Town-Hinterland Relations: A Social Accounting Matrix Approach

Abstract

A Social Accounting Matrix (SAM) can be seen as an analytical and predictive tool to represent and forecast system-wide effects of changes in exogenous factors. A great advantage of a SAM is its ability to capture a wide variety of developments in a (macro-) economy, as it links production, factor and income accounts. We use SAMs in this chapter because it focuses on the current economic structure of towns and hinterland, and SAMs can handle a very disaggregated sector structure. In this chapter we use 30 European SAMs describing the local town and hinterland economy. First of all, we will discuss some earlier SAM-based studies, the SAM framework, and the advantages and disadvantages of a SAM approach. Secondly, the development of regional or local SAMs will be described. We then discuss the results. First of all, we show some analytical results, describing the economic structure of European small and medium-sized towns. This is followed by an output and income multiplier analysis and the identification of key-sectors in rural areas.