THE NETWORK-BASED IDENTIFICATION OF KEY SECTORS IN INDUSTRIAL STRUCTURES

The identification of key sectors plays a crucial role in stabilizing the economy, especially during economic recession. This paper proposes a network-based model to measure the importance of sectors. The advantage of this approach is that, both the network effect formed by the process of intermediate consumption between sectors, and individually idiosyncratic effect resulted from final output of each sector, can be taken into account. Further, we analyze the importance of industrial network itself to the whole economic system, and make it a bridge to couple network effect and idiosyncratic effect. We illustrate our methodology through two case studies: the industrial structures of China and U.S., which lead to some interesting insights.