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Abstract

The objective of this study is to determine the direct and indirect economic impacts of the 2010-2011 Foot-and-Mouth Disease (FMD) outbreaks in Korea using a supply-driven input-output (IO) model. The supply-driven model is better than a standard demand-driven IO model in situations where the event alters sectoral production not the final demand. Obviously, the FMD outbreak is a supply reduction question and the standard IO approach may not completely reflect all the economic impacts. Both backward linkage (upstream sectors) and forward linkage (downstream sectors) effects of the FMD outbreaks are measured. The study shows that backward linkage effects in feed and manufacturing sectors and forward effects in dairy and livestock processing sectors are strong. Total direct and indirect economic impact is estimated to be 7.6 trillion Korean Won which is much larger than the economic impact from the standard final demand-driven IO analysis.

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