ABSTRACT
This chapter provides a brief description of production functions in general and their relation to Social Accounting Matrices (SAM). It looks at the composition and structure of SAMs. The chapter explores the SAM's usefulness for policy analysis as well as a forecasting tool is investigated. IO and SAM are important examples of multi-sectoral models. In a nutshell, SAM is a unified way to present a set of accounts for an economy that describes the circular flow. The SAM approach serves to emphasise the fact that the distribution of employment opportunities and living standards in a society is inextricably interwoven with the structure of production and the distribution of resources. The simplest and the most direct way to create a model of the economic processes based on SAM are through the 'Multiplier Analysis'. However, as the SAM is a square matrix, and the coefficients in every column must sum up to unity, there is 'no the inverse' to the matrix.
