A Quantitative Analysis of Sectoral Interrelationship in the Framework of the Structural Path Analysis

In this paper we analyze quantitatively the interrelationship between three major sectors of the Iranian economy, viz. agriculture, industry and services. We apply two approaches of Social Accounting Matrix (SAM), Namely; conventional multiplier and decomposed multiplier based on structural path analysis. The former illustrates the global effect of one account on the other without revealing the complexities of the socio-economic production processes. The latter depicts different paths as well as loops, circuits and network that have been generated in each path, thereby providing a wide scope to socio–economic analysis. In our study, we have used the Iran's 1996 SAM. The overall results suggest that in order to increase production, mere economic policies are not sufficient and therefore, supplementary socio –economic policies are required.