Year of Publication

2021

Degree Name

Doctor of Philosophy (PhD)

Document Type

Doctoral Dissertation

College

Agriculture, Food and Environment

Department/School/Program

Agricultural Economics

First Advisor

Dr. Thomas O. Ochuodho

Second Advisor

Dr. Carl R. Dillon

Abstract

The Kentucky forest sector plays a key role in ensuring economic stability and enhanced livelihood for both rural and urban communities in the state. Therefore, it is important to implement policies and measures to sustain and improve the sector. One way to attract attention and engage policy makers in discussions on the need for measures to sustain the sector is to undertake comprehensive assessments that would enhance understanding of economic contributions and impacts associated with activities of the sector. To this end, appropriate analytical tools and techniques must be employed for detailed and accurate estimates. This dissertation has applied input-output (IO) and computable general equilibrium (CGE) modeling frameworks to shed light on the economic contributions and impacts of the Kentucky forest sector. This dissertation has four major essays. In essay one (Chapter 2), an impact analysis for planning (IMPLAN) IO modeling framework has been applied to conduct forest sector contribution analyses, where sectoral aggregation bias is investigated. Two commonly used approaches in forest economic contribution analysis are employed. A hierarchical clustering procedure is used to develop a new aggregation scheme for the Kentucky forest sector. The newly developed aggregation scheme is used to generate forest sector contributions estimates. The results are then compared to the sector’s contributions from the currently used aggregation scheme to derive aggregation bias.

In essays two (Chapter 3) and three (Chapter 4), panel data regressions are used to examine patterns of forest industrial structural change as induced by regional input factor compositions. Forest sector shares in employment and output are used as structural variables. This analysis is conducted on a cross-country database in essay two and for Kentucky forest sector in essay three. For the cross-country analysis, a traditional catch-up growth model is also used to assess the role of the wood and paper manufacturing industries in aggregate economic growth. This analysis is rooted in factor endowment-based structural change theorems that posit that an increase in the endowment of a factor will lead to an increase in the output of the industries that use that factor more intensively.

Finally, a single-region, static CGE model is used to estimate the potential economy-wide impacts of increased demand for Kentucky forest sector products in essay four (Chapter 5). This analysis attempts to provide a broader understanding of potential impacts of the Kentucky forest sector by tracing the ripple effects of expansion in the sector as induced by increased demand of its products. Key findings of these analyses are: (i) the IMPLAN modification approach generates bias-free contributions from aggregated industries; (ii) forest-based industries grouping based on production structures introduce more bias in contribution estimates when feedback effects are captured; (iii) regional factor compositions are important determinants of forest industrial structural change; (iv) simultaneous adjustments of both labor and capital is crucial for improving forest industrial structure; and (v) the forest sector is an important contributor to Kentucky’s economic growth but complementary policies may help improve household welfare as the sector expands.

Findings from this dissertation highlight evolution of Kentucky’s forest sector over time. These results will enhance understanding of economic contributions and impacts of the Kentucky forest sector. These results further provide insights and guidance on IO forest sector contribution analysis on how to get more-accurate and less-biased estimates. These are critical to reliably communicate the economic stakes associated with the performance of the forest sector in the state’s economy. Further, the results provide insights into the potential economic impacts of increased demand of forest sector products that could serve as evidence base for recommending policies to sustain the sector and enhance regional household welfare.

Digital Object Identifier (DOI)

https://doi.org/10.13023/etd.2021.237

Available for download on Saturday, July 08, 2023

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