2.0 INTRODUCTION
Multiplier analysis has been widely used to estimate the impact on the New Zealand and regional economies of various projects and events and the Ministry of Agriculture & Fisheries has had a long term interest in the impact on the economy of changes in agricultural production. A recent project (Butcher, 1993) has provided a rough estimate of a 1990/91 inter-industry table, with the purpose being to provide more up-to-date estimates of multipliers. It seems particularly important to update estimates of multipliers in light of the significant changes in the New Zealand economy over the last decade. These changes have included the decline of industries which have not been able to remain internationally competitive once protection is removed, growth in competitive industries, increases in labour productivity, and changes in capital intensity.
The aims of this project are to identify trends and changes in the following areas over the period 1976/77 to 1990/91:
- Output, income and employment multipliers;
- Employment: output ratios;
- Household income: gross output ratios; and
- Employment generated directly and indirectly by agricultural production.
Knowledge of the trends in these areas will give some guidance as to likely future movements and will give users of multipliers an idea of how confident they can be of their analysis of current projects when they are using dated multipliers.
The results, particularly as they relate to cropping and horticulture, are subject to a significant degree of error. The main sources of error are the price indices used for cropping and horticulture, and the changes in definitions of farming in the inter-industry tables. A further problem lies in the volatility of farm output due to weather and hence volatility in input:output ratios. This latter problem is not believed to have been particularly significant in the results reported here since average yields (kg of wool and milk fat per animal, lambing and calving rates) in the years being compared were reasonably representative of the trend rates over the period.
Data for 1990/91 is derived from a non-survey inter-industry table of the New Zealand economy. It is possible that later survey data will reveal significant errors in some pans of the table. However, technical coefficients for agriculture have been inspected and adjusted to conform with information about shifts in the structures of the farming industries into the early 1990's, and hence are believed to be reasonably reliable.
Contact for Enquiries
Rural Affairs Coordinator
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0675
Fax: +64 4 4 894 0745
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