I. Introduction

The 2018 Input-Output (I-O) Accounts of the Philippines is the twelfth (12th) of a series of inter-industry studies of the Philippine economy since the construction of the first benchmark I-O table in 1961. The first two series, 1961 and 1965 I-O accounts, were prepared and published independently by the National Economic Council (the forerunner of the National Economic Development Authority, NEDA) and the Bureau of Census and Statistics (the then National Statistics Office, NSO). The next three tables (1969, 1974 and 1979) were collaborative works of these two offices. With the creation of the National Statistical Coordination Board (NSCB), the succeeding series, 1985, 1988, 1994, and 2000 were produced as a joint undertaking of the NSCB and NSO. With the virtue of Republic Act No. 10625, the Philippine Statistics Authority (PSA) was created from the merging of the NSCB, NSO, Bureau of Agricultural Statistics (BAS), and Bureau of Labor and Employment (BLES). As the central statistical authority of the Philippine government on primary data collection and production of statistics, the PSA released the two latest I-O tables of 2006 and 2018.

The 2018 Benchmark I-O presents the latest structure of the economy following the results of the overall revision and rebasing to 2018 of the national accounts. Among others, this covers the (1) digitalization of the economy; (2) emerging and highlighted industries and demand commodities such as information and communication, accommodation and food service activities, education, and human health and social work activities; (3) inclusion of valuables; (4) use of new classification based on the latest standards; and (5) advancement in measurement techniques and methods.

The 2018 Benchmark I-O Accounts provides disaggregative measures of the economic structure of the country, providing a detailed description of the process of production and the use of goods and services (or products) as well as the income generated by production. Thus, it provides planners and policymakers with a more in-depth view of the economic structure towards a more effective and specific translation of economic development plans and programs. It consists of an integral set of tables and matrices which shows the interrelationships between industries in the economy in terms of their production and uses of their products as well as imported products.

The 2018 I-O includes the I-O Transaction Table, the Technical Coefficient Matrix, and the Leontief Inverse Matrix with 16x16, 80x80, and 240x240 dimensions each.

Also included in the 2018 I-O release was the 2018 Input-Output industry classification for the 16, 80 and 240 industries and commodities.

II. Data and Data Sources

III. Methodology

III.1. Basic Framework

To facilitate input output analysis, three main tables are produced: the transactions table, the table of technical coefficient, and, the table of interdependence coefficient (inverse matrix).

1. The Transactions Table

The Transactions Table, which is the basic table of the I-O system, records all production flows within the economy during the specified year/period. To prepare the Transactions Table, the economy is divided int I-O sectors based on the 2019 Philippine Standard Industrial Classification (PSIC). Other classifications that were bridged into the I-O sectors were the 2009 Philippine Classification of Individual Consumption According to Purpose (PCOICOP) and the 2015 Philippine Standard Commodity Classificatio (PSCC). The output of each industry is distributed along a row of the table while the corresponding column records the inputs of the sector. Entries in a row present how the output of a certain sector is disposed, either as intermediate sales to other industries or as final deliveries of goods and services for (a) household final consumption expenditure, (b) government final consumption expenditure. (c) gross capital formation, and, (d) export of goods and services. Entries in a column, on the other hand, reflect the value of inputs utilized to produce the output of the sector. These are comprised of the intermediate inputs which include the materials, supplies, and services purchased from other industries; and the primary inputs which are payments to the factors of production in the form of (a) compensation of employees, (b) taxes on production and on imports paid to government, and (c) depreciation allowance (or consumption of capital allowance) for the use of capital; and operating surplus paid to entrepreneurs.

2. The Table of Technical Coefficient

The Technical Coefficients Table or direct requirements matrix presents the unit cost structure of production in an economy. This describes the coefficient value of intermediate inputs and primary inputs required in the production of one unit of output of the industry. The technical coefficients are derived by dividing each element in the intermediate transactions matrix by the total input of each sector as shown in the column total.

3. The Inverse Matrix

The Inverse Matrix or Leontief Matrix shows the production required, directly and indirectly, per peso of delivery to final demand. The elements in a column correspond not only to the direct requirements but also to the indirect sectoral output requirements needed to meet a unit increase in the final demand for that industry’s output. To illustrate, the effect of an increase in demand for a certain product/commodity does not end with its required direct intermediate inputs. It generates a long chain of interaction in the production processes since each of the products/commodities used as inputs need to be produced, and will, in turn, require various inputs.  One cycle of input requirements needs another cycle of inputs, which in turn requires another cycle. The sum of all these chained reactions is reflected in the inverse matrix.

For I-O analysis, the Leontief matrix is very important because it provides the link between production and the final demand. This can be used to calculate the required output levels of a postulated set of final demands. The matrix is calculated as the inverse of the technology matrix (I - A), where A is an input coefficient and I is the identity matrix.

Other I-O analysis that can be calculated using the Inverse Matrix include multiplier analyses (income and employment multipliers); backward (index of power of dispersion, and forward linkages (index of sensitivity); price cost analyses, and impact analyses.

III.2. Basic Input-Output Assumptions

Basically, two assumptions are considered in constructing the I-O table, namely: homogeneity and proportionality. By homogeneity, it is assumed that (a) each industry produces a single output (i.e., all the products of the industry are either perfect substitute for one another or are produced in fixed proportions); (b) each industry has a single input structure (i.e., one which does not vary in response to changes in product mix); and, (c) there is no substitution between the products of different industries. 1/ In effect, the same product or close substitutes could not be contained in two different industries.

On the other hand, proportionality requires that in any productive process all inputs are used in strictly fixed proportions. Any increase or decrease in inputs will result to a proportional increase or decrease in the level of output. Hence, a process that is labor intensive cannot be substituted by the capital-intensive alternative. Regardless of the extent of capacity expansion or reduction, the same fixed ratio is maintained.

IV. Concepts and Definition of Terms

1. The Transaction Table records all production flows within the economy during the specified year/period. Entries in a row show how the output of a certain sector is disposed while entries in a column reflect the value of inputs utilized to produce the output of the sectors.
2. The Technical Coefficients Table or direct requirements matrix presents the unit cost structure of production in an economy. This describes the coefficient value of intermediate inputs and primary inputs required in the production of one unit of output of the industry.
3. The Inverse Matrix or Leontief Matrix provides the link between production and final demand. It shows the production required, directly and indirectly, per peso of delivery to final demand.

V. Dissemination of Results

The Input-Output Accounts is being released every six (6) years. The latest 2018 I-O Table was released on 09 December 2021.

The next update of the I-O Table will coincide a year after the releases of the two major data sources of the accounts: the 2024 CPBI and the 2024 IOSPBI.

The web release materials include press release, statistical tables, infographics, publication report, and social cards.

VI. Citation

Philippine Statistics Authority. (2022). Technical Notes on the 2018 Input-Output 
Accounts. https://psa.gov.ph/statistics/supply-and-use-input-output/technical-notes

VII. Contact Information

Mr. Mark C. Pascasio
Chief Statistical Specialist 
Expenditure and Integrated Accounts Division 
(02) 8376-2024
m.pascasio@psa.gov.ph

For data request, you may contact: 
Knowledge Management and Communications Division 
(02) 8462-6600 loc. 820
info@psa.gov.ph | kmcd.staff@psa.gov.ph