Russians Interested
The Russians have also manifested interest in input-output analysis, and are now training people to perform the necessary operations. Leontief, who visited his native Russia briefly last spring, believes that although they are "having a hard time justifying the use of an analytical tool developed by a capitalist," the Russians will resort to it soon. Certain revisions have to be made in U.S.S.R. statistical methods in order to facilitate use of the analysis, Leontief added.
Underdeveloped Countries
Underdeveloped countries also have to overcome difficulties in formulating tables to use for planning. Although their economies are relatively uncomplicated, problems do arise in the collection of data, according to Mrs. E. W. Gilboy, assistant director of the Research Project and lecturer in Economics. Another difficulty for them is collecting funds for purchase of the giant computers necessary to construct the chart after the data is secured. Spain, which set up a table several years ago, had to send information to Italy, where computer work was done on Italian machines.
The Economic Research Project was set up 10 years ago by a grant from the Rockefeller Foundation to Leontief, "for research in the structure of the United States economy." Beginning in 1950, small Air Force grants were received, but these were discontinued in 1952, when the Administration changed. Ford Foundation then joined in support of the project. Since then a small grant from the National Science Foundation for large scale computation experimentation has also been donated.
Basic Research
The Project's work is not to construct actual tables. The cost of collecting the extremely large amount of data is beyond the scope of so small a group. The 25 Faculty members in the project conduct basic research, investigating different facets of Leontief's model. Among the studies now in progress is one on technological change and the methods through which new techniques are diffused through industry--this is coordinated with Leontief's work on a dynamic model. Application of the table to regional problems is being perfected; while various sectors of the economy--particularly household consumption and natural resources--are being given special attention.
About every 18 months, the Project prints a report on research to date, which has been sent free to interested people all over the world. The demand for these reports has become so great recently. Mrs. Gilboy remarked, that soon some charge will have to be made. Leontief plans to publish a series of small volumes to present the results of research made since 1953, when his last book (The Structure of the American Economy) on the project, was released.
The Research Project building, locat- ed on Massachusetts Ave., near the Law School also serves as a training center for interested visitors from foreign countries. Both Ford and Rockefeller Foundations assign Fellows to study research being conducted by the Project for periods extending from three to six months. Private groups also sponsor visitors. According to Mrs. Gilboy, the growing number of these students is beginning to tax facilities of the Project. Both working space and staff assistance are available to the Foundation-sponsored Fellows.
In spite of the adoption of input-output analysis by 35 interested foreign countries, the United States government has completely neglected the system in recent years. The last table devised for the U. S. economy was the 450-category chart made up in 1947. Interest at that time was occasioned by a wish to know the impact throughout the economy of an expansion of government spending on arms--the extent to which other types of production would have to contact, and the "bottle necks" that might arise.
Value Demonstrated
Wartime experience, when demand is largely in the hands of the Federal Government, demonstrates the value of a realistic guide to such future events: it could assist authorities to control scarce materials, to encourage production or substitution for them well in advance, and to arrange for more imports.
Recently, however, the Department of Commerce announced plans to publish a new small table. This move shows that the government is actually interested in the analysis, and Leontief's predictions of wider U. S. government use in the future seem nearer fulfillment.
Small - Scale Table
The small-scale table that the Department plans, Mrs. Gilboy pointed out, is not really adequate for an economy as large and diverse as this country's. One with at least 450 industrial sectors is needed. Only the government or large scale industries could afford the million dollar cost of such a project. One reason for the government's lack of enthusiasm seems to be a general fear of "centralized planning.'
Interest in European nations has been prompted by import-export considerations. Underdeveloped economies are anxious to pursue a rapid planned growth process, which is greatly facilitated by this type of analysis.
Commercial Uses
Outside the government American industries and local groups have developed several input-output tables. The Pennsylvania Railroad has based one on industries and commercial establishments that have grown up alongside its tracks. A massive report on the results of its research was published by the railroad. "This is not an academic project," Leontief remarked, "but it is practical." In St. Louis a table based on the metropolitan area has been constructed. A banking house in Berkeley, Calif., has also completed a local chart.
Industrialists Benefit
The value of input-output analysis to individual industries and local areas is perhaps more limited than its value to a national government, but an industrialist does benefit by knowing the extent to which demand for his product might be affected by economic change. Input-output analysis will not replace, and was not intended to replace the entrepreneur's vital role of seeking profits by anticipating changes in taste and technology, but it does provide throughout the economic system many useful indicators of the results of a change--large or small--in one of the sectors