Qualitative Input-Output Analysis of North Carolina Forest Sector Supply Chains

Abstract

Despite its contributions to the state economy, relatively little is known about North Carolina’s forest-based
economic network. In order to further understanding, qualitative input-output analysis was applied to determine
the number of supply chains present within the state’s forest industries. A 2014 input-output model of the North
Carolina economy was constructed using the IMpact analysis for PLANning database. The inter-industry
transactions table was first normalized by dividing the cells contained in each column by their respective sum.
This illustrated the relative contribution each row industry provided to producing one dollar of each column
industry’s output, where the focus here was on the 29 sectors considered to be forest-based. Cells greater than
or equal to $0.01 were re-coded as “1,” else “0.” This revealed direct purchases made by the forest sectors of
measurable size, and sequentially raising this new binary matrix to higher powers illustrated the number of
indirect connections between a forest sector and its upstream suppliers. While forest industries’ direct links to
other sectors numbered about 250, more than 15,000 total supply chains of three or fewer links were discovered.
Forestry and Logging contained less supply chains than the manufacturing industries (Wood Products, Paper,
and Wood Furniture) at each measured length. This is a first step to tracing the paths of transmission taken by
the forest industries’ multiplier effects through a regional economy. The benefits to understanding these pathways
can include not only identifying where potential bottlenecks inhibiting forest-based growth may reside but also
where economic assistance efforts could aid in tempering any negative effects associated with industry contraction.