An interindustry analysis of Tennessee with emphasis on agriculture

This study was concerned with the interrelationships of agriculture and agricultural related industries and nonagricultural industries in the Tennessee economy. The principal objective of the study was to establish quantitative measures of those interrelationships and to interpret the economic significance of the interrelationships. The method adopted to establish these interrelationships was the basic Leontief input-output model using linear and homogeneous production functions. The Leontief model involved four mathematical procedures. First, the flow table was constructed to show how and to what extent goods and services were distributed in the Tennessee economy. Second, a matrix of technical coefficients was computed to demonstrate the input structures of all producing sectors. Third, a matrix of interdependence coefficients was computed in order to measure direct and indirect relationships between all sectors. And fourth, unit and weighted final demand multipliers were computed to measure sectorial influence on the state and regional economies. This study used two variations of the Leontief input-output model. The first model was a statewide model defining thirty-four intermediate sectors and five final demand sectors. The second variation was an interregional model which divided the State of Tennessee into three regions: east, middle, and west. The interregional model included nineteen intermediate sectors and eleven final demand sectors. The statewide and interregional flow tables revealed that goods and services produced by intermediate producing sectors in the state flow more westward than eastward. The flow tables also revealed that the Tennessee economy is final demand orientated. The statewide and interregional technical coefficients implied that manufacturing and service sectors in the state imported a large part of their inputs; a result which coincided with the implications of the flow tables. The interdependence coefficients revealed that the intermediate producing forces in the state are not extensively linked together. Neither direct nor indirect relationships were, in general, very great. But there was some measurable, indirect relationship between all sectors in the economy. The unit multipliers revealed that primary agriculture and agricultural processing sectors had larger unit multipliers, in general, than manufacturing and service sectors. However, manufacturing and service sectors, in general, had larger weighted final demand multipliers than primary agriculture and agricultural processing sectors. The general conclusion of the study was that the role played by agriculture in the state economy would be grossly underestimated if only direct interrelationships were taken into consideration.