Policy Design from a Network Perspective: Targeting a Sector, Cascade of Links, Network Resilience

Tugrul Temel and Paul Phumpiu

MPRA Paper from University Library of Munich, Germany

Abstract: A computational methodology is proposed to: (i) characterize the upstream and/or downstream network of a targeted sector i, (ii) uncover the cascade of layers of links in the network, and (iii) measure the degree of network resilience. The methodology is implemented using Turkiye's 2018 input-output data to characterize the gaps and the type of policy reforms required to address them in the context of the targeted manufacturing sector. Market and competition policy reforms are discussed from a network perspective in such a way as to enhance the productivity of the manufacturing sector. Three findings are noteworthy. First, production activities of the manufacturing sector have strong links with regulated general purpose service sectors, including financial, energy-water-gas, and transport and ICT. Therefore, improved competition in the manufacturing sector will not necessarily increase its productivity even if competition policies perfectly support the market for manufacturing products. Second, the source-sink structure of Turkiye's manufacturing network illustrates that the manufacturing sector is the most dominant, whereas transport-ICT, energy-water-gas, and construction sectors are the potential sinks where large chunk of input flow ends up. Third, the cascade of three layers of links suggests that the upstream network of the manufacturing sector has a moderate level of resilience against the complete disruption of the intermediate layer.

Keywords: graph theory; production network; network resilience; Turkiye; policy planning (search for similar items in EconPapers)
JEL-codes: C45 C67 D24 O21 O33 (search for similar items in EconPapers)
Date: 2023-09-04
New Economics Papers: this item is included in nep-hme and nep-ict
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