Advances in Input-Output Analysis: Technology, Planning, and Development

By William Peterson | Go to book overview

CONCLUSIONS
The main findings from an analysis of 1975 interindustry relations in Indonesia, Korea (S), Mexico, and Pakistan can be summarized as follows:
1. The rankings of sectors according to the size of their linkage effects differ considerably, depending on whether these effects refer to output, income, or employment.
2. Linkage effects for employment are stronger for primary production than for manufacturing.
3. For manufacturing sectors, forward linkages are weaker than backward linkages.
4. Primary production sectors perform better as the destination of employment linkage effects than as the origin; the opposite holds for manufacturing sectors (confirming the findings in Bulmer-Thomas, 1982).
5. In addition, an analysis of the trade relations in 1975 and 1983 between the four developing countries (LDCS) discussed in this chapter and the EC reveals:

Labor intensities in the manufacturing sectors with a clear revealed comparative advantage in trade with the EC are higher on average than those for the manufacturing sectors with a clear revealed comparative disadvantage.

6. The correlation between the rankings of manufacturing sectors according to labor intensity and to their performance in trade is very weak.

The following conclusions can be drawn from the analysis of 1975 interindustry relations in the EC as well as in the LDCs concerned:

7. Production in the four LDCs selected is (far) more labor intensive than production of corresponding products in the EC (confirming findings in Lydall, 1975, and in Glismann and Spinanger 1982).
8. The package of manufactured exports of the four LDCs to the EC is more labor intensive than their package of manufactured imports from the EC, both when LDC technology is applied and when EC technology is applied.
9. A balanced increase of both imports and exports of $10 million, using the product structure of 1983 for trade between the four LDCs selected and the EC, would result in important employment gains in Indonesia and Pakistan, smaller gains in Korea and Mexico, and small employment losses in the EC.

APPENDIX A
Measuring Forward Linkages

The method for measuring forward linkages developed by Jones ( 1976) is as follows:

S = x + ̂-1 W (1)

In (1) the matrix of intermediate delivery flows (W) is premultiplied by the diagonal matrix of the inverse of production levels (x + ̂-1) to represent a stable structure of intermediate sales.

Further, let

x′ = x′S + v′ (2)

with v′ representing the row vector of primary inputs.

-208-

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