The Value Conversion Ratio: A Framework for Public Policy

The input–output model is an important analytical tool in regional economics because it represents economic sectors and their productive interconnections. This study proposes a new analytical framework based on two multipliers—one for production and another for value added—from which a Value Conversion Rate (VCR) is derived. The VCR measures the efficiency with which changes in output are converted into value added. Based on these indicators, a quadrant-based graphical structure is developed that combines the intensity of the production multiplier with the VCR. This structure highlights their possible combinations and indicates whether the propagation of production effectively translates into value-added generation, offering a new perspective for interpreting productive structures. By integrating propagation capacity with the efficiency of value creation, the VCR framework provides analytical support for economic diagnostics and for policies aimed at sustainable economic and social development. The approach is illustrated using the 2019 input–output matrix of the state of Rio Grande do Sul, Brazil.