NO. 88. SECTORAL AND REGIONAL MULTIPLIER VALUES OF THE GREEK ECONOMY
N. Rodousakis, T. Tsekeris | ISBN: 978-960-341-155-0 (Print) ISBN: 978-960-341-156-7 (Online)
This study aims to provide original analytical estimates of sectoral and regional multiplier values for the Greek economy, offering a systematic and theoretically consistent framework that captures the structure and spatial heterogeneity of production, demand, and employment in the country. It relies on the input-output (IO) methodology, which represents a reliable and effective approach to quantifying the economic interdependencies between industries and regions.
The input-output analysis, as embedded in the national accounting systems, captures the technical interrelations between the sectors of the economy, the goods and services they produce, and the flow of inputs required across production chains. A key advantage of this approach is its relative stability over time, as structural changes in economies tend to be gradual. Therefore, the use of the most recent available IO tables—despite their publication lag—remains analytically robust. Derived multipliers summarise these complex relations into clear, synthetic indicators that reflect the capacity of a sector or a region to generate output, employment, or income in response to a unit change in final demand. In this regard, the IO framework offers a general equilibrium perspective suitable for understanding and planning structural policies.
By contrast, econometric models often exhibit limitations, including an inability to fully capture intersectoral linkages, high sensitivity to structural breaks, reliance on contemporaneous data quality, and the requirement to distinguish between normal and crisis periods. These constraints render IO analysis more appropriate for the scope of this study, which is to provide an integrated understanding of multiplier effects across all sectors and regions of Greece.
The analysis further highlights the importance of regional IO frameworks. Spatial inequalities, both across and within European countries such as Greece, are persistent and marked by long-term productivity and income disparities between core and peripheral regions. In this context, multiplier effects serve as important indicators of the capacity of regions to respond to increases in demand and generate broader macroeconomic benefits. Regional analysis of multiplier values allows for the identification of best-performing and underperforming regions, in line with key policy objectives related to output, employment, and productivity growth.
Most existing studies in Greece focus on specific regions and apply location quotient (LQ)-based techniques to regionalise the national IO table. These have included assessments of regional investment programmes and agricultural reforms, particularly in areas such as Peloponnisos, Western Greece, Crete, and Macedonia. While informative, these studies are constrained by their localised scope, the simplistic assumptions of traditional Leontief inverse multipliers, and their limited capacity to capture import trade dependencies.
This study distinguishes itself by employing an advanced regionalisation of the 2015 Greek national IO table, based on an augmented Flegg’s Location Quotient (FLQ) methodology that accounts for market size and productive specialisation. Furthermore, it models the economy under conditions of openness in a joint production framework. In this way, it provides estimates of output, employment, and productivity multipliers that are not only internally consistent but also comparable across all Greek regions and sectors.
The main objective of the study is to identify and quantify intersectoral and regional multiplier effects, allowing for a nuanced understanding of structural asymmetries across the Greek economy. Several hypotheses are tested to evaluate the spatial and sectoral heterogeneity of multipliers, and to assess the impact of imports on the output capabilities of different regions. The results reveal considerable variation in multiplier effects, which reflect the distinct productive structures and trade dependencies of each region.
Based on the estimated multipliers, the study classifies the Greek regions into four main groups. The first group includes the island regions of Notio Aigaio, Voreio Aigaio, and Ionia Nisia, which exhibit high output multipliers, forming a distinct economic cluster. The second group comprises regions such as Western Greece, Attiki, Peloponnisos, and Crete, which demonstrate moderately high multiplier values. The third and fourth groups, encompassing Eastern Macedonia and Thrace, Central and Western Macedonia, Epirus, Thessaly, and Central Greece, exhibit lower multiplier values, indicating more limited capacity for economic propagation.
A key insight from the analysis is that regions with a high degree of dependency on imported goods tend to exhibit lower output multipliers. This suggests that policies promoting import substitution and enhancing local production capacity must be pursued with both sectoral and regional targeting, so as to increase domestic linkages and foster a more balanced pattern of regional development. Excluding imports from the analysis would disproportionately benefit Attiki and further widen existing disparities.
The study also highlights a negative correlation between the dominance of the primary and industrial sectors in a region’s economic structure and its average output multipliers. This finding reflects the limited internal linkages typically associated with such sectors. Additionally, it challenges the assumption that high productivity automatically translates into strong multiplier effects. In fact, regions with high output multipliers do not always align with those that display high productivity. This divergence underscores the need for a more comprehensive development strategy that considers multiplier values, productivity, import dependencies, and other structural characteristics in tandem.
In this context, the policy relevance of the study is manifold. The findings support the formulation of integrated regional development strategies, the targeting of sectoral investments, and the implementation of reforms designed to enhance both the depth and breadth of regional production systems. The evidence indicates that demand management strategies focused solely on regions with high output multipliers may result in short-term gains without addressing long-term structural weaknesses. Conversely, a more balanced approach can stimulate convergence, resilience, and sustainable growth.
Finally, the study offers a perspective for future research and policy development. It proposes that the methodology employed here could form the core of a broader interregional or multiregional input-output framework. Such a framework would enable the estimation of the interregional economic effects of infrastructure investments, through improved accessibility and more integrated regional value chains. In the context of evolving global economic challenges—digitalisation, decarbonisation, and demographic change—the need for such an advanced modelling approach becomes even more pressing.