THE BLACK BOX OF ECONOMIC INTERDEPENDENCE IN THE PROCESS OF STRUCTURAL CHANGE. EU AND EA ON THE STAGE

Abstract

The search of a hierarchy in economic systems, using triangulation method, has a long tradition in economics.  This study, after revisiting Authors’ optimization algorithm, based on ”path restricted unimodularity”, tries to cast new light into the black box of the rules governing the transformation of the economic structure in growth process.  Inter-temporal, cross-sectional and simulated comparisons have been made on European Community, Union and Euro Area input-output tables (1965-2007) aiming at verifying above all whether the asymmetrical hierarchy prevailed or not.  The main results prove that the agents (branches) work in competition rather than in cooperation, thus the dominance criterion rules inducing asymmetry.  Contrary to expectations, the richest Euro Area presents a more hierarchical structure than European Union and is more reactive to any fluctuation of final demand.  Also the classical Agribusiness complex, important for investigating new comers, presents a highly inductive triangular arrangement and plays an intermediate function.