 GS21 B B A
Government education services 114 GS22 B B A
Other municipal government services 115 GS40 B B A
Other provincial and territorial government services 116 GS50 A A A
Other federal government services and defence services 117 GS60 A A A
1. The quality ratings are determined with reference to the lastest benchmark year.
2. Intermediate inputs only.
Note:
* Ratings
A - most reliable
B - reliable
C - acceptable


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