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I'm struggling to get the meaning of the assumption underlying the construction of the input-output tables, that is, the proportionality assumption. I read:

When materials offshoring is measured by estimating imported intermediate inputs, a common assumption used is that an industry's imports of each input, relative to its total demand, is the same as the economy-wide imports relative to total demand: this is the so-called "import comparability" or "proportionality" assumption.

What does it mean? Can you make an example?

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economy-wide imports relative to total demand

Say the US economy uses 1 billion USD worth of engine parts a year (total demand), 200 million USD worth of which are imported (economy-wide imports). So 20% of engine parts used are imported.

Now say that the US areospace industry uses 100 million USD worth of the engine parts, so it is responsible for one tenth of the total US demand. Your quote says that they will assume that 20% of this is imported and 80% is domestically produced, just like for the rest of the country.

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  • $\begingroup$ It is what I understood, but it is a very strong assumption, I have to say. Thanks for the confirmation! $\endgroup$
    – Maximilian
    Mar 26 at 19:45

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