Measuring the economic landscape of Italy: Target efficiency and control effectiveness

Key industry analysis is traditionally used to evaluate the role, or the impact of a given industry in the economy, through the determination of convenient indices. In assessing the economic impact of a specific industry or a set of industries on an economy, Input-Output analysis has become a popular method. However there are problems in determining and analyzing all the information that can be obtained from this analytical approach. In this paper, we attempt rely on different contributions within the approach to provide a picture for identifying those industries that give a relevant contribution, either direct and indirect, to the output generation. We also propose two new indices extracted from the reduced form of the Leontief model, Leontief inverse, that show the relevance of each industry in determining the target-response of the highest policy control. The industry weights within these structures and their changes can give a picture on how the reaction of the structure changes through time. A comparison with existing methods is performed in an exercise on actual data on the Italian economy over the period of 1995 to 2011 focusing on the inter industry interactions.