Professor Leontief's Contributions: Acceptance Speech for International Leontief Award
Shuntaro SHISHIDO (Professor Emeritus, International University of Japan and University of Tsukuba)
Seven laureates of the International Leontief Centenary Award for 2006 include such prominent economists as Professor Lawrence Klein (University of Pennsilvania) and Robert Solow (MIT) along with Professor Shishido. The award ceremony was held at the Leontief Center in St. Petersburg, Russia, on September 30, 2006.
Professor Wassily Leontief was a scholar on a global scale, contributing not only to contemporary economic theory, but also to the advancement of political thought in the global environment and to peacemaking through his various energetic activities. It is to be greatly regretted that the present 21st Century can no longer look to his ingenious wisdom for the solution to growing international conflicts. As one of his students, now I feel the growing importance of the Leontief approach to deal with the increasing complexity of the 21st Century. At this critical time, it is such a great honor for me to be awarded the International Award of Wassily Leontief at his home place, St. Petersburg in Russia.
At the time I was an advisor in the Japanese government, the government started to launch the famous National Income Doubling Plan over the period from 1960 to 1969. Many people, however, including famous economists, rather opposed such an ambitious government economic target of 7% growth in terms of balance of payments and capacity constraints which were likely to aggravate inflationary pressure. It was Japan's econometric planning model with a Leontief framework, formulated by the Economic Planning Agency of the government to which I belonged, that presented a set of consistent sectoral growth forecasts on a 60-sectoral basis. The scenarios, including baseline and several growth alternatives, were welcomed particularly by industry circles and trade unions, and promised higher economic growth. The response of the stock market was really dramatic as you observed in Leontief's Memorial video-tape performance. Mr. H. Ikeda, the then Prime Minister, decided to adopt 9 percent growth in real terms with the result of 10% on average during the 1960s, thus implying that his income doubling target had been achieved in seven years. The 60-sector Leontief model linked with a Keynesian macro-econometric model proved to be an ideal scientific tool for indicative guide line policy in the market economy, and promised to reduce future risk. The model was carefully handled by the Econometric Committee of the government and was successfully used until the late 1980's. The above story is discussed in more detail in my article in IIOA's publication in remembrance of Leontief.
The compilation of the Leontief I-O table has been widely applied in Japan for both national and regional development. In 1991, business leaders, headed by Sohei Nakayama of the Industrial Development Bank of Japan, supported a new academic group for founding an association, PAPAIOS, the Pan Pacific Association of Input-Output Study. Various types of joint research projects between business, university and government have been conducted with respect to a Leontief type analysis and its variants.
Particularly noteworthy is the active support of business leaders for long-term demand forecasts of investment, prices, environment, new technologies, etc., in the international context, i.e. multi-country I-O modeling based on a vast amount of international data.
Since the early 1990s, Japan's growth rate has tended to decelerate from 5% in 1980's to 2% as a result of mismanagement of macro economic and structural policies. However, in the light of the stimulating international environment, the Japanese growth now seems to be accelerating, although its pace is still slow due to the high rate of unemployment and huge external surplus. In response to a growing demand from business and government, our modeling project has been exploring Japan's growth potential in the global context, with special reference to environment, food, energy and spill-over of new technologies. Since 1999, our Leontief-Keynesian model (DEMIOS) based on 80-sectors and macroblocks including disaggregate fiscal monetary variables has been under way, presenting various proposals with alternative policy scenarios. Particularly noteworthy is the North-East Asian economic scenario and Japanese contributions which was produced by integrating our DEMIOS with its North-East Asian satellite model.
Finally I would like to express again my heartfelt gratitude to the Leontief Center for having an opportunity to be one of the laureates of the Leontief Centenary Award, and to make this speech in the context of our input-output research activities.
(Posted here with permission of Professor Shuntaro Shishido)